Boost profits, margins, and customer loyalty with more effective CRM strategy Managing Customer Experience and Relationships, Third Edition positions the customer as central to long-term strategy, and provides essential guidance toward optimizing that relationship for the long haul. By gaining a deep understanding of this critical dynamic, you'll become better able to build and manage the customer base that drives revenue and generates higher margins. A practical framework for implementing the IDIC model merges theory, case studies, and strategic analysis to provide a ready blueprint for execution, and in-depth discussion of communication, metrics, analytics, and more allows you to optimize the relationship on both sides of the table. This new third edition includes updated examples, case studies, and references, alongside insightful contributions from global industry leaders to give you a well-rounded, broadly-applicable knowledge base and a more effective CRM strategy. Ancillary materials include a sample syllabus, PowerPoints, chapter questions, and a test bank, facilitating use in any classroom or training session. The increased reliance on customer relationship management has revealed a strong need for knowledgeable practitioners who can deploy effective initiatives. This book provides a robust foundation in CRM principles and practices, to help any business achieve higher customer satisfaction. * Understand the fundamental principles of the customer relationship * Implement the IDIC model to improve CRM ROI * Identify essential metrics for CRM evaluation and optimization * Increase customer loyalty to drive profits and boost margins Sustainable success comes from the customer. If your company is to meet performance and profitability goals, effective customer relationship management is the biggest weapon in your arsenal but it must be used appropriately. Managing Customer Experience and Relationships, Third Edition provides the information, practical framework, and expert insight you need to implement winning CRM strategy.
Foreword by Phil Kotler xiii Preface xvii Acknowledgments xxi About the Authors xxiii PART I PRINCIPLES OF MANAGING CUSTOMER EXPERIENCE AND RELATIONSHIPS 1 CHAPTER 1 Evolution of Relationships with Customers and Strategic Customer Experiences 3 Roots of Customer Relationships and Experience 5 Traditional Marketing Redux 11 What Is a Relationship? Is That Different from Customer Experience? 20 Who Is the Customer? 21 How to Think about Customer Experience 22 Return on Customer: Measuring the Efficiency with Which Customers Create Value 25 The Technology Revolution and the Customer Revolution 28 Royal Bank of Canada s 16 Million Loyal Customers 30 The ROI of Building Customer Relationships in Financial Services 34 Summary 38 Food for Thought 39 Glossary 39 CHAPTER 2 The Thinking behind Customer Relationships That Leads to Good Experiences 43 Why Do Companies Work at Being Customer-Centric ? 44 What Characterizes a Relationship? 46 Continuing Roles for Mass Media and Branding 46 Characteristics of a Genuine Business Relationship 47 Building Genuine Customer Connections: A Framework for Understanding Customer Relationships (James G. Barnes) 50 Customer Loyalty: Is It an Attitude? Or a Behavior? 61 Loyalty Programs 63 Summary 66 Food for Thought 67 Glossary 67 PART II IDIC IMPLEMENTATION PROCESS: A MODEL FOR MANAGING CUSTOMER RELATIONSHIPS AND IMPROVING CUSTOMER EXPERIENCES 71 CHAPTER 3 Customer Relationships: Basic Building Blocks of IDIC and Trust 73 Trust and Relationships Happen in Unison 74 IDIC: Four Implementation Tasks for Creating and Managing Customer Experiences and Relationships 79 How Does Trust Characterize a Learning Relationship? 82 The Speed of Trust (Stephen M. R. Covey) 82 The Trust Equation: Generating Customer Trust (Charles H. Green) 85 Becoming More and More Trustable to Customers 92 The Age of Transparency (Dov Seidman) 96 Basic Principles of Twenty-First-Century Trustability 101 Do Things Right and Do the Right Thing 102 Be Proactive 103 The Man with the Folding Chair 106 Relationships Require Information, but Information Comes Only with Trust 108 Scenario: Governments Develop Learning Relationships with Citizen-Customers 111 Summary 116 Food for Thought 116 Glossary 117 CHAPTER 4 Identifying Customers 119 Individual Information Requires Customer Recognition 120 The Real Objective of Loyalty Programs and Frequency Marketing Plans 124 What Does Identify Mean? 129 Customer Data Revolution 133 The Role of the Internet of Things and Smart Products in Managing Relationships with Customers 138 Summary 139 Food for Thought 139 Glossary 140 CHAPTER 5 Differentiating Customers: Some Customers Are Worth More Than Others 143 Customer Value Is a Future-Oriented Variable 145 Assessing a Customer s Potential Value 158 Different Customers Have Different Values 159 Pareto Principle and Power-Law Distributions 160 Customer Referral Value 165 Is It Fair to Fire Unprofitable Customers? 170 Dealing with Tough Customers 171 Canada Post Customer Value Management Program: Using Value to Differentiate Customer Relationships (Janet LeBlanc) 179 Summary 182 Food for Thought 183 Glossary 184 CHAPTER 6 Differentiating Customers by Their Needs 187 Definitions 188 Demographics Do Not Reveal Needs 191 Differentiating Customers by Need: An Illustration 192 Scenario: Financial Services 193 Understanding Customer Behaviors and Needs 194 Needs May Not Be Rational, but Everybody Has Them 196 Why Doesn t Every Company Already Differentiate Its Customers by Needs? 