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Little Things Put the 'Relationship' in CRM

By Christopher J. Bucholtz
Oct 7, 2010 5:00 AM PT

I was eating dinner at my favorite Japanese restaurant last night, and I was nearing the end of my meal when the waitress came to the table and presented two beautiful pieces of maguro, or tuna sashimi. When I said I hadn't ordered it, the sushi chef leaned over the counter.

Little Things Put the 'Relationship' in CRM

"No -- you did not order it!" he exclaimed. "But this is from the belly. It's so good, I thought you had to have it!"

I eat there all the time, and we talk sushi while I'm there, so they know how much I like really good tuna. And this was really good.

This is par for the course for this wonderful little restaurant -- it really does reward its regular customers with these occasional shows of kindness and respect.

It's the kind of things larger companies try to scale, with varying degrees of success. They range from sandwich shop rewards cards all the way to airline mileage programs, and when they're run well, they can keep customers coming back. When they're run badly, they can backfire and have exactly the opposite effect.

But forget about the mechanics of running such a program. In order to foster long-term loyalty in this way, a company has to decide that giving up a tiny bit of profit is a worthwhile tradeoff. That's a decision that many companies find difficult to reach -- especially when they fail to perceive the value in loyalty.

Customers Are People Too

That's never more prominently on display than in subscription industries like cable and satellite television. Your tenure as a customer is never rewarded by anything more than what's on the contract. There are many opportunities in this long-term relationship to build loyalty, but they're almost never seized upon.

Perhaps when the fifth anniversary of a subscriber's becoming a customer rolls around, a little note of thanks could be added to the bill. Maybe such events could be opportunities to offer additional services at a lower cost, or offer a one-time reduction in rates as a thank-you, or maybe reward a customer's loyalty with a free pay-per-view event.

All of that would be fairly easy to offer. But the cable and satellite TV industry -- like many others -- simply does not value customer loyalty. The barrier to switching providers is high, competition is not available everywhere, and these providers have traditionally focused on customer acquisition, not retention. The vast numbers of commercials aired by Comcast, AT&T and DirecTV are the visible artifacts of this obsession with finding new customers.

Instead of any sort of thanks for customer loyalty, there are constant efforts to upsell customers and a gradual increase in fees -- not to mention the ongoing service struggles that plague this industry.

This mindset places no focus on the customer's experience with the company. It's all about treating the customer as a unit of income for the company and figuring out ways to increase the value of that unit of income from month to month. Thus, the idea of giving back even the most minute amount of income in the form of a discount, a freebie or a thank you never is allowed to interfere with the formula. The idea that the customer could respond by bolting is not a major concern.

Use Your Customer Data Wisely

But it should be. If some knucklehead columnist can spot the chink in the armor, some competitor will be able to spot it, too --- and that competitor will build a business model to take advantage of it. That makes now exactly the right time for the existing participants in this market to start fostering loyalty among their customers as a bulwark against future competition.

That's a good idea for your business, too. Assuming that customers are going to stick around when you do just the bare minimum to hold up your end of the relationship is an assumption that promises hard times ahead for your business.

Start thinking about loyalty in your customers' terms, and think about what keeps you going back to the businesses you regularly patronize. If a well-timed personalized message, or a strategically timed discount, or an unexpected freebie keeps a customer coming back, why view it as an unneeded expense rather than a major ROI win?

Customer relationships are not made by the data you collect -- they're made by what you do with that data. Use the data to trigger these little gestures, and make sure they're as coordinated with your customers' needs and desires. If the sushi chef down the street can do it, your business can do it too.

CRM Buyer columnist Chris Bucholtz blogs about CRM at Forecasting Clouds. He has been a technology journalist for 15 years and has immersed himself in the world of CRM since 2006. When he's not wearing his business and technology geek hat, he's wearing his airplane geek hat; he's written two books on World War II aviation, and his next two are slated for publication in 2010.

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