Hack:
Measure Management 2.0 with CRI for Real-Time Management/Operational Control/Profit
Relationships drive business. Within the chaotic crush of interaction data coming off the Internet, smart mobile devices, Social Media, and Communities, is pure customer relationship gold. Three CRI (Customer Relationship Intelligence) metrics distill the gold—Relationship Value, the “effect” in relationship cause-and-effect; Interactions, the “cause;” and Variable Interaction Cost.
Relationships drive business. Yet no one knows who does what to whom, when, for what result in marketing, sales, and customer service. Customer retention is even more of a mystery--no one is in charge. And that is where the MONEY is! Some 80% of revenue comes from repeat business and referrals, only 20% comes from new customers typically.
Who would want to run a company with this level of process risk and uncertainty! Yet it is an everyday occurrence in Management 1.0. Here are the challenges to overcome:
- Customers are invisible.
- Executives are isolated.
- Operational control in marketing, sales, and customer service silos is incomplete and disjointed. A retention function is missing in most companies.
- Operational control is disrupted even further by the Internet and the Social Media Wild, Wild West as they tear down and flatten the silos. (This is a good thing!)
- Customers are increasingly in charge—increasingly in charge, but not in control. (There’s a way to win here—where everyone wins—your company, your teams, your customers, your stakeholders.)
Without effective, cross-functional operational control, there is no link between strategy and execution and profit. Without results based on real-time operational data tied to Individual Contacts and real-time profit, many executives are flying blind.
A MANAGEMENT 1.0 MEASUREMENT PROBLEM THAT CAN BE FIXED WITH MANAGEMENT 2.0
It is time for a shift from a company-and-product focus to an individual customer-focus across the entire customer lifecycle. Here’s the difference in “what is” compared to “what could be”:
- The difference between looking backward as is standard practice now and looking forward with our leading indicator for profit, Relationship Value as a guide.
- The difference between making decisions based on head count and allocated costs versus putting variable costs where they belong on the Individual Contact.
- The difference between relying on what people SAY they will do, looked at in aggregate, instead of on what they actually DO individually.
Managing based on real-time operational data tied to Individual Contacts and to real-time profit is a huge improvement. Not only does it make for better use of resources and deliver better governance, but you can compete and win based on exclusive customer relationships.
In Management 1.0 no one has operational control. In Management 2.0 operational control is shared. Executives have strategic operational control. Frontline Staff and Managers have real-time operational control. Staff and Managers can see what is happening operationally with an Individual Contact and how it compares to previously successful patterns. Staff is guided to make better and more profitable decisions in the moment, as they develop relationships with customers. Managers can watch what is working and how profit is being earned in real time, to make interim adjustments to optimize customer outcomes. Managers don’t have to wait until the end of a cycle or the end of the year. The process is transparent for all to see.
The solution isn’t to be faster at looking backwards or more complete in looking at trends by including Social Media. Or even using fancier tools to read the tea leaves. None of this matters if the right customer relationship metrics are missing. The right metrics are game changers.
History Repeats Itself: A century ago Frederick Winslow Taylor figured out what to measure to quantify manufacturing and the field of Industrial Engineering was born. Before Taylor, manufacturing was an art, not a science. Mass production and the specialization that it brought could only be dreamt of.
Now strategic marketing management can be similarly transformed with real-time operational data. And my dream is finally realized BIG TIME. Marketing is quantified to earn respect and takes its rightful place at the management table. Marketing, sales, and customer service are measured and managed by measuring and managing what they have in common—the development of the customer relationship. Changing how marketing is measured changes how management is measured in a customer-focused enterprise. The change overcomes the isolation from customers and extreme specialization that the Industrial Age brought about.
For Taylor, the atomic unit in manufacturing was motion. He measured time and motion. The atomic unit in marketing is the Interaction. Millions upon millions of Interactions are captured on the Internet and on smart mobile devices making it easier, faster, and cheaper to adopt CRI. It will be increasingly so as more and more of the customer relationship process goes online. As that happens, the Interaction Data will be more reliable, accurate, and real-time
And if Marshal McLuhan is right, we’ll be changed as well. A Wikipedia reference to him and his Understanding Media: The Extensions of Man suggests that technological innovations should be understood, not in terms of their content, but in terms of how they change society. The piece quotes him as saying “every process pushed far enough tends to reverse or flip suddenly.” Wikipedia continues, but this flip is never a literal return to the past, instead it involves a qualitative change, something radically new that seeks to recover something that has been lost. In McLuhan’s words, “we use the new to do the old.” I’d say we’re using the “new” to recreate the sense of community we had before the Industrial Age began. It was through harnessing the power of communities that the old Wild, Wild West was won after all. Our ancestors formed deep relationships and worked together on issues of mutual interest.
___________________________________
FOR MORE on the risks and uncertainly challenges to overcome see Chapter 1 in Customer Relationship Intelligence: A Breakthrough Way to Measure and Manage Sales and Marketing. A copy in eBook form is included in the Helpful Materials section with my compliments. For more on the book, please go to www.CRIbook.com.
Relationships drive business. By knowing what happens in the real-time individual Interactions between Individual Contacts and the company, you can gain relevant intelligence about your relationships with customers. Relevant intelligence delivers real-time management, real-time operational control, and real-time profit.
