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Managing Customer Experience and Relationships: A Strategic Framework, 3rd Edition

ISBN: 978-1-119-23625-2
624 pages
November 2016
Managing Customer Experience and Relationships: A Strategic Framework, 3rd Edition (1119236258) cover image

Description

Boost profits, margins, and customer loyalty with more effective CRM strategy

Managing Customer Experience and Relationships, Third Edition positions the customer as central to long-term strategy, and provides essential guidance toward optimizing that relationship for the long haul. By gaining a deep understanding of this critical dynamic, you'll become better able to build and manage the customer base that drives revenue and generates higher margins. A practical framework for implementing the IDIC model merges theory, case studies, and strategic analysis to provide a ready blueprint for execution, and in-depth discussion of communication, metrics, analytics, and more allows you to optimize the relationship on both sides of the table. This new third edition includes updated examples, case studies, and references, alongside insightful contributions from global industry leaders to give you a well-rounded, broadly-applicable knowledge base and a more effective CRM strategy. Ancillary materials include a sample syllabus, PowerPoints, chapter questions, and a test bank, facilitating use in any classroom or training session.

The increased reliance on customer relationship management has revealed a strong need for knowledgeable practitioners who can deploy effective initiatives. This book provides a robust foundation in CRM principles and practices, to help any business achieve higher customer satisfaction.

  • Understand the fundamental principles of the customer relationship
  • Implement the IDIC model to improve CRM ROI
  • Identify essential metrics for CRM evaluation and optimization
  • Increase customer loyalty to drive profits and boost margins

Sustainable success comes from the customer. If your company is to meet performance and profitability goals, effective customer relationship management is the biggest weapon in your arsenal—but it must be used appropriately. Managing Customer Experience and Relationships, Third Edition provides the information, practical framework, and expert insight you need to implement winning CRM strategy.

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Table of Contents

Foreword by Phil Kotler xiii

Preface xvii

Acknowledgments xxi

About the Authors xxiii

PART I PRINCIPLES OF MANAGING CUSTOMER EXPERIENCE AND RELATIONSHIPS 1

CHAPTER 1 Evolution of Relationships with Customers and Strategic Customer Experiences 3

Roots of Customer Relationships and Experience 5

Traditional Marketing Redux 11

What Is a Relationship? Is That Different from Customer Experience? 20

Who Is the Customer? 21

How to Think about Customer Experience 22

Return on Customer: Measuring the Efficiency with Which Customers Create Value 25

The Technology Revolution and the Customer Revolution 28

Royal Bank of Canada’s 16 Million Loyal Customers 30

The ROI of Building Customer Relationships in Financial Services 34

Summary 38

Food for Thought 39

Glossary 39

CHAPTER 2 The Thinking behind Customer Relationships That Leads to Good Experiences 43

Why Do Companies Work at Being “Customer-Centric”? 44

What Characterizes a Relationship? 46

Continuing Roles for Mass Media and Branding 46

Characteristics of a Genuine Business Relationship 47

Building Genuine Customer Connections: A Framework for

Understanding Customer Relationships (James G. Barnes) 50

Customer Loyalty: Is It an Attitude? Or a Behavior? 61

Loyalty Programs 63

Summary 66

Food for Thought 67

Glossary 67

PART II IDIC IMPLEMENTATION PROCESS: A MODEL FOR MANAGING CUSTOMER RELATIONSHIPS AND IMPROVING CUSTOMER EXPERIENCES 71

CHAPTER 3 Customer Relationships: Basic Building Blocks of IDIC and Trust 73

Trust and Relationships Happen in Unison 74

IDIC: Four Implementation Tasks for Creating and Managing Customer Experiences and Relationships 79

