IMV27 : Customer Relationship Management

The following is a transcript for IMV27 : Customer Relationship Management. The original podcast is located here.

Announcer:

Welcome to the Internet Marketing Voodoo podcast brought to you by MindComet. And now, here's your host, Ted Murphy.

Ted Murphy:

Welcome to Internet Marketing Voodoo Episode 27. I’m your host Ted Murphy and with me today is Art Hall, VP of sales and customer care at NetBank and also president of the Customer Relationship Management Association. Welcome to the show today Art.

Art Hall:

Hey thanks Ted. Appreciate it.

Ted Murphy:

Art, I know a little bit about NetBank and I was privileged enough to see a presentation you gave not too long ago. But for those people out there who aren’t familiar, could you start off by telling us a little about NetBank and specifically your focus on customer relationship management?

Art Hall:

NetBank was one of the first Internet only banks that was started in the mid 1990s. Actually we opened our virtual doors in February of 1996. And for seven years, NetBank was just a fully diversified retail bank, and we operate exclusively over the Internet. So, in other words, we’re saying that it’s all clicks and no bricks. And in 2003, we merged with a couple of mortgage companies so not only do we offer an array of retail products and services, but we also offer small business banking products and services, we offer conforming and non-conforming mortgages, we also do auto lending as well as commercial leasing. And I’ve been with NetBank for six years, I run the retail bank sales and contact center delivery channel for NetBank.

Ted Murphy:

And you’re also president of the CRMA?

Art Hall:

Yeah. The CRM Association, or CRMA is actually a industry trade association that has a national presence. The group was actually founded in Atlanta in 2000. We have chapters in Atlanta, Philadelphia, Minneapolis, Seattle, San Diego, Washington DC, and the group primarily focuses on real-world cases or best practices for CRM. And our primary audience targets both practitioners, solution providers as well as consultants in the space.

Ted Murphy:

Customer loyalty and satisfaction are big components of what you focus on. From a marketer’s standpoint of view, how do you measure those components? How do you measure whether customers are satisfied with the experience that they’re receiving online?

Art Hall:

Well, from a NetBank perspective, we do a couple of things to obtain that customer intelligence. First of all, we survey our customers every month and we survey them through our email channel as well as through our call center. If a customer comes through the call center, they have the opportunity to give feedback on the brand, give feedback on the company, as well as the associate that they had an interaction with. And we ask our consumers a number of different questions to assess not only are they satisfied with the organization, with the brand, but would they recommend us to a friend or family member, which I believe is one measurement that is really crucial in measuring loyalty.

I think the other one is that we look at whether or not they would buy additional products or services from us, so a corporate measurement that we have in place is called services per customer or products per household. And that ratio gives the organization a good indication of whether or not we’re delivering on our brand promises and value proposition to our customers. And as a result of that, if it’s translating into additional products or services with us, so are we taking a consumer with one product and making them a multi-product transactional type of customer with our bank?

So we capture the information from our customers from a variety of different mediums; we take that information seriously. At NetBank we believe that it’s not enough just to ask or solicit customers for that information and then put it on the shelf for it to collect dust. We actually have to do something with it if we’re really going to prove to be a customer-centric organization. Now we’re not totally there, and there’s pieces of our business that we still need to get in line. But we have a commitment from the top down, from our CEO all the way down, to actually execute on the value proposition and be a company where we have the customer’s best interest at heart. And it starts by capturing that type of information from our customers, interpreting what that means, and then developing quality improvement projects to actually deliver on that value proposition. So that customers actually would start to become evangelists and start to promote our company in sort of a viral marketing type of effect, and that would translate into additional products and services sold on behalf of the customer.

Ted Murphy:

You mentioned a variety of different ways of collecting that information. What do you find is the most valuable tool? Is that through the telephone? Is it online? Where do you get the most feedback from?

Art Hall:

You know I think that the most valuable tool in my opinion is the evolution of blogs. I think that customers are talking about you whether an organization realizes it or not. And if an organization could create some sort of online community, where to obtain that voice of the customer feedback, be it good or bad, I think that blogs is one avenue, well one channel where an organization can learn a lot about its customers, can learn about its competitors, can learn what customers are thinking, learn negative experience from customers, and take that intelligence and actually either create proactive communication back to the customer via blog or take that information and actually totally revolutionize the product and service creation. Revolutionize research and development for an organization and really put an organization on the forefront of being concerned about their customer.

I think if you ask me, that’s probably the definition of customer authenticity, is allowing customers co-development or co-creation in the product and services area or just giving them an avenue to either give feedback to an organization about what they’re doing right and what they’re doing wrong and having the integrity of an organization to take that information and actually respond to what customers are talking about.

So I think that blogs is one way that can happen. NetBank has toyed around with that idea; I think we’re still vetting out whether or not that’s something that we should get into, but from a revolutionary perspective or an evolutionary perspective, I think blogs is one way to really capture that type of information.

