Get Ready For Customer-Driven Loyalty-Based CMR!
by Ralph Harrison
Customer relationship management might be simply defined as the practice of getting, growing, and keeping customers. It comes in both offline and online models. It applies to virtually any industry, including the banking and financial services industry. And to this moment in its evolution, this fast-growing and meaningful technology designed to measure and anticipate customer behavior has come primarily in a format that is "company-driven" (driven by marketing action taken by the company) vs. "customer-driven" (driven by performance action taken by the customer).
But not anymore. There's a new and better answer to CRM about to enter the marketplace. Its benefits far outweigh those of company-driven technologies which will soon be rendered obsolete. It is "customer-driven" and "loyalty-based" and supported by new 21st century technology that heretofore was unavailable, but is now arriving just in time to serve the evolving customer economy. A new technology that employs a reverse sales strategy to solve the cultural marketing deficiencies of the banking industry by recognizing that "it's a lot easier and a lot less costly to teach customers to buy than it is to teach bankers to sell."
Why is customer-driven CMR better than company-driven CRM, especially when applied to the banking industry? Here are five primary reasons just for starters.
First, "company-driven" technology costs far too much to develop, implement, and maintain for the economic benefit delivered when compared to customer-driven marketing.
Second, although nearly all company-driven technologies promise they can get, grow, and keep customers, the last of these benefit claims (the "keep" part) is highly questionable and is the major misrepresentation in most company-driven benefit claims. While company-driven technologies are able to acquire and grow customers, in truth, they have no anchoring mechanism for retaining them once acquired. Accordingly, the whole company-driven marketing equation commonly becomes a very costly exercise in perpetual motion, especially when compared to the cost-efficient benefits of loyalty-based, customer-driven marketing that employs the power of lifetime engagement of the customer in the marketing promise to hold and build lifetime value at an affordable cost.
Third, customer-driven CMR acts as a complete low-cost customer-managed marketing system that encourages higher customer performance by recognizing and rewarding the lifetime needs and loyalty of all customers, not just the high-balance customers. A major flaw in current bank marketing strategy is that it fails to recognize that the one-relationship customer is the starting point for all customers. It is virtually impossible for any bank (without permanently damaging the franchise) to purge the 70% to 80% of its customers who are commonly defined as unprofitable and that actually represent the seed-bed for future profitability. By comparison, "company-driven technology" most commonly supports expensive short-term targeted marketing campaigns designed to meet the short-term needs of the company rather than the natural long-term needs of the customer.
Fourth, based on past experience and concept logic, it is believed that customer-driven CMR can materially accelerate customer usage and earlier profitability from new internet banking and account aggregation products currently looking for greater acceptance in the marketplace of today and tomorrow.
And fifth, a well-designed customer-driven marketing system can easily be tuned to simultaneously drive higher levels of employee loyalty, and solve many future "opt-in privacy" issues in advance, that most company-driven technologies will face down the road.
Perhaps Fred Reichheld, today's leading author on the subject of loyalty marketing and loyalty based economics, put it best in his 1996 Best Seller, The Loyalty Effect, when he said "If you want higher profits, don't aim for profit. Aim for loyalty." This simple, easy-to-understand phrase takes one out of the tired Old World of product marketing and into the fast-evolving New World of customer marketing.
So move over company-driven CRM. A whole new customer-driven relationship management model (CMR) is on the way with a new and better methodology. Financial services marketing will soon be a lot more affordable, a lot less complicated, a lot more productive, and a lot less risky to implement. A complete new 21st Century Marketing System (not just another data base marketing or CRM software) making it possible for the customer to do most of the work in exchange for lifetime recognition and reward for performance. A fair and just approach to marketing and customer management that marries common sense and human nature with 21st century technology to produce a better CMR answer for the 21st century financial service store.
Ralph Harrison is Managing Director of The Harrison Company, Aurora, CO, developer of the recently patented Loyalty Banking System and the Harrison Marketing Library, the only bank marketing library for the Internet and CD-ROM. Harrison has 25 years of marketing consulting experience in serving the banking and financial services industry with the past 15 years dedicated to building intellectual capital in the discipline of "customer-driven" loyalty-based marketing. He may be contacted through his web site at www.harrisoncompany.net or directly at ralph@harrisoncompany.net.
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