The Seven Myths of Customer Management

In this lively and readable book, the authors argue that in recent years far too much has been made of customer satisfaction, and that this has come at the expense of hard-edged consumerism. Whether or not "the customer is king," the first rule of business is to make money. Pragmatic and practical, the book destroys seven key myths about customer management that have gained almost folkloric status, and provides a step-by-step action plan for linking customer service with commercial goals.Die Kunden - sie sind der größte Aktivposten eines Unternehmens und die Hauptquelle für langfristige Wertschöpfung in einem Unternehmen. Doch anders als andere Aktivposten, verändern sich die Kunden permanent. Deshalb muss man besonders sorgsam mit ihnen umgehen, wenn man die Erträge, die sie dem Unternehmen bescheren, maximieren will.

"The Seven Myths of Customer Management" sagt Ihnen, wie erfolgreiches Customer Management aussieht.

Die Autoren kritisieren, dass dem Thema Kundenzufriedenheit und der Vorrangstellung des Kunden eine viel zu große Bedeutung beigemessen wurde, und zwar auf Kosten kompromissloser Kommerzialisierung.

Die meisten Unternehmen hätten bei ihrer übertriebenen Kundenorientiertheit vergessen, dass die oberste Geschäftsregel heisst, Geld zu verdienen.

Dieses pragmatische Buch räumt auf mit dem weit verbreiteten "Der Kunde ist König"-Klischee und zerstört die sieben Mythen des Customer Management, wie z.B. 'Die Kundenbindung ist der Schlüssel zu erhöhter Rentabilität' oder 'Kundenzufriedenheit führt zu Kundentreue' oder aber 'Wiederholungskäufe sind dasselbe wie Kundentreue'.

Es stellt einen Aktionsplan auf, der Schritt-für-Schritt erklärt, wie man Kundenorientierung und kommerzielle Ziele miteinander in Einklang bringt.

Ziel des Buches ist es, dass Unternehmen lernen, kundenorientiert zu sein, aber nicht kundengesteuert.

