Tuesday, April 7, 2009

Six Ideas for Next Generation CRM

By Graham Hill, Customers & More

I chaired the IIR Telecoms CRM, CEM and Retention conference in Berlin yesterday. It was a great day with some excellent speakers. Of all the
speakers, one stood out for me: Christian Magel, the Chief Marketing Officer of low-cost mobile telco Simyo in Germany.

Simyo is a relatively recent entrant in the crowded German mobile telecoms market. It provides a simple, no-frills voice, SMS and data proposition to
cost-conscious customers. But that doesn’t mean that its customers don’t have any affinity for Simyo. On the contrary, it has a much, much higher
proportion of brand advocates (as measured by the NPS score) than any of its much larger competitors. It is a real customer-centric company.

At the end of his presentation, Christian spoke about six guiding ideas for Next Generation CRM (with my own interpretation):
1. With the Internet, the Cost of Communications is Not the Issue - With the Internet, communications, whether they are voice-to-voice through a
VoIP service like Skype, interactive like IM, or direct like email, are all effectively free. The real issue isn’t the cost, but the relevance
of the communications to customers. If your communications are targeted, informative and timely, there is a good chance that customers will
appreciate them, and you for providing them. Indeed, youth mobile telco Blyk, that offers free mobile minutes and SMS in return for listening
to branded ads, found that many of its customers actually complained that they didn’t hear enough ads! This is quite a change from ‘maximum
contacts per period’ rules used by most data-intensive companies, that explicitly acknowledge that the communications are, at best, irrelevant
to customers, at worst, a damned nuisance!
2. Customer Loyalty Starts with Product Design - Loyalty shouldn’t happen by accident. It should be the natural response to explicitly designing,
products, services and experiences that help customers get everyday jobs done. This means really understanding customers' needs, in terms of
the jobs customers are trying to do and the outcomes they are trying to achieve, and how you can provide solutions that help customers. It also
means designing products that really deliver what customers’ expect, wrap-around services that add real value to the customer and knitting them
together so they deliver a superior end-to-end experience for the customer, particularly during that all important post-purchase, product usage
period where customers really get value from the products they bought.
3. Bad Products have No Chance on the Internet - Simyo is an internet-based mobile telco. If its products don’t work properly the first time,
customers will drop them immediately and tell all their facebook, twitter and calling community friends. In the same way we all quickly
back-track out of websites that don’t work, are too slow, or that don’t have any sticky content. That doesn’t mean that products on the
Internet have to be perfect or fully featured, but it does mean that they have to meet the customers’ core needs from the start. And at a
suitable price point. This provides a great opportunity for disruptive innovators like Simyo, who provide products that meet customers core
mobile telephony needs, without all the expensive, unused frills of traditional providers, at a rock-bottom price. Evolving and additional
customer needs can be met later through a process of continuous innovation, in a similar way that companies like Google do.
4. It’s Not the Product, It’s the Customer - Most telcos and indeed, most companies, are still product-centric. Their annual report may say how
customer-centric they are, but in reality, their whole world revolves around making better products and then trying to find customers to buy
them. There is no wonder that 80% of their products fail on market entry and 60% fail on re-entry. In contrast to this, Simyo has built its
business around understanding its customers’ needs, provides products, services and an experience that exactly matches them, and then
delivering them to customers at a profit. By delivering value to its customers throughout the customer experience, Simyo has earned the right
to be paid handsomely by them for doing so. Customer-centric business starts and ends with customers.
5. Don’t Stop with Loyalty, Evangelists can Achieve Much More - Customer satisfaction, retention and loyalty, and their relationship to
profitability have been agued over for decades. But even emotionally committed, loyal customers arean’t enough. Not today. Companies need to
provide enough value to customers so that they want to tell everyone else about it. The old saying was that a happy customer told five friends
about it, on the Internet, they can tell 5,000 or even 5,000,000. And as research by Kumar on Customer Referral Value has shown, talkative
customers can have a value to the company through their referrals of up to four times the value of their own purchases.
6. Crowdsource your Best Ideas from your Customers - Experts in innovation like MIT’s Eric von Hippel, estimate that up to 80% of successful
innovations originate from customers. The challenge is in tapping into the right customers to see how they are using your products, those of
competitors or a mash-up of different products to get important jobs done. Approaches like crowdsourcing, open innovation and lead-user
innovation all provide a way to look outside your own company and to bring in winning innovations from outside. In Simyo’s case, they have
hired hundreds of Simyo Paten who crowdsource answers to customers questions. With response times to email questions in hours rather than the
more normal days, this is just one way to harness the wisdom of the crowd.

Christian’s six guiding ideas provide a great framework to think about Next Generation CRM. They encompass much of what is in Paul Greenberg’s CRM
2.0 yet go much further at the same time. Take a look at how you stack-up against them. And where you must do better if you are to build brand
advocacy in your customers like Simyo has.

You can follow Christian and the Simyo team at the Simyo blog.

With great thanks to Christian for his stimulating presentation in Berlin.

Graham Hill
Customer-driven Innovator
Follow me on Twitter

Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

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