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CRM 1.0 is dead, long live CRM 2.0
In light of the current challenging times, aspiring to grow might sound very cynical. The questions is: is there any choice? Is the option of not focusing on growth plausible at all?
When we consider that the opposite of growth is decay, then suddenly the prospect of not growing sounds very unappealing. So, the best way to survive these challenging times is to focus on growth!
One of the growth ‘miracle tools’ promoted in the past decades was CRM (now referred to as CRM 1.0). Despite of the exhilarating promises made, we know today that CRM produced a lot of hype and tons of data, yet little or no insight into the relationship or engagement of the customer.
The problem with CRM 1.0 is that it has not much to do with ‘relationship’ in the first place. At best, it can be described as a sophisticated Customer Data Management system.
How can companies define a ‘relationship’ with its customers solely on the socio-demographic and behavioral information about its customers, unilaterally? Since when is ‘knowing a lot about someone’ the definition of a relationship? In marketing this is called CRM, in the real world this is called ‘stalking’.
Isn’t a relationship by definition bilateral? No wonder that in the end CRM became ‘the emperor’s clothes’ of marketing.
Now, the business principles driving CRM implementation were not wrong. If you want to grow, your best multipliable assets are your customers. However, the key to unlocking this growth potential is understanding how your customers rate the quality of their relationship with your brand/company. And what you need to do to improve and strengthen that relationship. This is the fundamental difference between CRM 1.0 and CRM 2.O.
It’s not about the information companies have about their customers. Rather about the information customers give about a company. It is the customers who define the quality of this relationship and not the company.
A qualitative customer relationship has many benefits for a company or brand. According to research done by Susan Fournier (The Brand Relationship Model, Fournier 1998), a strong brand relationship will deliver the following benefits:
• Accommodation – Customers feel comfortable within their choice of brands
• Tolerance/forgiveness – In case of errors made by a brand, customers will be patient
• Biased Partner perception – Negative opinions about the brand are dismissed
• Devaluation of alternatives – All other brands are considered less valuable
• Attribution Biases – Brands are attributed higher qualities than usual
All these brand benefits are crucial for your growth, especially in the current times. On top of that, a strong customer relationship has a strong leverage effect, by turning customers into fans and endorsers of your brand.