Interactions with customers are the essence of strategy execution and value creation. Sustainable competitive advantage comes from understanding and acting on your customer behavior and profit patterns better than your competitors understand and act on theirs.
The secret sauce is anticipating a relationship development process in advance--what Interactions are likely to be needed to carry out the process--and then pre-assigning both a variable cost and a relative Relationship Value to these likely Interactions for how effective they may be in moving the relationship forward.
The right customer relationship metrics--Interactions, Variable Interaction Cost, and Relationship Value--change the game. They measure relationship cause-and-effect at what cost.
- Interactions capture what the people on the frontline DO with customers to carry out the tactics for acquiring and keeping customers and also what the customers DO. What Interactions, in what order, how many, when? Interactions are the “cause” in cause-and-effect.
- Variable Interaction Cost links the development of a customer relationship to profit.
- Relationship Value, the value of each Interaction in moving the relationship forward or backward, is the “effect.” For example, the relative Relationship Value of interactions associated with downloading a white paper is lower than the Relationship Value of participating in a product development initiative. Of the customer relationship metrics, Relationship Value, the missing metric, is the most important. Relationship Value is not only a Leading Indicator for Profit, but a Key Performance Indicator (KPI) for relationship development, which is how value is created and strategy executed.
Intelligence is built into, embedded within, the process—deliberately, in advance, making it more like data farming than data mining. CRI helps the discipline of business intelligence graduate from the hunter-gather stage of information management to data farming.
By configuring a CRI Tracking System, the relationship can be quantified automatically. The CRI Tracking System measures and manages the customer experience Interaction by Interaction—what you DO, what they DO—as the relationship develops and the process unfolds.
The data stream created for day-to-day operational feedback gets double use. It can be aggregated and used in later strategic analysis and long-term planning. This new customer relationship data provides an actionable context to compare and contrast with profit and performance data already being stored today in data warehouses—enhancing data mining and predictive modeling.
The right metrics—the Interactions, Variable Interaction Cost, and Relationship Value--are at the core of CRI and at the core of Social CRI (a Community Relationship Intelligence component of CRI).
THE RIGHT METRICS ANSWER CRITICAL QUESTIONS
The right customer relationship metrics enable three levels of intelligence to answer basic management questions and deliver operational customer intelligence.
1. Basic Operational Questions to Answer
(Real-Time Operational Control for Frontline Staff & Managers)
- What is happening, where, when? For what effect?
- At what variable cost?
- What is happening in Communities, specifically?
- Where are the problems areas?
- What’s going well?
Basic Operational Intelligence
Status: Individual, Aggregate, Community
Interaction Cost
Activity: Business Development Perspective, Community Building Perspective
Data in the tables changes in real-time. A simple implementation of the CRI Tracking System could stop with this level of intelligence and still be well ahead of how Management 1.0 is measured.
2. Advanced Operational Questions to Answer
(Real-Time Operational Control for Frontline Staff & Managers)
- What is happening right now with customers? At what cost? For what effect?
- How does the customer experience compare to previous successful patterns?
- What is best to do next to develop the customer relationship?
- What is the most profitable action to take?
- How well is this strategy working in real time?
Advanced Operational Intelligence
Relationship Cause-and-Effect: Individual, Individual to Aggregate
Relationship Cause-and-Effect Profit
Relationship Cause-and-Effect Event: Individual, Performance, Community
Attitude
Strategy Execution
The patterns in this intelligence are visualized in our Customer Relationship Wings model.
3. Strategic Questions to Answer
(Strategic Operational Control for Executives Based on Real-Time Operational Data Tied to Individual Contacts and Real-Time Profit)
- Where are you making more money?
- Are you growing high-value customers?
- Are Communities making a difference?
- How well are you driving profit and satisfaction?
- How can you achieve sustainable competitive advantage?
- How can you repeat success?
- Where should you focus next?
Strategic Intelligence
High-Value Growth
Priority Customers Characteristics/ Attributes
Strategy Performance
Operational Results
Leading Indicator*
Now executives can manage looking forward instead of backwards with our leading indicator for profit; make decisions based on variable costs tied to individual contacts instead of allocations and head count; and rely on what people actually DO instead of on what people SAY they will do.
*Leading Indicator intelligence, based on Relationship Value, is the most important. (Relationships drive business.) Relationship Value drives profit and customer satisfaction.
Profit follows after relationships are built, so there is a lag time before the value created is seen as profit. Still later, that is reflected in customer satisfaction, as customer evaluate their relationship to the company. Customer satisfaction is a lagging indicator for profit while Relationship Value is a leading indicator for profit.
A UNIFYING CRI FRAMEWORK, CONSISTENT METRICS, AND A DELIBERATE, SYSTEMATIC CUSTOMER RELATIONSHIP PROCESS
The customer relationship METRICS that generate the intelligence for real-time management, real-time operational control, and real-time profit are applied in a unifying CRI FRAMEWORK (which manages Acquisition, Closing, and Retention as a continuum).
The customer relationship metrics are built into a deliberate systematic process using the framework online and offline.
The customer relationship metrics are tracked in a CRI Tracking System, online and offline, to provide operational customer intelligence for real-time management, real-time operational control, and real-time profit.
The stream of data that results from recording the Interactions provides a basis for quantitative analysis that is far superior to what is possible with written (BlahBlahBlah) contact reports.
