How to implement customer relationship management
According to a number of PIDAS studies, 70% of all companies in Germany lose 50% of their customers every five years. The reasons for this are insufficient mechanisms to manage customers, and sheer indifference. Martin Ritter, director of the Steinbeis Consulting Center for Safeguarding Companies, explains what companies can do about this by using digital technology and the role played by customer relationship management (CRM).
In times when the differences between companies are often dictated by a destructive battle to win on price, placing more emphasis on the quality of personal service is a decisive factor in achieving differentiation. Sounds simple, but the challenge comes in actually doing this. According to statistics, every customer of a company will have approximately five contact points with employees and on average, each encounter will last around 15 seconds. This can redefine how people view a company on countless occasions every year. Every point of contact is a new experience, a 15-second piece of the puzzle that can be pieced backed together afterwards and made into a big experiential image. Ultimately, it’s these countless moments of truth that decide if a company will have a safe journey into the future. As each moment unfolds, the aim should be to prove to the customer that choosing this company was the best thing they could have done.
The current debate about unknowns regarding the impact of Industry 4.0 on companies often overlooks something: Clear statements are needed from business leaders and managers about the firms of the future being the product of the people who work for them. People are so fired up about digital transformation that this realization is being overshadowed. Our companies will no longer enjoy the protection of traditional competitive advantage as they undertake the journey into a digital economy. Once upon a time, they could bank on their engineering services and that famous Vorsprung durch Technik. Businesses are finding it more and more difficult to keep pace with the competition by simply pointing to product advantages. They now need new markets – ones that are not cluttered by the competition. This is a laudable aspiration and if firms play their cards right, they can enjoy some major successes. And one way to get there is to undergo a change and become a customercentric service provider.
A significant number of companies still see themselves as the sum of all products, technological capabilities, their impressive head office buildings, and slick administrative processes. But ask their customers and they won’t even mention the machines, high-tech solutions, advanced IT-based internal processes, or where and how they invest their money. Instead, customers point to their experiences with people at the company. Logically speaking therefore, succeeding as a business and remaining successful takes more than an accumulation of material assets. To an increasing extent, success is about quality enhancements in direct communications between customers and people working at a company.
Some time ago, Germany reached an historic crossroad and entered the service economy. This is even affecting companies that would previously not have considered themselves service providers. If everything is available to everyone one day and can be produced by anybody, and hard-earned know-how drifts off into the cloud, the starting point for securing the future of a business in the long term will no longer be products or technology, but customers. If companies want to stay in the running in the long term, they need to regain their bearings and set their sights on the customer. Everyone involved in a market must be clear about the fact that company value will almost exclusively revolve around having delighted customers – clients who all want to be treated like individuals and will not choose to enter into a business partnership with you if you don’t do precisely that. External and internal customer relationship management is a key, future-centric component of quality management and the long-term sustainability of a company.
The ultimate challenge will be external customer contact and how people deal with each other internally. Let’s imagine for a moment that everybody within a company does take this challenge to heart and behaves accordingly. The company would have a huge competitive advantage. This is why it’s important to learn how to welcome customers and their issues, desires, and complaints – rather than try to fight them. Companies need to develop an ability to foster constructive customer dialog rather than stifle it. Rather than feel demotivated, employees need to be empowered to enter into dialog with customers. The focus should be external, on the rapid changes happening in the market; not internal, on administrative scheming. If a company can seize this opportunity to enter into close client relationships and give staff ways to react individually to the needs and problems of customers, it can derive so much from those moments of truth, multiply the number of delighted customers, and thus safeguard the long-term competitive advantage of the business.
In doing so, it’s important that staff are allowed to shake off the shackles of administration. It’s also important to ensure that indifference becomes a foreign concept at the company. Employees should become managers themselves – helpers who serve their customers and the market. This engenders a culture that breeds mutual trust and togetherness, a place people want to stay in a personal environment that safeguards the future of the company in the long term. Even in times of Industry 4.0, everyone bears responsibility for customers, including the bosses, because customers are the only people who pay money into the company.
Martin Ritter is director of the Steinbeis Consulting Center for Safeguarding Companies. The Steinbeis Enterprise offers its customers stocktaking services with the aim of safeguarding companies’ long-term existence, foresight consulting, targeted support and implementation in all areas related to safeguarding companies, one-on-one coaching sessions for business leaders, managers, and staff, as well as the Steinbeis Enterprise Competence Check.X