In a keynote speech at the 2017 EMAC conference in Groningen, Michael Haenlein pointed the irrelevance of current CRM (Customer Relationship Management) strategies. Firms still believe that they can keep customers forever, nurturing them and growing their customer base forever. This is obviously not true.
Comparing CRM strategies with marriage, Hänlein had this wonderful word about CRM managers :
“people try to date today by following strategies used by their grandparents 80 years ago”
(please apologize if this is not exactly the exact transcript but at least you get the essence).
Relationships with customers have changed but CRM practices haven’t
It’s so true that relationships with customers have dramatically evolved and yet firms don’t adapt to these new challenges. Moreover, according to Hänlein, developers of CRM softwares still base their products on principles that long don’t stand anymore. If I interpret his thoughts well, this means that CRM softwares vendors are in a sense promoting obsolete practices by perpetuating an outdated vision of what relationships with customers are.
Customer valuation should take much more than only purchases into account
Let’s consider for instance customers’ reviews. They have become a stream of research in itself among marketing scholars, their importance is widely recognized. Yet, how are reviews taken into account in calculating the value and profitability of a customer ?
In the traditional CRM view, the value of a customer (customer lifetime value) is calculated based on all her future purchases. But how do you take widespread customers’ behaviors like giving reviews and influencing others, being an influencer on social media and not necessarily being a customer ?
What those examples prove is that CRM managers need to take much more than only purchases into account to determine the value of their customers. A renown vlogger for instance, could well be your most valued customer even if purchases very little from you. His high value is in his capacity to influence others and he should be rewarded for that.
Conclusion
The traditional view of Customer Relationships Management is obsolete. Firms need to understand that there are many more parameters to take into account than only purchases if they want to understand who their most valuable customers are.
Posted in Marketing.
