Managing Customer Experience and Relationships. Don Peppers

are creating a two-way brand, one that thrives on customer information and interaction. The two-way brand, or branded relationship, transforms itself based on the ongoing dialogue between the enterprise and the customer. The branded relationship is “aware” of the customer (giving new meaning to the term brand awareness) and constantly changes to suit the needs of that particular individual. In current discussions, the focus is on ways to redefine the brand reputation as more customer oriented, using phrases such as “brand engagement with customer,” “brand relationship with customer,” and the customer's “brand experience.” Add to this the transparency for brands and rampant ratings for products initiated by social media, and it's clear why companies are realizing that what customers say about them is more important than what the companies say about themselves.

      Companies are realizing that what customers say about them is more important than what the companies say about themselves.

      What does it mean for an enterprise to focus on its customers as the key to competitive advantage? It means creating new shareholder value by deliberately preserving and growing the value of the customer base.

ROOTS OF CUSTOMER RELATIONSHIPS AND EXPERIENCE

      Once you strip away all the activities that keep everybody busy every day, the goal of every enterprise is simply to get, keep, and grow customers (whether those are business-to-consumer [B2C] customers or enterprise business customers [B2B]). This is true for nonprofits (where the “customers” may be donors or volunteers) as well as for-profits, for small businesses as well as large, for public as well as private enterprises. It is true for hospitals, governments, universities, and other institutions as well. What does it mean for an enterprise to focus on its customers as the key to competitive advantage? Obviously, it does not mean giving up whatever product edge or operational efficiencies might have provided an advantage in the past. It does mean using new strategies, nearly always requiring new technologies, to focus on growing the value of the company by deliberately and strategically growing the value of the customer base.

      To some executives, customer relationship management (CRM) is a technology or software solution that helps track data and information about customers to enable better customer service. Others think of CRM, or one-to-one, as an elaborate marketing or customer service discipline. We even recently heard CRM described as “personalized email.” But it's far more than that.

Managing customer relationships is what companies do to optimize the value of each customer, because they understand the customer's perspective and what it is—and should be—like to be a customer. This book is about much more than setting up a business website or redirecting some of the mass-media budget into the call-center database or cloud analytics or social networking. It's about increasing the value of the company through specific customer strategies (see Exhibit 1.1).

EXHIBIT 1.1 Increasing the Value of the Customer Base

Get	Acquire more customers.
Keep	Retain profitable customers longer. Win back profitable customers. Eliminate unprofitable customers.
Grow	Upsell additional products in a solution. Cross-sell other products and services. Referrals and word-of-mouth benefits. Reduce the cost to serve customers.

Companies determined to build successful and profitable customer relationships understand that the process of becoming an enterprise focused on building its value by building customer value doesn't begin with installing technology, but instead begins with:

       A strategy or an ongoing process that helps shift the enterprise from a focus on traditional selling or manufacturing to a customer focus while increasing revenues and profits in both the current period and the long term.

       The leadership and commitment necessary to cascade throughout the organization, and the thinking and decision-making capability that puts customer value and relationships first as the direct path to increasing shareholder value.

      Customer strategy means increasing the value of the customer base. CRM can be thought of as a set of business practices designed, simply, to put an enterprise into closer and closer touch with its customers, in order to learn more about each one and to deliver greater and greater value to each one, with the overall goal of making each one more valuable to the firm to increase the value of the enterprise.

The reality is that becoming a customer-strategy enterprise is about using information to gain a competitive advantage and deliver growth and profit to the firm by increasing the value of the customer base. In its most generalized form, CRM can be thought of as a set of business practices designed, simply, to put an enterprise into closer and closer touch with its customers, in order to learn more about each one and to deliver greater and greater value to each one, with the overall goal of making each one more valuable to the firm to increase the value of the enterprise. It is an enterprise-wide approach to understanding and influencing customer behavior through meaningful analysis and communications to improve customer acquisition, customer retention, and customer profitability.² Customer centricity is distinguishable from product centricity and from technology centricity. These differences will be discussed more in Exhibit 1.3 later in this chapter.

      Customer centricity: An enterprise-wide business strategy that achieves customer-specific objectives by taking customer-specific actions.

      Defined more precisely, what makes customer centricity into a truly different model for doing business and competing in the marketplace is this: It is an enterprise-wide business strategy for achieving customer-specific objectives by taking customer-specific actions. It is enterprise-wide because it can't merely be assigned to marketing if it is to have any hope of success. Its objectives are customer-specific because the goal is to increase the value of each customer. Therefore, the firm will take customer-specific actions for each customer, often made possible by new technologies.

      In essence, building the value of the customer base requires a business to treat different customers differently. Today, there is a customer-focus revolution under way among businesses. It represents an inevitable—literally, irresistible—movement. All businesses will be embracing customer strategies sooner or later, with varying degrees of enthusiasm and success, for two primary reasons:

      1 All customers, in all walks of life, in all industries, all over the world, want to be individually and personally served.

      2 It is simply a more efficient way of doing business.

We find examples of customer-specific behavior, and business initiatives driven by customer-specific insights, all around us:³

       An engaged couple receives customized mobile reminders to choose a venue, select wedding attire, hire a photographer, and other key milestones, all at the appropriate time.

       A group of three friends open the web page of the same kitchenware company that they all have ordered from in the past. Each friend views a different offer featured on the company home page on their device.

       A woman receives an email before her eight-month obstetrics appointment that gives information about