Figures ix

Acknowledgements xi

Introduction xii

1 The seven myths of customer management: Debunking some established wisdom 1

The dangers of customer leadership 1

What is really happening? 5

Myth 1: Customer retention is the key to increased profitability 6

Myth 2: Divesting unprofitable customers will increase profitability overall 9

Myth 3: Customer satisfaction leads to customer loyalty 12

Myth 4: Repeat purchase is the same as customer loyalty 15

Myth 5: Organizations should develop relationships with their customers 18

Myth 6: One-to-one marketing is the ultimate goal 21

Myth 7: Technology is the primary enabler of customer focus 25

A different approach 28

2 Testing the water: Understanding where you are today 29

Picking up customer signals 32

Business-to-business customers 36

What research does not tell you 39

New technology, new danger 42

Substituting benchmarking for thought 44

Ten ways to gain real customer insight 46

3 Look before you leap: Developing a customer-focused strategy 50

What is customer-focused strategy? 52

Strategy in context 55

Developing customer-focused strategy 58

Appraising the world outside 62

Seeking to be different 66

Leading on cost 69

Focusing on markets or customers 70

The customer lifecycle 73

Deciding and evaluating alternatives 77

Action planning 80

4 Measuring your way to success: Allocating resources for maximum effect 83

The failure of measurement 85

Customer attitude measures 86

Customer retention measures 87

Customer value measures 89

The failure of management information systems 93

Towards customer value 97

Customer value analysis in action 102

The pitfalls and problems 107

The benefits of value-based management 109

5 Don’t keep it too simple, stupid: The need for a segmented approach 111

Segment or die 113

Understanding customers’ needs and motivations 114

Collecting the data 120

From data to intelligence 120

From intelligence to hypothesis 126

From hypothesis to appraisal 130

From appraisal to strategy 131

From strategy to results 133

Pitfalls and problems 136

Segmentation: a postscript 138

6 Lining up the ducks: Aligning the company for customer focus 140

Aligning finance 142

Aligning product strategy 143

Aligning the proposition: from product to profit 146

Brand alignment 148

Aligning distribution 150

Aligning customer communication 152

Loyalty programmes 158

Alignment: a postscript 163

7 Are you the problem? The role of leadership in creating customer focus 164

Data-less decision making 166

Rearranging the deckchairs 168

The pitfalls of project teams 169

Best practice is sometimes best left alone 170

Incentivizing inappropriate behaviour 172

Technology turmoil 175

Everyone embraces change enthusiastically 179

Reorganizing for focus 183

Changing a light bulb 187

8 Bringing the focus alive: A practical action plan 188

An action plan for customer focus 190

Managing the customer focus process 190

The internal review 193

Customer dynamics and needs 195

Segment objectives and propositions 198

Customer-management objectives, strategy and tactics 200

Channel strategies and implementation 207

Testing and performance measurement 208

Customer and market knowledge management 211

Change planning 213

Technology strategy 214

Index 218

"…is a stimulating canter through some marketing mantras, dismantling them fairly and frankly before suggesting alternatives…" (Marketing, 16 October 2003)

“… iconoclastic…” (Admap, February 04)

"...The myths put CRM into perspective, explaining what to use and what to discard." (Brand Strategy, September 2006)

John Abram began his career selling industrial textiles to major customers in industries as diverse as mining, water treatment and pollution control. He was promoted to head the firm’s business development functions in the UK, where he was responsible for introducing one of the earliest examples of automated customer management systems used in the UK.

He was recruited by American Express in 1978 and appointed Marketing Manager, with responsibility for Cardmember recruitment and retention, as well as cross-sales of complementary products and services.

In 1981, backed by a leading publishing firm, he started his own business promoting a range of products and services to entrepreneurs and business managers. In 1984, he bought out his original backers and took the business on to become a significant innovator in the promotion of investment products by phone and post, being the first in the country to sell personal pension plans direct to consumers.

Paul Hawkes joined American Express Card Division in 1975 and subsequently became Marketing Manager for the merchant network in the UK and Ireland. In 1979, he moved to Time-Life Books and was promoted to become European Marketing Vice President, responsible for mail order and retail marketing and sales, new product development and co-publishing relationships across 14 countries within Europe and Africa.

He was a director of the British Direct Marketing Association and a Council Member of both the Association of Mail Order Publishers and the Mail Order Publishers’ Authority; and is a Fellow of the Chartered Institute of Marketing. He is now a director of the Virtual Partnership Ltd.

John and Paul co-founded Abram, Hawkes plc in January 1987, the UK’s foremost consultancy specialising in marketing and customer management; or, more simply, advising and assisting organisations on how to grow revenues and build customer profitability. They sold the company at the beginning of 2000 to Valoris, a major European consulting firm.

The Seven Myths of Customer Management is about developing customer focus. It is not about being ‘nice’ to customers; it is about creating a sustainable and profitable business. This book argues that far too much has been made of customer satisfaction and the primacy of the consumer, far too little about balancing customer orientation with sharp-edged commercialism.

Written in a lively and readable style, The Seven Myths of Customer Management uses anecdotes and charts to illustrate practical and pragmatic advice on how to become more customer focused—the essential balance between the twin evils of customer- or company orientation.

The book begins by dispelling seven myths that have achieved almost folkloric status.

It then moves on to discuss how to achieve true customer understanding, calculate their value and manage them profitably—in the real world! It shows how to align the whole organisation behind common, customer-focused commercial goals; and highlights the reasons why so many companies are failing to achieve their latent customer value. Finally, it provides a step-by-step action plan describing how to put the pieces together, including what needs to be done, when and why.

The Seven Myths of Customer Management is for anybody who deals with customers or is responsible for corporate profitability. It is for everybody who is inquisitive and wonders whether there is a different and more successful path...