How Does Trust Characterize a Learning Relationship? 82

The Speed of Trust (Stephen M. R. Covey) 82

The Trust Equation: Generating Customer Trust (Charles H. Green) 85

Becoming More and More Trustable to Customers 92

The Age of Transparency (Dov Seidman) 96

Basic Principles of Twenty-First-Century Trustability 101

Do Things Right and Do the Right Thing 102

Be Proactive 103

The Man with the Folding Chair 106

Relationships Require Information, but Information Comes Only with Trust 108

Scenario: Governments Develop Learning Relationships with “Citizen-Customers” 111

Summary 116

Food for Thought 116

Glossary 117

CHAPTER 4 Identifying Customers 119

Individual Information Requires Customer Recognition 120

The Real Objective of Loyalty Programs and Frequency Marketing Plans 124

What Does Identify Mean? 129

Customer Data Revolution 133

The Role of the “Internet of Things” and Smart Products in Managing Relationships with Customers 138

Summary 139

Food for Thought 139

Glossary 140

CHAPTER 5 Differentiating Customers: Some Customers Are Worth More Than Others 143

Customer Value Is a Future-Oriented Variable 145

Assessing a Customer’s Potential Value 158

Different Customers Have Different Values 159

Pareto Principle and Power-Law Distributions 160

Customer Referral Value 165

Is It Fair to “Fire” Unprofitable Customers? 170

Dealing with Tough Customers 171

Canada Post Customer Value Management Program: Using Value to Differentiate Customer Relationships (Janet LeBlanc) 179

Summary 182

Food for Thought 183

Glossary 184

CHAPTER 6 Differentiating Customers by Their Needs 187

Definitions 188

Demographics Do Not Reveal Needs 191

Differentiating Customers by Need: An Illustration 192

Scenario: Financial Services 193

Understanding Customer Behaviors and Needs 194

Needs May Not Be Rational, but Everybody Has Them 196

Why Doesn’t Every Company Already Differentiate Its Customers by Needs? 197

Categorizing Customers by Their Needs 198

Understanding Needs 200

Community Knowledge 202

Using Needs Differentiation to Build Customer Value 206

Scenario: Universities Differentiate Students’ Needs 208

Summary 212

Food for Thought 213

Glossary 213

CHAPTER 7 Interacting with Customers: Customer Collaboration Strategy 217

Dialogue Requirements 219

Implicit and Explicit Bargains 220

Do Consumers Really Want One-to-One Marketing? 222

Two-Way, Addressable Media: A Sampling 223

Technology of Interaction Requires Integrating across the Entire Enterprise 226

Managing Customer Experiences by Taking the Customer’s Perspective (Mounir Ariss) 229

Customer Dialogue: A Unique and Valuable Asset 234

Customizing Online Communication (Tom Spitale) 236

Not All Interactions Qualify as “Dialogue” 239

When the Best Contact Is No Contact (Bill Price and David Jaffe) 240

Contact Centers Take a New Approach to Customer Interactions (Elizabeth Glagowski) 243

Cost Efficiency and Effectiveness of Customer Interaction 244

Complaining Customers: Hidden Assets? 245

Summary 248

Food for Thought 248

Glossary 249

CHAPTER 8 Customer Insight, Dialogue, and Social Media 253

The Dollars and Sense of Social Media 254

Listening to Customers 260

The Importance of Listening and Social Media (Becky Carroll) 261

Crowd Service: Customers Helping Other Customers (Dr. Natalie L. Petouhoff) 267

Age of Transparency 277

As Interactions Multiply, Trust Becomes More Important 277

Influencing the Influencers 283

Summary 286

Food for Thought 286

Glossary 287

CHAPTER 9 Privacy and Customer Feedback 289

The Trust Advantage of Robust Data Stewardship (John Rose) 294

Individual Privacy and Data Protection (Larry A. Ponemon, Ph.D.) 303

Privacy in Europe Is a Different World 306

European Organization for Economic Cooperation and Development Privacy Guidelines 307

