Being customer-centric is key for companies

What is customer management for you?

You could see customer management as the process of setting up, developing and nurturing relationships with your existing and/or potential new customers. Here, a customer-centric mindset is critical, which comes down to aligning your business with the needs of your most valuable customers. To do this, you need to develop a sound understanding of who these customers are (for example, what lifetime value do they represent?) and what they are looking for in their interactions with your company.

On the one hand, you need to think in terms of a long-term game here. How do I acquire customers? How do I retain and develop these customers? How do I prevent customers from churning away from my company? If they take their business elsewhere, can I try to think about win-back activities? On the other hand, companies also need to reflect on how they manage interactions with their customers in the moment. How do I set up touchpoints so that they deliver good experiences? How can I make the customer journey run smoothly and effectively? If something goes wrong (and it often goes wrong), how do I empathise with customers and, more importantly, fix the failure?

CRM is more than just software?

To me, customer relationship management, or CRM, is a management philosophy, much more than it is about any software or tech solution. To be sure, there are a lot of CRM tools and technologies available. But the central question in customer management is: how do I align my business with my best customers?

To me, software is just a tool. If you do not use tools with the right vision or understanding of what you want to achieve, their return will be very limited. Adopting new software and technologies for the sake of adoption, or because they are considered must-haves, is typically not the best way forward.

What is your area of expertise?

I have the great pleasure of teaching courses on the topics I research. My prime area of research relates to customer experience. What is it? How should we manage it? What are best practices here? I have a particular interest in the role and impact of new technologies, such as service robots.

Another research stream links to service recovery. How should you, as a company, recover from failures (think a missing order or product failure)? Lately, I have been particularly focused on recovering from failures in the digital environment, such as social media platforms. Here, recovery interactions happen while others are watching. This brings particular corporate challenges that need to be addressed with great care.

What tools students will learn to master?

On this course, I have my students work with Tableau and teach them to develop several important CRM data analyses: RFM matrices, customer cohort charts and the like. Students also learn to understand the basics of customer lifetime value calculations.

What is your teaching philosophy?

I try to combine academic research with a focus on the practical and strategic aspects of customer management. We often discuss recent real-life examples and try to connect these with the latest academic knowledge to shape our thinking and make sense of reality.

What is most important to me is seeing students being challenged to think at the ‘next level’. If we discuss certain cases or analyses, it is important to look beyond the obvious. Why is a certain pattern present? What additional questions should we be asking ourselves? For instance, while customer acquisition efforts may seem to pay off, we should not ignore the cost of acquisition and the long-term value of these customers. I try to get students to look at the broader picture.

In doing so, my goal is to sharpen their critical mindset and to make them ready to perform in their future careers as marketing consultants, analysts, etc. Being critical and asking the right questions in order to analyse a situation is of key importance.

How is customer management important to a career in marketing management?

The customer is central to any business. If you do not have customers, there is simply no business. So, customer management skills are critical for any marketer, if not any business professional, regardless of their functional area.

Today, customer experience management is actually very high on the agenda of many companies. A course on this topic is, therefore, pivotal in my view.

How important is the use of academic research in your course?

Well, the entire course is built on a solid foundation of academic work. Whatever topic we discuss in class, whatever best practice we put forth, all of these are evidence-based. For every session, I also try to make additional background materials available.

To give one example, I bring in work that relates to the TCQ framework, which is something I co-developed with several international colleagues. Here, we discuss the basics of customer experience and provide a tool for thinking about it in a very structured manner. I am currently developing this framework further with a US-based market research agency and I also immediately bring this into the classroom. In this way, I can also show how business practice, academic work and the classroom can feed into each other.

What is your must-read on CRM?

I would say the books of Peter Fader, a professor of marketing at Wharton Business School. He is one of the leading minds on customer centricity. He has co-authored three practitioner-focused books on the topic: The Customer-Base Audit: The First Step on the Journey to Customer Centricity; The Customer Centricity Playbook: Implement a Winning Strategy Driven by Customer Lifetime Value, and Customer Centricity: Focus on the Right Customers for Strategic Advantage. I also encourage people interested in customer management to follow Daniel McCarthy on social media channels such as LinkedIn or Twitter. He is a professor of Marketing at Emory University and often shares highly interesting work related to customer management. Both are also the driving forces behind Theta, a start-up focused on customer lifetime value models and customer-based corporate valuation.

What are the challenges in customer management moving forward?

They are numerous! Let me pick just a few. First, I would say customers are more and more difficult to satisfy. They are more informed than ever before and there is an abundance of choice. If one brand does not deliver, people go to another brand. So, there is a strong need to try to live up to customer expectations.

Second, technology is obviously changing the way customers interact with companies. They reach out to you through various channels (phone, email, chat, text messages, social media). And there is the expectation that anyone behind these channels is aware of what is going on, knows us and our contact history. So, companies must set up and integrate systems that enable them to interact with customers in a consistent manner.

Another challenge is how can we get technology to live up to its promise? Artificial intelligence-driven chatbots, for instance, seem to be stuck at a level where they deliver an ‘okay’ service, but struggle to move to ‘excellent’ interactions that can also deal with more complex customer requests.

Proving the return on investment of customer management activities is also critical. As marketers, we need to invest more in concretely demonstrating how we contribute to the financials of the company. The work of Peter Fader and Daniel McCarthy is a very good step toward this end. By using techniques that allow us to express the financial worth of the customer base, you have a lot more to bring to the table as a marketer. You also see that companies value this type of model – more and more companies embarking on an initial public offering provide concrete information on how their customer base is evolving, their lifetime value, churn rate and acquisition cost. This gives investors a much clearer view on how well a company is doing.

The core challenge, however, remains: how do I develop a customer-centric culture in my business? How can I be empathetic with my customers? As a company, how can I support customers in their life?

Why do customers buy our products? Usually, it is because these fit into their lives. Many companies focus on how they can be as efficient and cost effective as possible. But they forget to ask about the customer and their journey. In my view, things should be reversed. The question is not ‘How does a customer fit into our company journey?’, but ‘How do we, as a company, fit into the customer’s journey?’ If we make a decision, what does that mean for our customers and how can we make a difference for those customers?

Discover the MSc in Marketing Management