Superboss - Article 16. The Singapore Switch On

THE PSYCHOLOGY OF CRM

THIS ARTICLE IS AN ADAPTATION OF A TALK GIVEN BY DR FREEMANTLE ON THE ABOVE TOPIC AT THE "CUSTOMER RELATIONS MANAGEMENT" CONFERENCE AT OLYMPIA.

Frequently CRM has little to do with customer relations. It is interactions between two or more people that create relationships, not interactions between a computer and an individual. The key factor in any relationship is the heart and the emotional connections that are established. Companies that create a buzz in their relationships are those that recognise this and put a lot of 'love' into the way they deal with customers and employees alike. Motivation is closely linked with emotions and these have to be 'stimulated' by applying the 'stimulus factor'. There are a number of clusters of motivational stimuli that can be used for this purpose.

Most companies, when trying to improve customer relationships focus mainly on systems, and by this I mean not only the technical aspects of e-commerce but delivery systems, equipment and processing of transactions. This 'systems' aspect of customer relationships whilst essential is 'impersonal', in fact e-commerce is predominantly impersonal . In my view it is impossible for a customer to have a relationship with a 'clever' computer database which sends him useful information about products or services which might (or might not) meet his needs. For example whilst I buy books from time to time from Amazon.com I do not consider that I have a relationship with Amazon.com. They are very good at sending messages via their home page which effectively say "because you've bought this book you might be interested in this other book…" but in the end I know that it is a computer that is generating this information. I have not interacted personally, even minimally, with anyone from Amazon.com - whether it be a two line personal e-mail or a brief telephone call - and therefore I have no relationship with any person in Amazon. This does not mean to say that I am against Amazon.com, far from it. I like their efficient approach and the convenience of sitting in the comfort of my study and using my PC and the internet to order a book Thus e-commerce has little to do with customer relationships but more to do with the impersonal exchange of specified information between customers and computers coupled with an impersonal albeit efficient transaction process. With e-commerce there are not two human beings undertaking a commercial transaction but one human being, a customer undertaking a transaction with a highly impersonal computer. With traditional commerce the customer normally knows the name of the person he or she is dealing with. With e-commerce the customer has no such name, normally there is no person at the other end. This is no different from withdrawing cash from an ATM or purchasing cinema tickets by pressing numbers over the telephone. You only deal with a human being (if you are lucky) when things go wrong.

E-commerce is thus limited to 'non-relationships' and in this context 'customer relations management' is a misnomer. It does not require too much study of psychology to indicate that most human beings are social animals and actually do enjoy and value positive interactions with other human beings. This drive for social contact is not just confined to family and friends but extends to the whole world of commerce. One of the reasons we go to certain restaurants is because we enjoy the social contact with the team of waiters and waitresses there - if we simply went to restaurants to eat food then it would be more cost-effective to poke a credit card into a machine and have the hot food come out of microwave the other end.

For example, when it comes to airline travel I tend not to buy tickets on the Internet - for the simple reason that I have an excellent relationship with Sanchia Gallifent at BA Travel Shops. She is friendly, efficient and exceptionally helpful. From time to time she bends the rules in my favour and I can trust her to get things done for me when I plan to fly. I actually enjoy the brief interactions I have with Sanchia. They become social events as well as business transactions. Sanchia and I have a 'customer relationship' - something I do not have with British Airways website.

The centre of all human relationships is the heart. There is a fundamental difference between a robot and a human being. Both robots and human beings have brains. However a robot does NOT have a heart. Regrettably, with the emphasis most companies put on 'systems' they treat their employees as if they were robots, programming them to complete a various range of tasks. Each task is carefully documented through a manual which employees are trained to apply. The end result is that even when a customer comes into contact with an employee, for example through a call centre, there tends to be a mechanistic approach to customer relationships in which customers are subjected to 'scripted welcomes' and then railroaded through a set of procedures. As everything is programmed by the company employees are given little opportunity to 'exercise their heart' in creating relationships with customers. Such 'exercise of the heart' (for example a friendly chat) is deemed as inefficient as it consumes time. Gradually employees become 'automatons' applying a set of carefully designed routines - and thus come across to customers as indifferent, disinterested and with little concern or understanding of how a customer really feels at that point of time and at that point of contact.

Yet it is feelings (and emotions) that drive all relationships. As indicated in my book THE STIMULUS FACTOR the most basic law of motivation is that people move towards what makes them feel good and move away from what makes them feel bad. This is really the cornerstone of the psychology of CRM. In any commercial situation (in which customers have genuine choice) customers will move towards those companies that make them feel good and avoid those that make them feel bad. For example last evening I rang a certain hotel to make a reservation. The switchboard passed me through to the appropriate department where I was then kept hanging on for five minutes, at which point I put the phone done - it was a long distance call. How long should I be kept hanging on for? The reality is that I am made to feel bad when I am kept hanging on, especially when there is no interim communication. When I feel bad I eventually put down the phone and the company, in this case a hotel, loses the business and I take my custom elsewhere, to another hotel where I am made to feel good. It would have been so easy for this hotel to build up a relationship with me by noting my name and telephone number and arranging a call back.

