Building Customer Relationships in Four Steps

In order to set up and manage your relationships with individual customers, you have to accomplish four basic things:

    • Identify customers individually. Obviously, you can’t have a relationship with an audience or a population, but only with an individual. So before you can establish a relationship you must be capable of identifying customers, one customer at a time. You don’t have to have each customer’s name and address, but you need to know that the customer on the phone right now is the same one who was in the store yesterday, or on your Web site the day before that.
    • Differentiate customers, one from another. Customers differ from each other, in terms of both their value to your business, and what they need from your business. What a customer needs from you will drive behaviors that you can observe. And behaviors will create (or destroy) value.
  • Interact with customers. Almost by definition, a relationship depends on some interaction between two parties. You want those interactions to be cost-efficient, so drive more and more interactions into more efficient channels. But you also want them to be effective — that is, to tell you something about the customer’s needs or value, for instance, that you can’t learn simply by observing.
  • Customize for customers. The “pay off step” for managing a customer relationship comes when your business behaves differently toward that customer. We call this “customization” even though we’re not necessarily talking about it in terms of literally customizing the product or service. But whenever I treat Customer A different from Customer B, based on what I think I know about their differences, I am “customizing” the customer’s treatment.

If you’ve ever studied Customer Relationship Management (“CRM”) academically, there’s a good chance that these four steps – identify, differentiate, interact, and customize – are already familiar to you. Martha Rogers and I wrote and edited the CRM textbook for graduate-level business students, Managing Customer Relationships: A Strategic Framework, based on this “I-D-I-C” methodology. And at our consulting firm, Peppers & Rogers Group, a large proportion of the work we do can be understood in terms of dissecting how these tasks function (or don’t function) for a client’s organization.

But a couple of other things are worth pointing out about the I-D-I-C model of relationship management. The first two tasks – identifying customers and differentiating them – are steps that a company can take in the privacy of its own IT department. Your company has a database of individual customer records, you track the transactions of individual customers in order to better understand both their value and their needs, and yet the customer herself never really has to participate in the process. The customer, in fact, may not even be aware of the data you are compiling.

By contrast, the third step – interaction – demands the customer’s personal attention and participation. You can’t interact unless there’s someone else on the other end of the interaction, right? And the fourth step, customizing your behavior in some way to a particular customer, also involves the individual customer directly, as the “recipient” of this behavior.

So you could think of the first two steps of the I-D-I-C model as “analytical” CRM, while the next two steps are “operational” CRM. Analytical CRM is required to develop better customer insight, while operational CRM is how you deliver a specific customer experience.

– See more at: http://www.1to1media.com/speaking/blog/2014/01/building-customer-relationships-in-four-steps.html