CRM to BRM-THE NEXT STAGE OF CREATING CUSTOMER VALUE

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1 CRM to BRM-THE NEXT STAGE OF CREATING CUSTOMER VALUE Chris Colbert, CEO & Co-Creator Much has been made of CRM (Customer Relationship Management), as the new construct for companies interacting with customers to deliver more value to them and get more value from them. Arguably, CRM is based on the premise that in a commoditized, highly competitive world, customer value is increasingly derived not from any singular feature or benefit being offered, but from the multiple touch points the customer experiences with the brand. Each touch point is an opportunity to recognize their needs and deliver specific tangible and intangible attributes to meet those needs. The summary takeaway is the customer value proposition. The assumption is that the better a company is at understanding customer needs and delivering the goods at each touch point, the more loyal the customer will be and the more profitable. That is the promise of CRM. But isn t it also the promise of building a brand? To create a relationship with the customer that delivers rational and emotional benefits, that builds loyalty, and that creates more profits. It is here that the construct of CRM is really a construct of BRM, Brand Relationship Management. Take Starbucks, the increasingly ubiquitous purveyor of pretty damn expensive cups of coffee. They are on every street corner, with lines of customers a mile long, willing to fork over $3 plus for a cup of coffee with foam. Is the value proposition purely in the quality of that coffee? Or the foam? Nope. The value proposition is a function of how well Starbuck s conveys its values of quality, freshness, and humanity in every thing it does. From the use of script in its signage, to the attire of its wait staff, to the music it plays in each store. All of those touch points, all of those signals, are carefully managed by Starbucks to communicate their message, their value proposition to their customers. And they are communicated so well, so pervasively, that the customers have become part of the brand themselves. Their commitment, their espousing of Starbuck s, is arguably one of the most powerful elements in the company s Brand Relationship Management mix. Brands then are not the consequence not of singular acts (or single cups of coffee) but of relationships. At the highest level they are the result of the relationship between the company and all of its constituencies (customers, prospects, employees, and shareholders). As with CRM, affecting the right

2 relationship and achieving the desired value proposition and brand perception is a task of aligning every touch point with each constituency and ensuring that at that point, value is being delivered or at least reinforced. In this sense, BRM is about organizational alignment; getting every facet of the enterprise focused on its role in creating value and reinforcing it. The critical first step is in understanding the value proposition for each constituency. That proposition should be the intersection of three perspectives: the core values of the company, the constituency s rational and emotional needs, and the competitive offerings. Of these the most crucial are the core values. Brands are not born out of thin air. Inevitably their genesis and delivery is a direct result of the nature and ways of the company that holds them. The nature and ways reflect the leadership s beliefs, the organization s heritage, its style and competencies. These attributes can be categorized as the brand s core values. They are eternal, they are honest, and if fashioned correctly they are a balance of reality, aspiration and delivery. These core values are critical in defining the customer value proposition because they are embodied throughout the organization already. The value that a customer experiences in interacting with an organization inevitably is impacted by the values that already exists in it. The task of BRM is really to insure that those values come through effectively at every point of contact. Southwest Airlines is one heck of a brand relationship manager. They have built their business and brand on a set of values that involve creating a whole new way to serve up airline travel. From their use of open seating to the irreverent banter of their in-flight personnel, they do the business differently. And their value proposition is clear and reinforced in everything they do. It is so clear and so consistent that their customers, not unlike Starbuck s customers, feel like part of the brand s family. Southwest is an example of leadership driven top down BRM. Herb Kelleher s values were the core values of the brand. His actions and words transcended the organization and their consistency insures a constant delivery of the company s uniqueness and value to its customers. The benefit of this individual driven BRM model is in its simplicity. Herb is Herb, his direct reports follow his lead, and their reports follow theirs, and so on. It s an approach that obviates the need for lots of method and planning. But it is also an approach that carries significant risk. What happens when Herb retires? Will the core values continue to be reinforced? Will the organization continue to deliver its uniqueness? Will employees feel the same excitement and commitment that they feel today?

