There is no doubt about it – prescott’s customer relationship management has turned into a pure case of ‘mismanagement’. Prescott gained a sale but lost a customer. Unfortunately, with the advent of technology-led tools for managing customer relationships, today we all find stark cases where the customer is left in the lurch as exemplified by Madhur in this case study. Be it telecom companies with wrong billing, durable companies with service responses, e-commmerce players with delayed deliveries and faulty returns, many a times a customer is left wondering what he did wrong in dealing with a particular company. The irony is that the expensive IT tools and processes were set up to improve customer relationships!
Why is this so? Prescott’s behaviour, as demonstrated through its actions, in this case are symptoms of three core issues:
— The “know more but do less” syndrome that accompanies investment in Big Data. That means, learn a lot more about the customers but earn the maximum by doing the least for the customers
— Cutting corners on maintenance and upgrades because a customer cannot see it
— Pure fraud and cheating
Know more but do less: The Holy Grail of business is now customer relationship and insights. Use Big Data to study everything about the customer, his habits, behaviour, and use insights to find more opportunities to sell… sell… sell. The IT industry thrives on pushing its technology with promises to increase profits manifold with technology-led interfaces. Somewhere along the line the spirit of customer relationship, that is, ‘do more’ for customer to earn more gets forgotten. Prescott’s focus has become extracting more and more from Madhur without the commensurate service enhancements that a loyal customer needs. The end result is that customer relationship management (CRM) turns into pure mismanagement.
The three pillars of CRM are recognition, ease and recovery. In Prescott’s case, the first step recognition seems to have been handled well. The process not only recognised Madhur but also his other details such as credit card information, etc. So, full marks to Prescott on recognition. On the ‘ease’ factor, the story becomes tilted in favour of Prescott. It was easy for Prescott to accept the order “instantly” without even Madhur confirming it, but absolutely impossible for Madhur to cancel it . There even was no access to a customer care number. Not only that, with a new executive handling it every time, he had to repeat his story multiple times — certainly not a “ease of doing business with me situation”. Prescott failed Madhur on the ease factor.
Where Prescott failed most miserably was on ‘recovery’. When things went wrong, starting with stolen data, wrong order booking, cancellation, etc. Prescott’s recovery mechanisms were nonexistent. Acknowledging a mistake and correcting needs to be in the customer service DNA. However, most of the time, front line is lamely defending the company’s errors. Recovery requires strong listening skills, an attitude of empathy and an organisational empowerment of the front line staff to take actions to retain customers. In Prescott’s case the staff was focusing on defending the company and not listening to Madhur. In addition, there was no empathy for his plight of having his credit card details stolen with expensive transactions in Luxembourg and no empowerment of the service staff to instantly resolve Madhur’s issues. Prescott was wanting on all three elements of recovery. A good way to design CRM processes is to first understand service failures and design recovery processes, otherwise the story will be like one of “knowing more about the customer but doing less”.
One of the biggest real outcomes of Big Data is that more the technology used, the less the company managements are close to the customer. Every customer becomes a number and not a flesh and blood person to be serviced. Some reports quote that 95 per cent were happy and thus, everyone pats themselves on the back. But good businesses work on that lost 5 per cent.
Maintenance aversion: The second issue the case study throws up is the ‘maintenance aversion’ of the Indian mindset. This is everywhere, in our governments and in our private sector. Roads, factories, buildings are all constructed with much fanfare but the spends needed on maintenance are always cut back or non-existent. In fact, we take pride in being dilapidated. I have often wondered why is it that in India every type of fencing — wires, brick walls, stone fencing et al — is always broken. Make but not maintain. Perhaps the PM can spur greater economic growth with ‘Maintain India’ rather than Make in India.
This syndrome has also struck our IT industry. Investments in security upgrades are often ignored or cut back on. In this case too, investments in cyber security have obviously been ignored. It isn’t that managements don’t know the risks but at the altar of cost reduction, such investments are often ignored. In the IT world, these are equivalents of the Bhopal tragedy, ignore at your own risk and one day they could be killers.
‘Maintenance aversion’ is not limited to technology, it is even more endemic for manpower. The quality of front line staff is gradually compromised in an attempt to control costs. Undertrained and underpaid front line staff will only do that much for the customer and not more. Prescott seems to have succumbed to the same generic industry trend.
In the quest for cost control, the philosophy of putting customer first is forgotten and the philosophy of sales first with least cost takes over. After all, it is about profits! Not realising that unrealised profits are resident in an unhappy customer.
Pure fraud and cheating: Prescott had no right to save Madhur’s credit card details without his consent. Even the instant order booking without his consent violated his rights as a customer. Madhur is well within his rights to sue Prescott for cheating and fraud.
The case fortunately brings out the positive CRM of Bank of Bensy. Not only did it call Madhur immediately when they noticed unlikely transactions, it gave him time and support to figure out what is happening. Interestingly what happened is not the bank’s fault but it understood the customers pain points and had a design of service to deal with it. The bank has obviously invested in technology that senses unusual transactions and helps customers like Madhur. Not only that a senior resource was deployed to resolve the issue. Bank of Bensy is a winner on all three aspects of CRM recognition, ease and recovery. Goes to show that with management will, things can be done too.
In the evolutionary sense, the Internet age brings a challenge. Business dealings originally were all face-to-face. Even with the advent of big brands the physical face of retail was always there to give customers comfort and trust. In the Internet age, the seller and buyers are faceless. In the faceless era, the challenge of building trust with the customer becomes even more difficult. It turns out that trust building requires huge investments in systems, people and organisations. Most Indian companies are not ready for such investments today.
Not only companies, people who finance today’s fancy e-tailers, namely the private equity players, do not ask the promoters the key question of CRM processes before they finance companies. Looking for maintenance expenses, recovery processes, etc., just makes business models more robust. Private equity players ignore these at their own peril. Perhaps there should be a line item in the profit and loss that says “trust” investments.
Even going by Wikipedia’s definition, CRM is an approach that manages the current and future customers. It is an approach that uses data analysis to improve business relations, specifically focusing on “retaining” customers to drive growth. Prescott could do well to adopt that approach.
Finally, there is always the “caveat emptor” or the ‘buyer beware’ side of the story. The law clearly states that the buyer has to check and be careful. Madhur so far wasn’t careful in checking how his data was being used. He was educated but not aware. But ignorance is no excuse under the law.
In terms of actions, what do most customers do in Madhur’s situation? They would close the issue with Bank of Bensy cancelling the Luxembourg transaction, Prescott refunding him his sale amount on the cancelled order and an apology from Prescott. And Prescott would merrily continue as before with an irritating chapter closed.
However, as an enlightened consumer, Madhur should simply put a one-page complaint against Prescott at the consumer forum and pressurise Prescott and by implication, many others to change. It is only customer pressure that can change companies.
Guest Author
The writer is Managing Partner at Intrim Business Associates , a management consultancy firm focusing on strategy, retail, and supply chain