The Interaction Record for offline interactions, like an in-person meeting, is easier for the person on the frontline with customers to prepare. Tracking of offline relationship development Interactions is point-and-click into the system and then accessed online. Digitized Interactions, from the Internet or mobile devices, for example, are entered automatically by the system without the user needing to do anything.
But the Internet and all things digital can only make online data entry automatic when people interested in the Enterprise have been drawn into the Enterprise’s Stakeholder Community. These people are Suspects, Prospects, Customers, Employees, Partners, Suppliers, Influencers, and Interested Parties. Then the relationship development process with this focused set of relevant people can unfold using the Enterprise’s technology, not the technology controlled by others in the Social Media Wild, Wild West.
Social Media and Communities Play an Important Role: They are driving the integration of Marketing, Sales, and Customer Service silos. That reality--and that many of the Interactions are already digital--makes measuring and managing Communities a logical place to begin using the CRI FRAMEWORK, METRICS, and PROCESS.
You can start with Social CRI and track a Stakeholder Community or Community Initiatives. (Popular Community Initiatives are product development initiatives, mutual support initiatives, or those that evangelize the company or the company’s offering.)
Inside Social CRI Communities there is structured data for real-time operational control. Outside the boundaries of the Communities, the Social Media Wild, Wild West reigns—to be influenced by the Social CRI Communities, but not controlled. Enterprise GOAL: Expand reach and influence of Communities.
From Social CRI Communities, a natural next step is to narrow the focus to those in the Community who are also in a CRI Segment. CRI Segments are sales channel/ product group/ customer segments with potential for profit improvement. (See the First Steps section for some ideas of how to start in your Stakeholder Community with customers.)
The game-changing CRI approach links interactions to relationships to results. It thrives at the intersection of Business Intelligence (BI), Customer Relationship Management (CRM), and Business Process Management (BPM).
___________________________________
WHAT OTHERS ARE SAYING ABOUT RELATIONSHIP VALUE AND OUR CRI SOLUTION:
We are still in the early stages of understanding and developing customer relationship metrics. Until now, these metrics have concentrated on measuring our own performance to see how well we are doing. Linda Sharp’s Relationship Value metric turns this on its head with a new metric that measures our whole relationship with customers.►Richard Taylor, Senior Software Engineer, SenSage, Inc., Co-Chair and Founder Business Intelligence SIG, SVForum
Customer Relationship Intelligence is powerful! I especially like the prescriptive second half of the book. I believe the remedy to the inescapable challenges Linda Sharp laid out so carefully is very doable. I say this from the perspective of an executive who helped pioneer the use of data warehouses for customer intelligence. You do better in marketing if you know the facts. The CRI Framework is an organized, simple way to build intelligence into process to get unique customer feedback and the key performance indicators you need to run your business in real time. When sales people have to focus on short-term opportunities, they can keep other relationships alive and growing without having to think too much about it. Imagine the advantage of knowing which actions to take and when for a higher payback with each individual customer. ►Boyd Pearce, Former Executive, IBM, Teradata, Truviso
With the Relationship Value metric, Linda Sharp has found a quantitative way for sales to give feedback to executives without being second-guessed. Her Customer Relationship Intelligence Framework reflects a great respect for and understanding of sales. She has truly made the sales job easier day-to-day. ►Alfred Dipman, Vice President North American Operations, Linkquest LTD
Today in spite of that fact that businesses have more data available than ever before, almost every business is looking for ways to quantify their performance and make sense of the data to run their business better. With this background, I naturally found Linda Sharp's innovative approach to measuring and managing sales and marketing attractive. Her focus on interactions as the atomic unit of customer relationships promises to quantify the value of interactions, and moreover to measure cause-and effect. Therefore, I quickly became convinced that her approach to sales and marketing optimization can add much value to a field that it inherently hard to quantify. She describes the framework in clear language and she stays away from rambling sentences and overloaded terminology that so often make conceptual books difficult to apply in the real world. Linda Sharp has a powerful message to share. Customer Relationship Intelligence is a promising direction that holds much potential. ►Tilmann Bruckhaus, PhD, Director of Risk Analytics, Eventbrite, Former Chief Architect, Data Mining and Analytics, Sun Microsystems
Linda Sharp’s approach to measuring the value of each individual customer relationship puts a framework around what we all know we should do, but didn’t know how to do until now. The real gem in Customer Relationship Intelligence is that, by knowing where we stand with a customer in real time, we will be able to proactively and cohesively deliver on the promises we make. For many corporate executives, this eliminates a major excuse for not delivering great customer experiences every time. ►Sharon Oatway, President & Chief Experience Officer, VereQuest Inc.
The intangibles that are the real drivers of enterprise value are the most difficult to measure and manage. A consequence has been the 80-20 rule of management, i.e., managers have tended to spend 80 percent of their time managing factors that are responsible for 20 percent of the value of the enterprise. We are now witnessing a revolution in management practice that will be the hallmark of the future winners: metrics and systems that focus on designing and managing value creating organizations. The Religence Framework for CRI and metrics have the potential to meet this need in the critical domain of CRM. ►Michael M. Mann, PhD, Chairman, EnCompass Knowledge Systems, Inc., Adjunct Professor of Industrial and Systems Engineering, USC
FOR MORE on the FRAMEWORK see Chapter 3, for more on the METRICS see Chapter 4, for more on Customer Relationship Strategy see Chapter 5, for more on Customer Relationship Tactics see Chapter 6, for more on PROCESS see Chapter 7 and for more on Operational Control see Chapter 8 in Customer Relationship Intelligence in the Helpful Materials section.