Ted Murphy:

So what type of information should you be looking to capture in your CRM? If you’re building a customer profile, what are you finding is the most relevant information to have in that profile, and what helps you push people through that sales funnel and eventually get that first sale and then more importantly get those additional products and services that you added providing the full value to the customer?

Art Hall:

Yeah, I think the way I would answer it, is by stating some foundational things. I think first of all, for so long at least the past decade, that CRM was always analogous with Siebel, now Oracle, but I think the point is that every time a person mentioned the name CRM, they always thought about the operational components of CRM. The system that contained the customer data. And another piece is that every time you think about CRM, people most always talk about it from a three prong perspective, of people, process, and technology. And CRM is not Oracle or Microsoft or any of the leading solution providers out there that provide some sort of platform to manage customer information.

And yes, CRM is the people, process, and technology three pronged approach, but CRM is actually more than that. It’s actually the fourth prong, which no one really talks about, which is the business strategy to manage an end to end customer relationship through a company value proposition from the outside in. From the customer’s perspective in. And most organizations are starting CRM from the inside out, you know, what bells and whistles do we need to provide a three hundred and sixty degree view of our customers to marketing, sales, and service. For example, so when you ask what type of information should be in a CRM system to create greater marketing messages, to serve up relevant and bold marketing messages, to enable sales and to generate service? I think things like technographic, ethnographic, and demographic information I think is critical. Trying to understand consumer’s preferences, what channels do they use? How they want to be marketed? What are their lifestyles? And then based on that, creating not just consumer segments, but consumer personas, and using those personas to create relevant marketing messages and then products and services to appeal to that particular persona, because all consumers are not created equal.

And every consumer, regardless of their segment, have different motivations or different propensities for making purchases. And while segmentation is excellent, I think that there’s a lot of sophistication and profiling and targeting and segmenting, but one trap is that we can actually generalize a segment even though that there are still different types of perceptions and attitudes and motivations within a segment. So for a marketer or from anyone that’s involved in CRM, trying to drill down to personas and understanding lifestyle behaviors and propensities for purchasing decisions and channel preferences and likes and dislikes is really the holy grail of really organizing a company to be customercentric, or customer authentic. Another word, a company, in every interaction or every decision they’re going to make on behalf of the customer, they’re asking themselves the question, “What’s in the best interest of this targeted market?” or “What’s in the best interest of this consumer base that we’re serving?” And using that as the foundation to create marketing messages and marketing strategies and sales messages and sales strategy and service execution, I think that piece of information has to be tapped into and integrated into both the operational CRM applications as well as the analytical CRM applications in order to really slice and dice and really understand how a particular target market segment is interacting with a company as well as it’s competitor.

Ted Murphy:

Well I think a lot of those things that you’re talking about are obviously some huge fundamental changes inside of an organization. You’re talking about trying to steer a giant ship and getting that to all move in the same direction, and how do you deal with getting the internal momentum and fostering that customercentric ideal inside of the organization, getting everybody pulling on the same oar?

Art Hall:

Yeah, I think there’s several things that any organization needs to consider. First it always starts at the top. If you don’t have a CEO buy-in, and not buy-in to CRM as a project, but buy-in to CRM as a strategy, as a way of life, as a culture, then there will always be disconnects in any organization looking to approach CRM. When we were in Boston together on a cab ride back to the airport, a young lady I was sitting next to said, “Every time I’ve thought about CRM, I’ve always thought about the application.” And again, it’s not the application, it’s really about culture, it’s really about strategy, it’s really about philosophy. You’ve got to live and breathe it. You don’t want to lip sync it, you don’t want to do business karaoke, you’ve actually got to execute it. So if you have a CEO that buys into that philosophy, that strategy, then it makes it much easier for the rest of the organization downstream to gravitate around that.

I think the second thing is that you need constant communication and that constant communication can come through a variety of venues. If a corporation uses blogs internally to share thoughts from the CEO, almost like a fireside chat with a CEO and communicate that out to the organization, I think that’s one way. Emails, intranets, town hall meetings, whatever the different communication venues are that an organization employs, constant communication about the strategy; about why to organization is doing it, and emphasizing that it’s not only to shareholders, why an organization’s in business, but without customers, an organization would not be in business is really critical.

I think the third thing is you’ve got to look for quick hits, that’s the way that you get buy-in from a CFO or CMO or the rest of the organization is that you don’t want to boil the ocean with a CRM initiative, but looking at quality improvement areas where that can provide a quick ROI to any organization is another way to drive that within an organization; get everyone to rally behind it.

And I think the last thing, and probably the most important thing, is budget. Tying budget to strategy. And most organizations don’t tie their budgets to strategy and then making sure that people within the organization are not just organizing around a cost center, but are organizing around a customer. And then that customer strategy is tied into budget, it’s another way that that actually drives that viral effect within any organization.

