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Once you strip away all the activities that keep everybody busy every day, the goal of every enterprise is simply to get, keep, and grow customers (whether those are business-to-consumer [B2C] customers or enterprise business customers [B2B]). This is true for nonprofits (where the “customers” may be donors or volunteers) as well as for-profits, for small businesses as well as large, for public as well as private enterprises. It is true for hospitals, governments, universities, and other institutions as well. What does it mean for an enterprise to focus on its customers as the key to competitive advantage? Obviously, it does not mean giving up whatever product edge or operational efficiencies might have provided an advantage in the past. It does mean using new strategies, nearly always requiring new technologies, to focus on growing the value of the company by deliberately and strategically growing the value of the customer base.

To some executives, customer relationship management (CRM) is a technology or software solution that helps track data and information about customers to enable better customer service. Others think of CRM, or one-to-one, as an elaborate marketing or customer service discipline. We even recently heard CRM described as “personalized email.” But it's far more than that.

Managing customer relationships is what companies do to optimize the value of each customer, because they understand the customer's perspective and what it is—and should be—like to be a customer. This book is about much more than setting up a business website or redirecting some of the mass-media budget into the call-center database or cloud analytics or social networking. It's about increasing the value of the company through specific customer strategies (see Exhibit 1.1).

EXHIBIT 1.1 Increasing the Value of the Customer Base

Get	Acquire more customers.
Keep	Retain profitable customers longer. Win back profitable customers. Eliminate unprofitable customers.
Grow	Upsell additional products in a solution. Cross-sell other products and services. Referrals and word-of-mouth benefits. Reduce the cost to serve customers.

Companies determined to build successful and profitable customer relationships understand that the process of becoming an enterprise focused on building its value by building customer value doesn't begin with installing technology, but instead begins with:

 A strategy or an ongoing process that helps shift the enterprise from a focus on traditional selling or manufacturing to a customer focus while increasing revenues and profits in both the current period and the long term.

 The leadership and commitment necessary to cascade throughout the organization, and the thinking and decision-making capability that puts customer value and relationships first as the direct path to increasing shareholder value.

Customer strategy means increasing the value of the customer base. CRM can be thought of as a set of business practices designed, simply, to put an enterprise into closer and closer touch with its customers, in order to learn more about each one and to deliver greater and greater value to each one, with the overall goal of making each one more valuable to the firm to increase the value of the enterprise.

The reality is that becoming a customer-strategy enterprise is about using information to gain a competitive advantage and deliver growth and profit to the firm by increasing the value of the customer base. In its most generalized form, CRM can be thought of as a set of business practices designed, simply, to put an enterprise into closer and closer touch with its customers, in order to learn more about each one and to deliver greater and greater value to each one, with the overall goal of making each one more valuable to the firm to increase the value of the enterprise. It is an enterprise-wide approach to understanding and influencing customer behavior through meaningful analysis and communications to improve customer acquisition, customer retention, and customer profitability.² Customer centricity is distinguishable from product centricity and from technology centricity. These differences will be discussed more in Exhibit 1.3 later in this chapter.

Customer centricity: An enterprise-wide business strategy that achieves customer-specific objectives by taking customer-specific actions.

Defined more precisely, what makes customer centricity into a truly different model for doing business and competing in the marketplace is this: It is an enterprise-wide business strategy for achieving customer-specific objectives by taking customer-specific actions. It is enterprise-wide because it can't merely be assigned to marketing if it is to have any hope of success. Its objectives are customer-specific because the goal is to increase the value of each customer. Therefore, the firm will take customer-specific actions for each customer, often made possible by new technologies.

In essence, building the value of the customer base requires a business to treat different customers differently. Today, there is a customer-focus revolution under way among businesses. It represents an inevitable—literally, irresistible—movement. All businesses will be embracing customer strategies sooner or later, with varying degrees of enthusiasm and success, for two primary reasons:

1 All customers, in all walks of life, in all industries, all over the world, want to be individually and personally served.

2 It is simply a more efficient way of doing business.

We find examples of customer-specific behavior, and business initiatives driven by customer-specific insights, all around us:³

 An engaged couple receives customized mobile reminders to choose a venue, select wedding attire, hire a photographer, and other key milestones, all at the appropriate time.

 A group of three friends open the web page of the same kitchenware company that they all have ordered from in the past. Each friend views a different offer featured on the company home page on their device.

 A woman receives an email before her eight-month obstetrics appointment that gives information about what to expect at the appointment and her baby's stage of growth. A month later, the same woman receives a notification of her baby's immunization appointment that is triggered when she leaves the hospital with her newborn.

 An insurance company not only handles a claim for property damage but also connects the insured party with a contractor in their area who can bypass the purchasing department and do the repairs directly.