WHAT LEADERS WANT, THEY NOW CAN HAVE:
- Business process simplicity beyond the current complexity.
- Customer-focused performance.
- Real-time operational customer intelligence.
- Creative, outside-the-box, collaborative solutions.
- Radical, systemic, not incremental change.
CXOs in recent studies from IBM, SAP, Jive, and McKinsey all point to the need to be closer to their customers and the need for a BIG change. Finance executives particularly want to play a more strategic role in the Enterprise. Now they all can--with numbers to back them up.
TECHNOLOGY HAS CAUGHT UP WITH MY CRI VISION:
From the beginning I didn’t worry about the technology to implement CRI. (In other words, I wasn’t restrained by what was possible at the time.) What I have invented is so simple in principle that it can be done manually in a small business, albeit somewhat tediously. In fact, one of our CTO Jim White’s neighbors, taking advantage of a dog-walking conversation when we were in the midst of writing the book, did just that and increased his business substantially.
Frankly, I figured that what I was doing made so much sense that the technology would catch up. It has. We are building our core system in MySQL, for example. The core system is perfect for verticals like our consulting firm. And it is perfect as a model for an on demand application or as a guide for an internal Enterprise deployment on existing customer-facing and community systems to augment them, to tap into them, and to extend their usefulness.
There are three logical ways to approach CRI- enabled technology development:
- Social CRI -> CRI Enterprise Version with customized strategy, tactics, process.
- CRI Verticals with standardized strategy, tactics, process. (Our core system is configured for a SMB Professional Services Firm, namely us.)
- Social CRI for SMB, 3rd Party Communities, Stakeholder Communities.
Extensions: Literally dozens and dozens of extensions customize the core system to each Enterprise or to the offering of a technology company. Here are some examples.
A breakthrough extension could be to overlay the Social Graph, proprietary to the Enterprise’s Stakeholder Community, to measure the strength of the relationships being formed.
Another breakthrough extension could overlay Enterprise Content Management on top of the Social Graph. This dream could deliver the context needed to back up the insufficient, hands-waving-madly justifications now being made for Social Media by some.
In an obvious mainstream extension, the operational Social CRI -> CRI Tracking System can ride on top of existing Customer-Facing and Community Systems, becoming part of the operational workflow. CRI essentially integrates these Customer-Facing and Community Systems at the data level. Although not shown in the visual that follows, it can be built into collaboration solutions, which can then ride on top of existing systems to enable them to integrate at the data level, too. Developing a relationship is the ultimate collaboration, after all!
The Social CRI -> CRI Tracking System collects Interaction Data for each Individual Contact from all the systems. Each system is tracked separately and the Interaction Record consolidated to show one view of the Individual Contact within the Enterprise CRI Segment. Where the Interactions are unstructured, or only partially structured like the Activity Streams coming off collaboration tools used in Enterprise 2.0, business rules convert the Interactions to a structured data stream. The combined CRI data can mashup in real time with Enterprise Financial data.
And here’s what I love. Mobile technology has finally caught up with my vision as well and is delivering real-time Business Intelligence to mobile devices. Yes! The process is so simple and transparent that Interaction Data can be input from a mobile device and real-time operational customer intelligence downloaded to the mobile devices as well. I can just see people on the frontline with customers checking their mobile device for real-time customer intelligence before walking into a meeting and inputting the meeting results afterwards just point-and-click instead of writing notes. I can see managers coaching their teams on the fly. I can see executives sneaking a peak at their Relationship Value Leading Indicator report for bragging rights on the golf course.
MANAGEMENT 2.0 IS HERE NOW FOR CUSTOMER-FOCUSED ENTERPRISES:
When visionary executives take the lead in linking strategy to execution and profit, their companies win, their teams win, and their customers win. A Customer-Focused Enterprise is one that develops mutually beneficial (profitable) and sustainable relationships with its customers, to its competitive advantage. That takes the whole enterprise being focused on the customer, from the people who engage the customer directly to those who support them throughout the organization, from finance to operations. Being customer-focused is everyone’s job in Management 2.0.
Value to Your Company:
- Tighter, more nimble operations.
- Better use of resources.
- A more profitable, sustainable business model.
- Improved corporate governance, transparency, and accountability.
- More realistic valuations.
Value to Your Team:
- Recognition for the value they create everyday in developing relationships with customers. (I dedicated my book to them!)
- Working on a highly motivated, directed team is exhilarating.
Value to Your Customers:
- Recognition as active participants, as partners, in the business.
- Get attention and respect they deserve.
- Value given is balanced with value received so both the company and customer profit.
____________________________________
WHAT PEOPLE ARE SAYING ABOUT THE PRACTICAL IMPACT OF CRI:
Applying metrics to marketing was what initially attracted me to Linda Sharp and her Religence CRI team. As a finance executive, I was eager to find a comprehensive approach that could help us bring discipline and control to sales and marketing. The Religence CRI team has put us on a path to both high-profit revenue and improved processes by helping us know who our most profitable customers are and why. I look forward to doing more with the CRI Framework. As I said when I first heard about the CRI Tracking System approach, this is just crazy enough to work! ►Kent Wegener, Vice President of Finance, Otis Spunkmeyer, Inc.