So I think those four things are not exhaustive, but I think those are four critical elements that any organization could consider driving CRM down in their organization.

Ted Murphy:

Well you hit on budget really quickly there, and I think that that is a major sticking point for a lot of organizations. What type of budget should a mid-size company be looking at in terms of implementing the hardware and software required along with the actual human resources to commit to implementing a CRM project?

Art Hall:

Well I think that you need to look at several different components. On the marketing side, you’d certainly need to look at the effectiveness of the campaigns that are coming out and what type of return on investment those campaigns are bringing back. Same thing on the advertising and the promotions side. On the sales and service side, you need to look at how well that you can decrease staff, increase revenue. Some softer things, and I hate to use the word soft on the things that I’m about to mention because there are some CRM proponents that could advocate, and I would advocate it too, that these issues are not soft, but they’re actually hard dollar savings, or hard dollar revenues, such as increase customer satisfaction or increase customer engagement. Those types of things should be considered an ROI model.

The one thing around budgets for CRM practitioners, particularly in the small to mid-size is that there’s different pricing models for CRM applications today. There’s a new model called Hosted CRM, where it provides a lower total cost of ownership to any organization because the CRM application is actually hosted by the provider, not within the organization. So that provides an immediate lift for organizations considering budgeting for CRM initiatives because there’s not much capital outlay that an organization has to do, since it’s actually managed by a third party or by the supplier that’s providing the CRM application.

And then there’s also another concept called Software as a Service, or SaaS, that provides CRM licensing on a subscription basis. So, you use the CRM as a pay as you go type of service. And again, any small to mid-size business that’s having challenges with capital outlays could look to either a hosted model or a subscription based model as a way to justify a CRM application. Of course, this is the operational side of CRM, and get all the bells and whistles then from a large scale CRM application. And I think that hosted CRM and Software as a Service both provide some immediate lifts for organizations that are maybe strapped for capital.

Ted Murphy:

And what are we talking about to get into one of those systems?

Art Hall:

Really not much. It all depends on what an organization’s volume is in terms of consumers that they serve. I mean you can probably get a hosted CRM application for less than five hundred thousand dollars in some cases. Large scale implementations can run in the millions. Four, five, six, even more than that. But some CRM providers can provide a hosted solution for less than five hundred thousand dollars, really, really low.

Ted Murphy:

And you talk a lot about marketing and the return on investment from a marketing standpoint. What are you guys doing at NetBank in terms of using your CRM system to drive your marketing efforts? And are there any specific results or case studies that you can share with us in terms of the uplift that you’ve been able to get as a result of integration with your CRM system?

Art Hall:

Yeah. From a marketing perspective, we have segmented our customers from three general segments to very granular segments, and we customize our messages to make them more relevant to our customers, and that’s always a iterative and continuous process. We use our CRM application epiphanies, our CRM that generates our campaigns for us, and we push those messages out to customers and we also have indication if a customer has been served up a marketing message through one channel and they call in to customer service for example. If that consumer has actually accepted an offer, we won’t ask their offer through the service channel or if they decline that offer, we won’t ask them through the service channel. And we’ve seen one instance between January of ’05 to now, about a hundred and seven percent ROI effectiveness in those type of CRM marketing and service related campaigns that we sent out to our customers.

And of course, there’s still things that we tweak. There’s some campaigns that work for us; there’s some campaigns that don’t. But on the average for the past eighteen months, we’ve seen a positive ROI in the majority of our campaigns and we continue to refine our data opines and logic to create more customized, personalized, and relevant messages in order to avoid the fragmentation that some of our customers are seeing from irrelevant marketing messages as well as to improve the reach that we’re trying to connect with our customers. Considering that we don’t have any physical infrastructures from a small business and a retail banking perspective, trying to improve that reach and really put a personality with a company that operates exclusively online for the past ten years, it’s really critical for us in order to create that emotional engagement with the customers that we serve.

Ted Murphy:

So what would you say are the top three core components to implementing a successful CRM strategy?

Art Hall:

I think number one, the recognition that customers are a company’s scarcest resource, so you’ve got to start with the customer in mind first. I think second you have to have CEO buy-in. And then the third, I think it’s open communication slash focusing on quick wins. I think those three components in my book are the critical success factors for any CRM engagement.

Ted Murphy:

Well Art, it’s been a pleasure having you on the show today, and if people want more information on NetBank or want to sign up as a customer, they can go to NetBank.com. Would you share the URL as well for the CRMA?

Art Hall:

Oh yeah. The URL is www.CRMAssociation.org.

Ted Murphy:

Great. Well we wish you luck with all your efforts at NetBank and also at the CRMA.

Art Hall:

Thank you Ted, I appreciate it.

Announcer:

For more information on this week's topic, visit http://www.InternetMarketingVoodoo.com. This podcast has been brought to you by MindComet, the Relationship Agency.

[End of Audio]

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