Customer relationship management offers significant opportunities to deliver on the customer experience. That is, of course, if you’re investing in the right customers.
As we continue to move into an era of greater customer mobility, particularly via digital channels, the business imperative on customer retention and “optimisation” remains a critical strategy.
Customer Relationship Management (CRM) systems enable businesses to continually identify and engage customers, with real time data and information providing organisations with substantial insights into how those customers interact with the business.
That said, CRMs are difficult to deploy and configure effectively, thanks to the many moving parts of customer engagement. Once established, the maintenance of CRM – effectively your eyes and ears of customer experience – is often challenging due the the volume of data that needs to be ingested, processed and kept up-to-date.
So why do organisations struggle so much with CRM?
CRMs ‘Don’t Work’
All too often, businesses struggle with CRM, in particular, seeing the value it provides in achieving the bottom line.
Could it be you are focusing on the wrong customers?, e.g. those that add little to no value to the top and bottom line? Does it give you an effective lens from which to view what a ‘good customer’ looks like and thus the ability to sort the wheat from the chaff? Indeed, are all customers even worth the often significant effort to retain them?
Unfortunately, no, they are not. Enter the rise of the incorrigibles.
Who are the Incorrigibles?
In the early days of customer centricity Booz Allen’s Strategy and Business magazine (1998) featured an article entitled How to Brand Sand that identified a group of customers they termed “Incorrigibles” and described them this way:
Incorrigibles: No matter what you do, these customers are not going to love you. You can rent their affection, but only until your money runs out. These are not strategic thinkers. They are tightly focused on a single goal: making the best possible deal on the transaction at hand.
These are the pure price buyers, who treat suppliers as the enemy and focus exclusively on current delivered price. They will switch suppliers with lightning speed for even the slightest price differential. Not only is it often a waste of time to market to these bottom-feeders, it is sometimes not even worth the trouble of having them as customers; their greatest use is often as gifts to competitors.
Unfortunately, the Incorrigibles constitute half the market, or more, in some commodity businesses. They are so prevalent that no supplier can seriously think about “firing” all of them.
Incorrigibles often represent 50% or more of a customer base within a CRM and act as a ‘debilitating tax’ on an organisation’s profits. These so-called bottom feeders can consume valuable resources, distort an organisation’s management’s thinking and create dangerous risk.
Dealing with the Scourge: Identify Incorrigibles and Step Toward Customer Centricity
Incorrigibles persistently feature in the number of complaints, legal cases, bad debts, product returns, customer service interactions, sales calls, overdue accounts, warranty claims, and loyalty program costs.
Marketing funds are another major victim of Incorrigibles. Product launch invitations (i.e. free food and drink) competitions (something for nothing) surveys (more giveaways) coupons (freebies) even marketing collateral, direct mail and other promotions are largely consumed by the Incorrigibles.
Equally damaging is the time these customers demand from management to address their issues, as their weight of numbers (vocal majority) drowns out the voice of “Quality” customers.
The key challenge therefore to deal with this issue is to develop strategies to reduce costs of incorrigibles on the business. The first step is therefore to identify the customers that truly warrant further investment and focus on them.
Critical Customer Insights & Value-Add Customer Retention
The CRM database should hold the entire view of all customers, both the good and the bad. However, achieving completeness is only half the battle – the CRM should also be providing critical customer insights and enabling a business to make value add decisions on customer strategies.
Therefore, effort should also go into the maintenance of your CRM so it is configured in such a way that it can help a business identify and if necessary weed out the incorrigibles. After all, not all business is good business and your CRM should be at the vanguard in ensuring the company’s focus and effort goes onto the good customer base as opposed to the incorrigibles.
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