FOR MORE on The Missing Metric Relationship Value see Chapter 4 and for more on a Vision for a Customer-Focused Enterprise see Chapter 9 in Customer Relationship Intelligence. For more on the leadership studies, follow the links in the Helpful Materials section.
THE MONEY IS IN RETENTION. START THERE WITH CRI.
Although the CRI Framework manages Acquisition, Closing, and Retention as a continuum, a practical place to begin is Retention. It’s the sweet spot for competitive advantage and profit.
- Few companies have anyone in charge of Retention. A new Retention function needs to be created. National account teams in sales organizations may be the closest thing to what is needed now. But, here’s the difference. It is needed to keep all customers close.
- What passes for Retention in most companies is Customer Service, which is generally considered a cost center.
- In Management 2.0, re-imagine Customer Service. Move from reactive to proactive mode and from cost to profit. Proactively cultivate customer relationships and market to and through customers—for repeat and increased business and for referrals and influence.
In the Management 2.0 competitive advantage goes to the companies who can optimize customer behavior and profit patterns better than their competitors. Here’s how to begin:
- Shift your focus from customer acquisition and revenue to customer retention and profit. 7X as much is spent on acquiring customer as is on retaining them. Work backwards over time to acquisition and revenue. Some 80% of revenue comes from repeat business and referrals; only 20% comes from new customers typically. Know how value is created—or destroyed—for top priority customers like key accounts or franchise customers. Understand the effect of gaining or losing a key customer has on business profit metrics such as risk adjusted return on capital.
- Build more exceptionally profitable customer relationships. First, know who are your most profitable customers and why. Then map and track what it is like to do business with you. Get your distributors on board. The confidentiality of their relationships is protected with Relationship Value, while still giving both of you vital intelligence.
- Leverage your customer relationships with Retention Initiatives in your Stakeholder Community to profit from referrals, to get support and collaboration help on your offering and to influence the conversation in the Social Media Wild, Wild West.
(Your Stakeholder Community is so important that I am predicting that major Enterprises will run their businesses through them within five years. They will run, or manage their business, with the operational customer intelligence from CRI. And they will profit from relationships with Suspects, Prospects, Customers, Employees, Partners, Suppliers, Influencers, and Interested Parties in the Stakeholder Community. So start with customers, certainly, but build out from there. People long for community, to be a part of something bigger than themselves and to be recognized for what they do. Recognition is more important than money. Communities make relevant public recognition easy for management to give—what this contest is all about.)
____________________________________
WHAT PEOPLE ARE SAYING ABOUT RETENTION AS A FIRST STEP:
Customers are business partners. Customer service is a profit center. Outrageous? No. At last someone thinks as I do. In her book Customer Relationship Intelligence Linda Sharp makes a strong case for customer retention and why the customer relationship spans a continuum of acquisition, closing, and retention. Understanding what is going on with customers all the time is critical to success. Without this intelligence, you are flying blind. To get it requires collaboration among sales and marketing and customer service within a unifying framework. ►John Poppleton, Product Manager, Applikon BioTechnology
FOR MORE on Retention see Chapter 2 in Customer Relationship Intelligence and Social CRI: A Community Approach to Win in the Social Media Wild, Wild West in the Helpful Materials section. For more on the First Steps tools see the Religence Framework for CRI.
It Takes a COMMUNITY to sustain one through an odyssey like I’ve been on. Thank you all. I especially thank all of you who endorsed my CRI book, many of whom are quoted here at the end of relevant sections. See what a dozen others have to say at the front and the back of the book. Things like:
“A logical, scientific, mathematical approach”
“Well worth an executive read…”
“Takes the guess work out of relationship marketing”
“A must-read resource for a new breed of marketers”
“A unique and practical method”
How the CRI Book Happened: I will be forever grateful to Jim White, Religence CTO and DuPont and Charles Schwab alum, who understood early on that we had to do a book to explain CRI. It was a good call. Not only did that force us to get it down, but the intense debate among our Religence CRI Team as we wrote chapter after chapter, made it better and helped us bridge the gap between our proven methods and this new approach. Here’s why Jim was excited about my discovery, taken from his Foreword to the book:
“Sharp’s Relationship Value metric is revolutionary! Along with the change in perspective it inspires—having you consider customer acquisition, closing, and retention as a continuum—it will surely change the way you manage your business.
“Nonetheless, I did not really get excited about what she had developed until I saw the entire superstructure she had laid out on top of this framework and metric. Sharp has begun to anticipate the sales and marketing equivalent of Industrial Engineering—all the while respecting the creativity and the humanity of the people in the field. This is not just another analytical framework or another strategy and planning tool; Sharp’s Customer Relationship Intelligence (CRI) Framework can become core to all of your day-to-day operations. …Sharp’s CRI Framework is operational as well analytical, and that is the big breakthrough.”
Many, Many Acknowledgements take up a dozen pages in the book. I had a lot of help! The Religence CRI Team is there plus friends, family, and colleagues.