197 Categorizing Customers by Their Needs 198 Understanding Needs 200 Community Knowledge 202 Using Needs Differentiation to Build Customer Value 206 Scenario: Universities Differentiate Students Needs 208 Summary 212 Food for Thought 213 Glossary 213 CHAPTER 7 Interacting with Customers: Customer Collaboration Strategy 217 Dialogue Requirements 219 Implicit and Explicit Bargains 220 Do Consumers Really Want One-to-One Marketing? 222 Two-Way, Addressable Media: A Sampling 223 Technology of Interaction Requires Integrating across the Entire Enterprise 226 Managing Customer Experiences by Taking the Customer s Perspective (Mounir Ariss) 229 Customer Dialogue: A Unique and Valuable Asset 234 Customizing Online Communication (Tom Spitale) 236 Not All Interactions Qualify as Dialogue 239 When the Best Contact Is No Contact (Bill Price and David Jaffe) 240 Contact Centers Take a New Approach to Customer Interactions (Elizabeth Glagowski) 243 Cost Efficiency and Effectiveness of Customer Interaction 244 Complaining Customers: Hidden Assets? 245 Summary 248 Food for Thought 248 Glossary 249 CHAPTER 8 Customer Insight, Dialogue, and Social Media 253 The Dollars and Sense of Social Media 254 Listening to Customers 260 The Importance of Listening and Social Media (Becky Carroll) 261 Crowd Service: Customers Helping Other Customers (Dr. Natalie L. Petouhoff) 267 Age of Transparency 277 As Interactions Multiply, Trust Becomes More Important 277 Influencing the Influencers 283 Summary 286 Food for Thought 286 Glossary 287 CHAPTER 9 Privacy and Customer Feedback 289 The Trust Advantage of Robust Data Stewardship (John Rose) 294 Individual Privacy and Data Protection (Larry A. Ponemon, Ph.D.) 303 Privacy in Europe Is a Different World 306 European Organization for Economic Cooperation and Development Privacy Guidelines 307 Privacy Pledges Build Enterprise Trust 310 10 Points to Consider in Developing a Company s Privacy Pledge 313 Submitting Data Online 314 Universal ID 317 Summary 318 Food for Thought 318 Glossary 318 CHAPTER 10 The Payoff of IDIC: Using Mass Customization to Build Learning Relationships 321 How Can Customization Be Profi table? 322 Demand Chain and Supply Chain 325 Technology Accelerates Mass Customization 331 Customization of Standardized Products and Services 333 Value Streams 337 Bentley Systems Creates Value Streams 338 A Quick Primer on Business Rules (Bruce Kasanoff) 342 Culture Rules 346 Summary 349 Food for Thought 350 Glossary 350 PART III MEASURING AND MANAGING TO BUILD CUSTOMER VALUE 355 CHAPTER 11 Optimizing around the Customer: Measuring the Success of Customer-Based Initiatives and the Customer-Centric Organization 357 Customer Equity 364 What Is the Value Today of a Customer You Don t Yet Have? 373 Customer Loyalty and Customer Equity 376 Return on Customer 380 Return on Customer = Total Shareholder Return 384 Measuring, Analyzing, and Utilizing Return on Customer 389 Leading Indicators of LTV Change 393 Stats and the Single Customer 401 Maximize Long-Term Value and Hit Short-Term Targets 402 Summary 409 Food for Thought 410 Glossary 410 CHAPTER 12 Using Customer Analytics to Build the Success of the Customer-Strategy Enterprise 413 Verizon Wireless Uses Analytics to Predict and Reduce Churn 415 CRM in the Cloud 417 Customer Intelligence in the Era of Data-Driven Marketing (Jim Goodnight) 424 Boosting Profits by Up-Selling in Firebrand Real Estate Developers 431 Looking for the Right Time to Sell a Mortgage Loan 439 Summary 443 Food for Thought 444 Glossary 445 CHAPTER 13 Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 1 447 Customer Experience: What, Why, and How (Alan Pennington) 449 How Do We Fix Service? (Bill Price and David Jaffe) 460 Improving Customer Service at an Online Financial Services Firm 464 Customers, Customer Service, and the Customer Experience (Christopher J. Zane) 467 Relationship Governance 470 Understanding Customer Experience through Customer Journey Mapping (Valerie Peck) 476 Customer Experience Capabilities and Competencies Compared to Financial Performance (Jeff Gilleland) 502 Summary 507 Food for Thought 507 Glossary 508 CHAPTER 14 Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 2: Transitioning from Traditional Business to Customer Centricity 513 Becoming a Customer-Strategy Organization (Marijo Puleo, Ph.D.) 514 Pilot Projects and Incremental Change 519 Picket Fence Strategy 521 Segment Management 523 Customer Portfolio Management 524 Transition across the Enterprise 525 Using Up Customers 528 Transformation from Product Centricity to Customer Centricity 531 Transition Process for Other Key Enterprise Areas 533 Managing Employees in the Customer-Strategy Enterprise 540 The Everyday Leader (Marilyn Carlson Nelson) 544 Summary 546 Food for Thought 547 Glossary 548 CHAPTER 15 Futureproofing the Customer-Centric Organization 553 Leadership Behavior of Customer Relationship Managers 554 Maintain and Increase the Trust of Customers 556 Reciprocity in Action 559 JetBlue Builds Trust into Its DNA 560 Summary 575 Food for Thought 576 Name Index 577 Term Index 585