Is CRM just linked to
Customer Centricity?

"Through the last 12 months of research and learning about CRM and how it impacts people, I found a lot of reference to Customer Centricity. I found there were many different definitions for what CRM is, however there seemed to be a common theme that you had to be Customer Centric in order to practice CRM successfully. After some thought, it became obvious I fundamentally disagreed with this. Surely there are people and businesses out there who practice CRM successfully that do not subscribe to the Customer Centric approach" Dion Davidson, formerly of SRD Group Ltd.

For this question let’s look at 3 common descriptors for a business strategy. Product Focused, Customer Focused and Customer Centric.

Product Focused

This is where a business designs a product and then goes about finding a market that will buy it. The needs of customers are not considered. It’s assumed there will be a market for this great product the business manufactures. Time is spent collecting market information, including customer specifics, with intent to ‘target’ markets that would most likely purchase the product.

All the process and structure of the business is set up with an internal product focus. The idea is "the better we can make and deliver our products – the more people will buy them." The business therefore spends its time making the products better – by internal measures - while searching for a market that finds the product desirable. When a sales person approaches customers, the focus is strongly on "I’ve got this great product – you should buy it!" Customer retention strategy is focused on product related improvements.

The business focuses its energy on its own objectives.

Customer Focused

A business is Customer Focused when it is ‘customer needs’ oriented. This type of business identifies what the needs are of customers and then designs a product to best suit those needs. There is a strong drive to get to know customers so their issues, obstacles, market forces, competitive pressures and business objectives are understood.

The process and structures of the business are set up to facilitate satisfying the needs of customers rather than just the needs of the business. Sales people spend their time understanding the core needs of customers "What problems are you facing and how are these impacting your business?" The customer retention strategy is built upon anticipating the customers’ future needs and being close enough to the customer to be able to identify these needs more accurately and earlier than the competition.

The business focuses its energy on their customers’ objectives.

Customer Centric

These businesses are not only Customer Focused, they have intimately involved customers in their business. Customers are continually consulted about improving the business to best suit customers’ needs. There must be a high level of communication and trust. In order for this level of trust to survive, information about customers and their needs, markets, issues etc are collected to ensure the most appropriate customers are listened to and involved.

Customer Centric businesses have their customers at the centre of all they do. The business processes and structures have been set up either involving customers (customers helped design these) or customers are integral to them. Customers are able to access process, structure and/or information that resides in the business. Customers become ‘part of the business’. Customer retention is facilitated through providing more measurable intrinsic value than the competition.

The business focuses its energy on the ability to involve customers in their business through information management, communication and customer valued continuous improvement.

Do These Businesses Practice CRM?

If we agree CRM (Customer Relationship Management) is a business system that facilitates the understanding of the types of relationships a business has with its customers and with people collecting customer, market and operational related data in order to measure and manage those relationships, with the ultimate intent to be more successful, then all 3 of the business strategies above may (and probably do) practice some form of CRM.

With Product Focused businesses, it’s most likely successful sales and/or marketing staff practice a form of CRM. The successful sales people for example, probably practice personal CRM to build and manage relationships with individual customers. They would also be collecting market information for the business to be able to segment markets and target the most appropriate customers.

With Customer Focused businesses, a greater ratio of staff would be practicing CRM. Included would be sales, marketing, perhaps service and most likely management. This is all to do with building relationships so staff can get ‘closer’ to customers. A complex array of contacts with customers is desirable. This would enable earlier and more accurate identification of the customers needs, as discussed, at various levels within the customers business. Customer information is collected and stored to be able to understand these needs in order to act upon them throughout the business.

With Customer Centric businesses most staff are required to practice some form of CRM. As customers are able to access and interact with multiple areas of the business – customer information gathering, storage and sharing is critical. Understanding which customers should have what level of access to the business also requires tactical and strategic levels of CRM. In a Customer Centric business a company wide understanding of customers and the relationships with them is required. Almost all staff would be required to be able to ‘manage customer relationships’.

Is Customer Relationship Management Just Linked To Customer Centricity? The answer is NO!

CRM Is Not Just For Customer Centric Businesses

The main differences (relating to CRM) between the 3 business strategies discussed above are the levels of tactical and /or strategic CRM within each business. As businesses become more Customer Focused (and perhaps ultimately Customer Centric), a greater and more complex level of relationship management, inside and outside of the business, is required in order to be successful.