I particularly appreciate the inspiration from
- Competitive advantage seer Michael Porter of Harvard and Monitor Group for his insight that the essence of strategy is in the company’s choice of activities. His ideas led me to think that the essence of strategy execution is the Interactions that develop a relationship between the company and its customers—not just what the company does,
- Advertising strategists Jack Trout and Al Ries for what it takes to establish a brand in customers’ minds and for their idea of marketing from the bottom up. They stimulated my thinking about taking strategy down to where the action is with customers and then to measure the customer experience by measuring Interactions, one after another, after another, and
- The late marketing guru Theodore Levitt of Harvard for saying there is no such thing as a commodity and for showing the differentiation of your offering possible by capitalizing on the relationship between the buyer and seller. Yes! Not only was he a brilliant thinker, but he was a generous human being as well. I will never forget how a person as famous as he was would take the time to confirm an insight I had had about the percentage of business that is repeat or referral. Thank you, Sir.
These Stars are singled out and mentioned again in a special thank you to the Giants in Business upon whose Shoulders I’ve stood—David Axson, John Chambers, Peter Drucker, Robert Kaplan, and Martha Rogers to name a few more.
FOR MORE on how CRI happened, see the Helpful Materials section for the file on Religence Framework for CRI and look at my CEO Notes in it. For more Acknowledgements see the section in Customer Relationship Intelligence beginning on page 165.
©2011 Religence®, Registered USPTO, Patent Number US 7,526,434
This is a very insightful and intriguing piece. I particularly found the discussion on operational questions and prospective management helpful and applicable. Well done.
- Log in to post comments
- Log in to post comments
Measuring marketing investment and progress in the old management 1.0 world, has been vague at best. Typically only judging by the total sales of the company. And while everyone acknowledges that social media is creating a brave new world of market and communication, your referral of it as the "Social Media Wild, Wild West" is most apt. But applying your leading edge "Customer Relationship Intelligence" structure and metrics to it, to provide "real time" metrics via the flood of social media interaction data is brilliant. Also, converting the "blah, blah, blah..." of contact reports into an a trackable "interaction record" seems so obvious, but amazing how few companies do it!
Measuring Management 2.0 seems so central to the new process... I hope and trust that your new, leading edge approach is picked up by many new and transforming companies... and that you have the kind of success that these new approaches deserve. Great job!
- Log in to post comments
- Log in to post comments
Lots of strong short-, medium- and long-term value enabled by this approach -- a giant step beyond traditional approaches to customer relationship management (CRM) AND to business intelligence (BI)!
- Log in to post comments
- Log in to post comments
Everyone talks about new business, but misses relationships. The few that think about relationships never measure them. This hack gets it: focus on relationships and use rechnology to measure them and make brilliant results happen.
- Log in to post comments
- Log in to post comments
It reminds me of Isaac Asimov's "Foundation" series: we are getting ever closer to be able to predict the behavior of people. To predict people's behavior, you have to know what is important to them. Guess what? People care more about their relationships than the stuff they are buying. I think that Religence is on to something here.
- Log in to post comments
- Log in to post comments
The ideas of interactions as the raw material of relationship management is simple yet profound. Everyone knows that a positive customer relationship is a good thing. While companies strive to achieve that, they have no way of measuring it. Measuring interactions to determine whether they are value adders or values sappers is truly a brand new way of measuring value. Doing that real-time and then acting proactively to build a stream of value-adding interactions for each customer is what I find attractive in this hack.
- Log in to post comments
- Log in to post comments
Tools like CRM have proven that they can have a positive impact, but they require a lot of work. Yet we look to them to improve our companies and possibly to understand our clients by doing some data mining. Ms. Sharp understands this current view, and is offering to help us to see the future more clearly.
If we can gain a firm understanding of our clients, and what they want (or don't want) from our company the windfall could be tremendous.
We could lower acquisition costs by speeding sales cycles (happy customers refer business to those they like) which in turn would lower our advertising spend.
The bottom line would be further improved by lowering the work load on help desks and allowing us to retain staff that are known to burn out (sales, customer support for example) as there work situation would be vastly improved. Product development cycles could be shortened.
I look forward to learning more about what Ms. Sharp has to offer.
- Log in to post comments
- Log in to post comments
Kudos to Linda Sharp and Religence for figuring this out with all the associated algorithms and CRI metric detail. New comers to this space will find it very hard to leap frog their well thought out systems and design.
- Log in to post comments
- Log in to post comments
Linda’s work is the most important foundation for today and the future. She has done the hard work to ease your transition to CRI and Management 2.0.
Relationships have always driven the business. At one time, the most valuable were face-to-face. Salesmen usually managed the highest value or revenue relationships and gathered snippets of information from organizational silos within the company and other salesmen working the same customers. Data warehousing added insight into customer behavior and helped marketing create programs that made selling easier and in service industries, enhanced operational upsells and customer satisfaction.
In today’s world, relationships are most often nurtured electronically, networked and temporal. Obstacles slowing decisions and action have shrunk since you can get mostly reliable information, other’s experiences and even advice anywhere, anytime. You can complete many actions and even tell others what you’re doing in just a few seconds.
- Log in to post comments
- Log in to post comments
Mining customer data for actionable strategic insights is one of the biggest, yet most-overlooked, opportunities for most organizations. Linda Sharp’s methodology provides a rigorous, structured process for doing so – and thereby provides a significant competitive advantage for her firm’s clients.
