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Customer relationships are conversations

As companies move their operations into a more customer-centric era that involves interactions over the Internet, as well as traditional call-center customer support, CRM has moved further into the spotlight. Many companies do practice some form of CRM, but few have sat down to define their business strategy as it relates to CRM.

In a recent interview with Ray McKenzie, director of management consulting at Seattle-based DMR Consulting and author of the recently released book, "The Relationship-Based Enterprise," searchCRM learned the importance of conversations in creating lasting relationships with customers. McKenzie also touched on technology and the IS department's role in creating a balanced view of CRM while speaking with Christine M. Campbell, assistant news editor for searchCRM.

What inspired you to write "The Relationship-Based Enterprise?"
As a group, we felt that we had a pretty unique view... of what the usual issues were surrounding customer relationship management, and we're pretty passionate about that. ... We started looking at what organizations were doing, what our customers were doing, [and] we looked at the materials that were published around customer relationship management. For the most part, we concluded that the definitions of CRM were essentially lists of benefits of CRM. ... The hardest part of defining customer relationship management is the last word. One of the main points of view that we took is that we decided we really needed a rigorous definition of customer relationship management so that enterprises would know exactly what things they have to deal with. Where does technology fit into CRM?
Technology is a part of customer relationship management, but it is certainly not the vision. ...Customer relationship management, as far as we're concerned, is a strategy. ...The promise of CRM, really, is to be able to scale that kind of behavior. ...Large organizations simply can't do that without technology. Technology is essential for them to emulate the behavior of a small organization [such as knowing the customer's preferences]. Technology is necessary, but certainly not sufficient.

While technology is important, technology is vital, it just is not the only thing you need to deal with [in CRM endeavors]. How do you define CRM?
Our position is that relationships are built from a series of conversations. Value-added conversations can lead to long-term customer relationships. Thus, CRM is defined as the series of conversations that define what the customer needs and what the enterprise offers, the competitive space in which the exchange occurs and reveals all that there is to know about the customer. In "The Relationship-Based Enterprise," you mention that CRM needs to be redirected to focus on discovery, dialogue and discipline. What do you mean by that?
It's pretty simple. ...First, we put the framework [surrounding those terms] together because we wanted to group the questions and make it simpler for the business reader. We wanted to group the questions under the customer, which is discovery; under relationship, which is the dialogue; and under management, which is discipline. Discipline really is the decision, the choices made by management, to insure that they engage their customers in a dialogue so that they can continually discover their customers. The reason for needing to continually discover customers is that customers are constantly changing.

Customers are not static. In fact, customer information itself is perishable. It's just as perishable as lettuce... if you use that information after a certain date, it probably is no longer valid. The reason for having discovery in there, and rediscovering people, is so that enterprises can keep their information about the customers fresh.

The dialogue itself is about the relationship and engaging the customer. It's not just engaging the customer in a single conversation... or engaging the customer in terms of a monologue, but engaging the customer in a dialogue... where the customer is a part of that conversation. What role should the IT department play?
I think that information technology plays a strong role. A result [of the evolution of the current interest in CRM] has been the IT department in charge of the [CRM] projects. Most analysts now see CRM as a business strategy, rather than a technology. I think the IT function, the role they play [in CRM], is as a partner in the implementation. Do you have any examples of companies that are successfully practicing these principles?
If you take a look at the way Dell interacts with its customers, the customer is not just at the end of the manufacturing process where they buy the computer that's already assembled off the shelf. Dell actually engages the customer in a conversation where the customers are configuring their own system. You can almost think of Dell as inviting the customer into Dell's business process, their manufacturing process. ...That seems to have value. Customers can go to some shop and buy the exact same configuration off the shelf. Instead, for whatever reason, they're intrigued, or they get involved, or they're engaged by the ability to actually get involved in that kind of conversation where they're part of the process.

Another example is Amazon.com. ...They track the kinds of books that other people have purchased. When you go to purchase the book, [Amazon] says others who have purchased this book might have also purchased this. They're trying to make a conversation with the customer that is really specific to the customer. I think that's one of the things that the so-called dot-coms brought forward. Most of them have done really outstanding jobs in terms of connection with the customer.

To read an excerpt of "The Relationship-Based Enterprise," visit DMR Consulting.

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