Culture Shock: How CRM can redefine your company’s view of its customers

(Dec 17 2009) CRM

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Technologies: Cloud Computing, CRM, CRM Blog, ERP, ERP Blog, Green IT, on-demand, SaaS, web-based

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  1. By Pam Baker

    In an apparent outbreak of mass delusion, companies everywhere commonly believe they know their customers well and their business even better. Indeed, some companies do have a handle on things – those are the ones with modernized CRM in place, optimized to the hilt with everything from predictive analytics to social media. Most companies, however, are in for a surprise when reality catches up to the status quo. 

     “Traditional CRM was something businesses did to their customers (one to one).   Now, social media has changed everything and CRM is becoming a process you do with your customers (many-to-many),” explains Sanjay Dholakia, CMO of Lithium Technologies.

     “Those companies who are investing and leading in transforming their business to take advantage of this new trend are seeing business results in the areas of innovation, sales and marketing promotion, and support,” adds Dholakia.

    Customer Check

     One example of a company successfully harnessing this new CRM trend: Whirlpool. The home appliance giant received a nasty jolt when it discovered through CRM alerts - many of which came via social media - that a new product had a hidden fault. Because of the early awareness, the company was able to address the issue at the manufacturing level within two days of the first notification by a customer.

    “The team identified the size and magnitude of the problem and determined complaints were coming from a specific geographic region,” said Fred Roth, director of cost leadership and business growth for Whirlpool Corporation. “Discovery of this issue was two months in advance of other quality analysis tools within Whirlpool.”

    Production volume was 20,000 units per day. Certain geographical locations would have experienced 100 percent failure if the problem had not been detected in time. Losses could have climbed into hundreds of thousands of dollars, but because Whirlpool was listening to its customers early in the game, sales were saved and losses were minimized.

    In Whirlpool’s case, as it is in so many other cases, the customer became an interactive intelligence component that helped steer the company to higher profits.

    Good News from Bad News

    “CRM systems can help companies increase profitability by either discovering new high-profit opportunities or by discovering profit-sinks,” says Curtis N. Bingham, founder of Chief Customer Officer Council and president of Predictive Consulting Group.

    Bingham tells of two cases where CRM dramatically changed the course of business for two separate companies:

    In the first instance, a small company had just begun its CRM efforts and the CEO was alarmed at the results.  “The printout he handed me had been furiously marked up, and it showed some very bad news,” says Bingham.  “Nearly 25 percent of his customers were unprofitable.”  This group of customers had negotiated very low prices for the company's software and monthly maintenance.  Yet they made up the bulk of the call-center volume, with one customer actually making as many as 35 calls per day. 

    Bingham says this kind of call volume clearly indicates three things: 


    1. The products needed immediate attention to prevent this kind of frustration,
    2. The support system was flawed if issues required so many multi-call resolutions, and
    3. There was a group of customers that upon further analysis were simply unprofitable and no maintenance fee was enough to support them. 

    “The immediate decision was made to begin helping these customers find new homes,” he said.  “In so doing, revenue dropped somewhat, but overall profitability skyrocketed.”

    In the second case, Bingham says a large financial services software company was considering lowering pricing in response to significant competitive pressure.  Without the insights and predictive capabilities of CRM, the company would have most certainly taken the profit hit.

    Instead, CRM identified a large segment of customers willing to pay more than they were currently paying.  “By looking at historical data, we determined there to be a very high likelihood they would accept a minor rate increase,” says Bingham.  “Through this analysis, the company generated an additional $26 million in annual incremental revenue.”

     The highly-focused view of your customers and your business via CRM may present a bit of a culture shock. However, the jolt almost always proves to be a more profitable redirect of your efforts.







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