By understanding and implementing her approach, you can begin to transform isolated customer touch points and interactions into an integrated, dynamic ‘knowledge system’ for customer behavior, preferences, and relationships. The net result is increased customer satisfaction, retention, and loyalty.
- Log in to post comments
- Log in to post comments
For far too long, business executives and managers have overlooked the importance of customers as human beings.
The Customer Relationship Intelligence (CRI) methodology noted above provides for a next generation model by which old school operational tactics can be replaced with new school insight. The quantifiable CRI insight is formidable as it enables relationship intelligence to interact with ever changing real time cloud based technologies, while integrating the human factor in nurturing long term customer relationships.
- Log in to post comments
- Log in to post comments
As an operations executive in an emerging global market, I know how difficult it is for an executive team to have more than qualitative measures of why we are successful, what the value of our relationships is, or whether our strategy will pay off. I also know how reluctant most sales forces are to share even that customer information.
Now Linda Sharp has found a quantitative way for sales to give feedback to executives without being second guessed. Her CRI Framework reflects a great respect for and understanding of sales. She has truly made the sales job easier day-to-day
- Log in to post comments
- Log in to post comments
Working with executives over the years, I've found the design of pay for performance compensation programs and sales incentive planning is continually challenged with finding meaningful metrics in customer satisfaction and customer retention. The Customer Relationship Intelligence methodology offers just such measures. Executives want to ensure they are paying for the "right results", yet typically they can't get a true handle on what that really means or how to define it. It needs to be done such that the employee is both held accountable for the results, as well as receiving the appropriate compensation. Linda's CRI Framework also allows for real-time feedback which allows for a course correction early on, rather than late in the year or after the customer or sale is long gone.
- Log in to post comments
- Log in to post comments
- Log in to post comments
- Log in to post comments
> using the “new” to recreate the sense of community we had before the Industrial Age
Yes, Linda and Religence, please do shoot for the stars. Customers and business are ready for this.
It's due time for the new leaders to break away from the pack.
Using your CRI Framwork it is totally possible to value the intangibles and make strategic breakthroughs. I like how you add profit into the equation, too. Your well-thought out approach is no"eyeballs" or landgrab-type mentality. This is solid, actionable stuff, with real-time feedback for mid-course correction. Agile and adaptable.
With this framework customers and business become partners, now aligned with a common interest in good service that is profitable service, to enhance the consumer experience. Yes, personally, I want the best price, but only for superb service. Now there is a plan to deliver this balance.
I can't wait to see you make inroads with this process. You are the thought leaders, now we need some action-leaders to take up the challenge and work with Religence to make it happen.
- Log in to post comments
- Log in to post comments
Just read "The Big Idea: Creating Shared Value" by Michael E. Porter and Mark R. Kramer, in HBR (Harvard Biz Review), January 2011. He promotes the idea of a commmunity of interest between the business and its customers.
"A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble
** while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.**
** How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell?**[emp. added, gjf]
How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges? Government and civil society have often exacerbated the problem by attempting to address social weaknesses at the expense of business. The presumed trade-offs between economic efficiency and social progress have been institutionalized in decades of policy choices.
Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging.
** Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core."
Looks like Religence has this framework Michale Porter is looking for.
Yes, we need thought leaders like Michael Porterto keep the torch burning until action-leaders like Linda Sharp can design the flashlights.
- Log in to post comments
I so agree that at the end of the First Steps section I predicted that major Enterprises will run their businesses through Stakeholder Community within five years. They will run, or manage their business, with the operational customer interlligence from CRI. And they will profit from mutually beneficial relationships with Suspects, Prospects, Customers, Employees, Partners, Suppliers, Influencers, and Interested Parties.
People long for community, to be a part of something bigger than themselves. Many companies are already using communities to collaborate on product development, mutual support, and promotion of their company and their company's offering. Measuring the community's collaboration has eluded most companies until now. With CRI there is a disciplined approach to measure and manage the communities and tie their activities to positive outcomes.
So I see an even bigger agenda than social responsiblity that Porter and Kramer talk about. But I can easily see a social responsibility initiative where a company collaborates with many of its stakeholders--say to even define what is good environmental practice. Which reminds me of another reason why I admire Porter. He is so ahead of the game. I read a paper of his in the mid 90s about the economic benefit that can be accured by sound environmental practice. His Shared Value approach may help realize that vision. It would be an honor to support his ideas. Thanks for your comment, Linda
- Log in to post comments
Enjoyed your presentation last week on CRI at the metrics meetup. Look forward to reading your book and learning more.
- Log in to post comments
Thank you, Doug. I especially liked your comment that you could see the change management opportunities with CRI. I agree. And it won't just bet the change in how Marketing, Sales, and Customer Service are measured and managed, but also how strategy is formulated and executed and measured. You know the saying, be careful what you wish for. Executives have been saying they want BIG change. CRI can turn what is seen by many as a challenge into an opportunity and a welcome change. Thanks for your comment, Linda
BTW, you might want to check out two more HACKs we have just posted:
Long-Term Capitalism Challenge: Measure Value Creation with CRI
Long-Term Capitalism Challenge: Measure Strategy Execution with CRI
- Log in to post comments
This hack is revolutionary. It not only covers the breadth of marketing, sales and customer service, it covers everything from strategy through tactics to operations. It is not just a new conceptual framework., it also has practical ideas for implementation. Innovative and practical is a rare combination that provides great value to the whole field.