Privacy Pledges Build Enterprise Trust 310

10 Points to Consider in Developing a Company’s Privacy Pledge 313

Submitting Data Online 314

Universal ID 317

Summary 318

Food for Thought 318

Glossary 318

CHAPTER 10 The Payoff of IDIC: Using Mass Customization to Build Learning Relationships 321

How Can Customization Be Profi table? 322

Demand Chain and Supply Chain 325

Technology Accelerates Mass Customization 331

Customization of Standardized Products and Services 333

Value Streams 337

Bentley Systems Creates Value Streams 338

A Quick Primer on Business Rules (Bruce Kasanoff) 342

Culture Rules 346

Summary 349

Food for Thought 350

Glossary 350

PART III MEASURING AND MANAGING TO BUILD CUSTOMER VALUE 355

CHAPTER 11 Optimizing around the Customer: Measuring the Success of Customer-Based Initiatives and the Customer-Centric Organization 357

Customer Equity 364

What Is the Value Today of a Customer You Don’t Yet Have? 373

Customer Loyalty and Customer Equity 376

Return on Customer 380

Return on Customer = Total Shareholder Return 384

Measuring, Analyzing, and Utilizing Return on Customer 389

Leading Indicators of LTV Change 393

Stats and the Single Customer 401

Maximize Long-Term Value and Hit Short-Term Targets 402

Summary 409

Food for Thought 410

Glossary 410

CHAPTER 12 Using Customer Analytics to Build the Success of the Customer-Strategy Enterprise 413

Verizon Wireless Uses Analytics to Predict and Reduce Churn 415

CRM in the Cloud 417

Customer Intelligence in the Era of Data-Driven Marketing (Jim Goodnight) 424

Boosting Profits by Up-Selling in Firebrand Real Estate Developers 431

Looking for the Right Time to Sell a Mortgage Loan 439

Summary 443

Food for Thought 444

Glossary 445

CHAPTER 13 Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 1 447

Customer Experience: What, Why, and How (Alan Pennington) 449

How Do We Fix Service? (Bill Price and David Jaffe) 460

Improving Customer Service at an Online Financial Services Firm 464

Customers, Customer Service, and the Customer Experience (Christopher J. Zane) 467

Relationship Governance 470

Understanding Customer Experience through Customer Journey Mapping (Valerie Peck) 476

Customer Experience Capabilities and Competencies Compared to Financial Performance (Jeff Gilleland) 502

Summary 507

Food for Thought 507

Glossary 508

CHAPTER 14 Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 2: Transitioning from Traditional Business to Customer Centricity 513

Becoming a Customer-Strategy Organization (Marijo Puleo, Ph.D.) 514

Pilot Projects and Incremental Change 519

Picket Fence Strategy 521

Segment Management 523

Customer Portfolio Management 524

Transition across the Enterprise 525

Using Up Customers 528

Transformation from Product Centricity to Customer Centricity 531

Transition Process for Other Key Enterprise Areas 533

Managing Employees in the Customer-Strategy Enterprise 540

The Everyday Leader (Marilyn Carlson Nelson) 544

Summary 546

Food for Thought 547

Glossary 548

CHAPTER 15 Futureproofing the Customer-Centric Organization 553

Leadership Behavior of Customer Relationship Managers 554

Maintain and Increase the Trust of Customers 556

Reciprocity in Action 559

JetBlue Builds Trust into Its DNA 560

Summary 575

Food for Thought 576

Name Index 577

Term Index 585

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Author Information

DON PEPPERS is founder emeritus of Peppers & Rogers Group, and LinkedIn's most authoritative Influencer on the topic of "customer experience," with more than a quarter million followers.

MARTHA ROGERS, PH.D., is founder emerita of Peppers & Rogers Group, and has served as adjunct professor and Director of the Relationship Management Center at Duke University. She now heads Trustability Metrix.

Peppers and Rogers have published eight bestselling books together, including Return on Customer, Rules to Break and Laws to Follow, and The One-to-One Future. Their most recent book is the revised and updated paperback edition of Extreme Trust.

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