 Instead of sending out the same offer to everyone at the same time, a company waits for specific trigger behavior from a customer and increases response rates 25-fold.

 When logging in to buy tickets from a website, a father taking his tween daughter to a concert experiences a very different customer journey than does his twenty-something son who logs into the same site.

 Through the same phone app they used to check their flight status, an airline passenger in the airport waiting to board is offered an upgrade to business class as an apology for a 45-minute departure delay.

 An outdoor gear company sees that their tents are being discussed on a social channel and sends a free tent as a trial sample to a consistent product supporter.

 A supervisor orders more computer components by going to a web page that displays the firm's contract terms, their own spending to date, and the departmental authorizations.

 Sitting in the call center, a service rep sees a “smart dialogue” suggestion (see Chapter 8) pop onto a monitor during a call with a customer, suggesting a question the company wants to ask that customer. (The company is not asking all customers who call that week the same question.)

 A customer service representative sees a complaint a customer has made on a social channel and, at the same time, is able to view their purchasing history and order status. The service rep uses that information to reply to the complaint via the same social channel.

 An online cosmetics customer receives personalized offers when they open the company website, and promotional coupons are automatically applied to their shopping cart.

 A business sees that a customer has left their website, abandoning a cart with selected products before checkout, and makes sure that when the customer calls up their news online the next day, they get a reminder or a sweetener to go back and complete the order.

Taking customer-specific action, treating different customers differently, improving each customer's experience with the company or product, building the value of the customer base, creating and managing relationships with individual customers that go on through time to get better and deeper—that's what this book is about. Note that in the case of consumers, this can be conducted in a way that is simultaneously customized and yet efficiently automated. In the chapters that follow, we will look at lots of examples. The overall business goal of this strategy is to make the enterprise as profitable as possible over time by taking steps to increase the value of the customer base. The enterprise makes itself, its products, and/or its services so satisfying, convenient, or valuable to the customer that they become more willing to devote their time and money to this enterprise than to any competitor. A customer-strategy enterprise interacts directly with an individual customer. The customer tells the enterprise about how they would like to be served. Based on this interaction, the enterprise, in turn, modifies its behavior with respect to this particular customer. In essence, the concept implies a specific, one-customer-to-one-enterprise relationship, as is the case when the customer's input drives the enterprise's output for that particular customer.⁴

The overall business goal of this strategy is to make the enterprise as profitable as possible over time by taking steps to increase the value of the customer base.

A suite of buzzwords have come to surround this endeavor, in addition to customer relationship management (CRM): one-to-one marketing, customer experience management, customer value management, customer focus, customer orientation, customer centricity, customer experience journey mapping, and more.

You can see it in the titles on the business cards—chief marketing officer, of course, but also a host of others, such as:

 Customer success manager (B2B)

 Chief customer officer (B2C)

 Chief relationship officer

 Customer care leader

 Customer experience manager

 Customer experience advocate

 Director, customer experience and digital design

 Customer value management director

 Chief revenue officer

 Customer revolutionary

As with all new initiatives, this customer approach (different from the strictly financial approach or product-profitability approach of the previous century) suffers when it is poorly understood, improperly applied, and incorrectly measured and managed. But by any name, strategies designed to build the value of the customer base by building relationships with one customer at a time, or with well-defined groups of identifiable customers, are by no means ephemeral trends or fads any more than computers or connectivity are.

A good example of a business offering that benefits from individual customer relationships can be seen in online banking services, in which a consumer spends several hours, usually spread over several sessions, setting up an online account and inputting payee addresses and account numbers, in order to be able to pay bills electronically each month. If a competitor opens a branch in town offering slightly lower checking fees or higher savings rates, this consumer is unlikely to switch banks. They have invested time and energy in a relationship with the first bank, and it is simply more convenient to remain loyal to the first bank than to teach the second bank how to serve them in the same way. In this example, it should also be noted that the bank now has increased the value of the customer to the bank and has simultaneously reduced the cost of serving the customer, as it costs the bank less to serve a customer online than at the teller window or by phone.

Clearly, customer strategy involves much more than marketing, and it cannot deliver optimum return on investment of money or customers without integrating individual customer information into every corporate function, from customer service to production, logistics, and channel management. A formal change in the organizational structure usually is necessary to become an enterprise focused on growing customer value. As this book shows, customer strategy is both an operational and an analytical process. Operational CRM focuses on the software installations and the changes in process affecting the day-to-day operations of a firm—operations that will produce and deliver different treatments to different customers. Analytical CRM focuses on the strategic planning needed to build customer value as well as the cultural, measurement, and organizational changes required to implement that strategy successfully.