- Log in to post comments
So, Jim, great observation that it is rare combination to find an approach that is innovative AND practical. I would submit that the idea that launched mass production and the Industrial Age was both innovative AND practical. That the atomic unit to measure in manufacturing was motion. About time for the change agent for the Relationship Age. CRI may just be that practical, innovative idea. To measure relationship development with Interactions, quantified by cost and value in moving the relationship forward. We'll see. Thanks for your comment, Linda
- Log in to post comments
So many firms do not know what they do not know about their customers and their customer/company relationships. They have mountains of unstructured data, but less than perfect understanding of how all of the transactional data interact. CRI is about gaining a better understanding of individual customer relationships and revealing facts upon which to base positive actions.
Smart marketers have long wished for a way to pull together the myriad sources of customer interactions, e.g. sales, customer service, marketing support, order desk, operations, customer returns, etc. It appears that Religence has the answer in what they have dubbed Customer Relationship Intelligence (CRI). Merging data on every type of customer transaction is a profound step toward more intelligent business management.
In my practice, I strive to uncover new ways of thinking that allow my clients to take positive action to improve results. CRI, properly implemented, promises to provide a better overall understanding and point to additional ways to improve relationships with existing customers. Bottom line, that is where a lot of untapped profit lies.
- Log in to post comments
Not only can CRI integrate data from all Customer-Facing and Collaboration Solutions, Richard, but it can make sense of it, and tie it to business results from an individual customer point of view. What all these systems and the people who use them have in common is the development of the customer relationship.
Relationship development is what CRI measures in a practical, actionable way. The companies who understand and ACT on customer behavior and profit patterns better, faster, and more reponsibly than their competitors can have unique, sustainable competitive advantage. This competitive advantage is unlocked by our breakkthrough metric Relationship Value. You might want to look at our HACK, "Measure Strategy Execution with CRI to Compete on Relationships" for more on why Relationship Value is so important. Thanks for your comment, Linda
- Log in to post comments
This is so powerful, yet it doesn't appear that many firms have anything even close to this comprehensive approach.
I wonder if a firm like Netflix, which lost millions of customers and $billions in market cap, could have better understood their current and future customers desires through better Voice of the Customer input, analyzing the multiple ways that customers use the service and interact with the firm, and mapping the profitablity by segment, distribution channel, and media preference.
Many firms should take heed to what you say in order to avoid their own "Netflix Moment".
- Log in to post comments
I'm sure you are right about Netflix, Dave. Hopefully, what happened to them has served as a wake up call to others. We've just posted a new HACK, "Measure Value Creation with CRI for Long-Term Success." In it we talk about VALUE from the customer and the company perspectives and how to map what the customer experiences.
In the First Steps section of the Value Creation HACK, we recommend listening to customers as critical. We talk about three ways to do that. First, investing in a Social Media Monitoring tool or service--how you manage your own "Netflix Crisis Moment," should you have one. Second, conducting one-on-one interviews with priority customers on a regular basis to augment social and traditional research--to take the relationship to another level. And, third, operationalizing Voice of the Customer in a CRI Tracking System--to correlate what people DO with what people SAY-- as an early warning system in the context of the relationship. Thanks for your comment, Linda
- Log in to post comments
Over the past quarter century I have not only had the pleasure of Linda's mentor-ship, but I have also experienced the power of her conceptual genius and down to earth ability to apply to her revolutionary approach to CRI in three different real world strategic business development settings. Bottom line the tools developed by Linda and her team allowed us to successfully focus our company's vision, our teams ability to execute, with a powerful suite of statistical matrix and measurement tools to organically retain customers while also building increased revenue, as a direct result of using the power of the customer relationship to add value . My last collaboration yielded some extraordinary results: 99% customer retention, 33% average year on year organic revenue increases with existing customers, 62% gross margins, 20% net profit before taxes and a doubling of revenue with no increase in employees. While our service based product concept was highly unique, these results would never have been possible without the added value of Linda, her Religence team and their powerful CRI tool chest.
- Log in to post comments
Oops, I meant to reply to you and did a comment instead. Please see above for how appreciated you are, Kent. Thanks for your comment, Linda
- Log in to post comments
If you've enjoyed this HACK, you may want to view the rest of the trilogy--our HACKs on:
Measure Value Creation with CRI for Long-Term Success
Measure Strategy Execution with CRI to Compete on Relationships
Please help us spread the word about CRI. Thank you for your interest and support, Linda
- Log in to post comments
Thank you, Kent, for being the Visionary Leader that you are and for providing the opportunity for CRI to flourish. We focused on the customer relationship. We started with Retention and worked backwards. We, in your words, operationalized strategy together!
The work we did to help you create those attention-getting results formed the basis of my patent and subsequent book "Customer Relationship Intelligence: A Breakthrough Way to Measure and Manage Sales and Marketing." You were the muse again when I started thinking about how to carry CRI into the Social Media Wild, Wild West and developed a community approach to win--Social CRI. Thank you.
Thank you for your comment, Linda
- Log in to post comments
You need to register in order to submit a comment.