3 To insure that the brand continues to thrive and offer value, most organizations should employ BRM as an employee driven, bottom up proposition. Energizing the entire organization in the process of reinforcing the brand will enable long lasting consistency of delivery and an ongoing dialogue of how to do it better. This bottom up approach to organizational alignment and BRM has four critical phases: Dissection, Dialogue, Distillation and Delivery. Dissection involves a categorization of all touch points that currently exist between a company and its constituencies. The categories are dimensions of any organization: physical, human, process and policy, programs, external communication, and internal communication. Think Disney World. The combination of their theme park s physical layout, their staff s service orientation, their orchestration of process and policies (so that the lines are just acceptable), how they promote their family magic, and how they encourage it internally, all of those dimensions add up to define the Disney brand. It is their orchestration, their alignment that makes the brand, and the experience, so powerful. These seven dimensions are the key touchpoint categories whether a company is a dot.com selling discount travel, or a Fortune 100 hawking genetically engineered corn. Effectively addressing each dimension is the opportunity and the challenge in Brand Relationship Management. Once categorized, there must be a first pass at prioritization, i.e. which touch points seem most ripe for enhancement against the core values? The prioritization criteria include: -Reasonable cost -Sustainability -Ease of implementation -Impact potential This early stage prioritization enables management to focus its conversation in the dialogue phase. Without it, the organization could spend inordinate time exploring touch points that cannot be enhanced or modified. It s a realism check that insures that the internal investments will likely yield a positive return.

4 Dialogue is the phase of engagement. Armed with an understanding of the core values and of the most likely touch point opportunities the BRM team can solicit the opinions and ideas of customers, suppliers, and other employees. This phase has multiple consequences. In addition to gaining insight on how to improve value delivery, it is an iterative means to getting emotional buy in to the current proposition and the future aspiration. The diversity of an organization s constituencies requires a range of dialogue tools. Radisson Hotels in its quest for brand dialogue and understanding has considered sending a recreational vehicle across the country visiting many of its 200 US hotels to solicit employees opinions and create excitement about the BRM opportunity. They might augment this road tour with an Intranet site with electronic bulletin boards and chat rooms for employees to talk with management and each other. And while the traditional in-room guest comment cards will continue, in the not too distant future Radisson customers should be able to go online and chat with Jay Witzel, Radisson s President. In truth the Dialogue stage should never end. Many of the mechanisms created to energize customers and employees should be maintained and the feedback continuously translated into ways to improve touch points or create new ones. Dialogue will validate the internal prioritization of touch points and provide fodder for enhancements. It will also result in too much information. The third phase of BRM then is Distillation, a final prioritization of where the organization should invest time and money to get the greatest incremental return. Distillation inevitably includes trade off discussions. Many of the opportune touch points will require process changes, changes that require a great deal of energy and follow through. Decisions will need to be made as to how management and employee time is best used against such initiatives. Distillation results in an explicit BRM plan that identifies the elements within each of the 7 organizational dimensions that will be impacted. It should also identify each element s shareholders and who within the company can serve as its champion. The final stage is Delivery. Delivery demands that in addition to assigning ownership, the organization must put in controls to insure that progress is being made in each area. Setting up specific milestones against each element s implementation is key, as is having overall success metrics for the endeavor as a whole. And that raises the question of what exactly are we measuring? Brand awareness? Brand perceptions? Brand consistency? As

5 with CRM, BRM is designed to deliver more value to customers and get more value from customers. So the metrics must be about value creation: looking specifically at the movement in what customers are willing to pay for our products or services, and their loyalty to our brands. Since few marketers enjoy complete price inelasticity, the willingness to pay will have an impact threshold. In other words, BRM s ability to perpetually increase willingness to pay will be limited by the availability of substitutes. Which suggests that the longer lasting measurement opportunity is in gauging the movement in loyalty, the customer s increasing commitment to the brand. Assessing a change in commitment involves looking at factors like consumption frequency, share of wallet (% of total category purchase), referral likelihood, and longevity. All are indicators of more value being created for the customer through Brand Relationship Management. The measure of how much more value we get from our customers for our investment in BRM is actually not worth undertaking. While there is increasing emphasis by companies on trying to gauge the return on their marketing investments, in the case of BRM that desire may be short-sighted. Because at the end of the day, BRM is not an option. For any firm to compete they must differentiate and deliver value, and they must do so in light of their core values: defining their brand in ways that are consistent with those core values, and then delivering on them across every dimension of their organization. The promise of Brand Relationship Management is its ability to create alignment, consistently deliver customer value, and reinforce that value at every point of contact. Realizing that promise is requisite to long-term survival and a lynchpin to profitable growth.