CRM: Managing Customers or Managing Expectations?
On the outset, the need to understand the customer has been growing steadily ever since the requirement for the customer profitability came before the term company profitability. The customers worth is no longer a term that refers to the personal assets of the individual but on how much he or she contributes the company coffers. In the urge to extract more from the customer, corporate are leveraging on technology to try and capture buying habits, and anything else that would help contribute to increasing the customers spend. The shift has been noticed from increasing the mind share of the product with the customer to increasing the “wallet” share, roughly translating to increasing the “per customer” spend.
According to a leading research house, wallet shares are increasing in India in the household sector. It has grown by a whopping 47% in 2005 as compared to the previous year. That means two things, one, being the companies are able to target their customers better, by placing the things that the consumer wants to buy alone on the shelves, or that consumers themselves have loosed their purse strings a little more. This can be evident from the exponential growth of disposable incomes that have risen to about 20 – 30% above the prevailing wages .
The advent of technology and the advancement in field of data mining has lead to companies targeting its specified clientele, the prime example is the diapers kept in the back, through the racks of toys, this forces children to go through them especially when they are being accompanied by their parents. The reseach that must have gone in to the entire exercise in order to execute this simple yet effective strategy in order to increase the “wallet Share” of the customer, must have been lots.
However, what if there was no technology, what if there existed smaller more personalized localized groceries as opposed to large super stores? What if there spirit of entrepreneurship broke out from the shackles of large corporations? What if the spirit of the small retailer or service provider was admired more than the discounts being offered by chain stores and larger chain retailers?
Prior to the advent of software and data mining technology how did stores manage to maintain and in fact grow relationships with their consumers? Personal relationships are the answer. There still exist shops that maintain these methods to maintain and grow the existing relationships.
One of the most fitting examples of managing customers is the local barbershop. The appearance of a person is the most important as that is what the world sees of them. The service being offered by this particular saloon has made me go back to him for about 8 years now. It is very simple. Everybody there greets with a smile. They know what kind of hair cut you would like. And they upsell. After the hair cut, they inevitably give you a small massage, after that they would ask you if you would like to oil your head and have a proper massage. Now, having sampled the goods, you are very tempted to give in, and this generally makes you feel much more relaxed.
So how does an establishment retain customers and grow them without technology? The answer is the human computer. Emotional level selling is something most marketers aim for, but few achieve. Striking a chord with the customer is like getting the formula of the magic portion (from Asterix), and this saloon does that.
The very simple fact of being recogonized boosts the image of the consumer to feel wanted. There is the warmth factor, the smile that makes all the difference. Once you are seated, you are asked if you want to cut it like how you did it the last time, if you are the experimenting sort, you would say no, and give another style, else, the regular cut. They cut, and then message.
So how do they keep in touch? They talk to the customers, enquire about their families, ask if everything is all right, and very polite questions. This brings to the next point of the power of observation. If some time you go with someone, they notice that and ask you the following time. All this adds brownie points.
Reading material while waiting for your turn: based on you appearance, the magazine is given. If you look like a native, you are given a local language paper. If you look like an outsider, you are given an English language periodical. Now, this is also done with caution, the local language periodicals are kept by the side, and the other periodical is given. This definitely adds brownie points as I am given what I want to read.
Upselling: as mentioned earlier, the massage, and sometime beauty treatments like face packs, shaves and hair treatment are also offered to the consumer, depending on the kind of customer who comes in.
Hence it can be seen that the advent of technology has not infiltrated this particular saloon, however, this has not deterd them from using CRM to acquire, retain but also grow customers. However, this case the Customer Relationship Management is just that, managing the relationships with the customer.