The key challenge therefore in CRM is to make customers feel good. I call this 'creating a buzz!!!'. The BUZZ is the title of my most recent book. Most of my seminars around the world focus on how companies can accomplish this buzz. When you make customers feel good you are actually creating positive relationships with them, relationships which arise from emotional connections between people. In establishing this emotional connection value can be added to the relationship. That value can take the form of a smile, an expression of genuine interest, some personal initiative or some friendly chat. For example I was recently staying at the Conrad Hilton Hotel in Singapore. It happened to be my birthday. I am too old to celebrate birthdays and therefore told nobody of this. At 6.00 p.m. on that day I returned to my hotel room after running a BUZZ session for Singapore Airlines. The duty manager rang me and asked me if he could come to my room to discuss one or two things. He was just checking I wasn't in the shower. Five minutes later there was a knock at my door and there were four members of hotel staff outside singing 'happy birthday'. They had balloons and presented me with a birthday cake - suitably inscribed, with icing, in my name. I was overjoyed. This little celebration, costing very little and taking very little time created added emotional value and helped the hotel reinforce the excellent relationship it has with me. The team there also presented me with a birthday card. If a computer had sent me a birthday card it would have meant very little - but the fact that one first class employee, Kamaliah Kamis, had spotted from my passport that it was soon to be my birthday and had then taken the initiative to get a small team together to briefly celebrate it thrilled me. That even I went across to the Starbucks coffee shop in Millennia Walk, Singapore - and exactly the same thing happened. They celebrated my birthday by presenting me with a card signed by each member of the team.

Companies such as these go to great efforts to create a BUZZ to make customers feel good. To achieve this they must first make their employees feel good - such that they love coming to work and love serving customers. Progressive Chief Executives like Sir Richard Branson of the Virgin Group, and Allan Leighton who until recently headed up ASDA Stores in the UK - as well as people like Michael Lee who used to run the Starbucks operation in Singapore recognise this: that the core of any company's success is it's people. It is a lesson I first learnt when I started my career with the chocolate manufacturer Mars Ltd many years ago. To be successful in business you have to invest an inordinate amount of time, effort and energy into getting the people thing right. If you make your employees feel good the probability is that they will make customers feel good and you will establish excellent customer relationships. Such positive feelings come from the heart and radiate out from the Chief Executive through the whole company to customers. These are feelings of love, warmth, enthusiasm, delight, kindness, compassion and so on. These organisations are driven by a deep-rooted sense of positive emotional value.

Many companies talk about values and there is much research evidence to suggest that successful companies are 'values driven'. However 'values' cannot be concocted artificially by way of intellectual debate. 'Values' come from the heart: they are emotional. For example in companies which value people employees 'feel trusted', 'feel appreciated', 'feel understood', 'feel supported'. Trust, appreciation, understanding and support are values which have to be 'felt' through an emotional experience. They are not logics.

To sustain a high level of positive feelings and thus exceptional customer relationships is hard work. It requires an immense amount of emotional energy - emotional energy which many front-line employees would prefer to avoid if they could relapse into the automatic mode of routine and 'unthinking processing of customers'. The latter requires much less energy. Peaks of energy expenditure (and the related high performance) will invariably decline into lowers levels of energy expenditure unless a stimulus factor is applied to the relationship.

Research for my book 'THE STIMULUS FACTOR' involved interviews with over 1,000 people worldwide and revealed that motivation does not occur by itself. It has to be stimulated. The stimulus can either be internal (from within a person) or external (from outside a person). There are a wide range of stimulus which fall into a number of clusters.

Application of the stimulus factor can be expressed diagrammatically as follows:

The challenge for any company therefore is to apply a fresh stimulus from time to time in the way it stimulates relationships with customers and also a fresh stimulus to the way it motivates employees. There is no guarantee that any one individual will respond in the desired way to any given stimulus. We therefore have to 'experiment' by drawing from a wide range of stimuli to determine which are most effective in stimulating a relationship - whether it be with customers or employees. The following are examples of just a few clusters of stimuli that can be used:

As indicated below these clusters of motivational stimuli are effectively the 'triggers' to various motivational drives:

Successful front-line employees draw upon these motivational stimuli to 'spark' positive relationships with each of their customers, this 'spark' effectively creates the 'buzz' which customers sense when they experience outstanding service, when everything works, when everything is 'humming'. It is this BUZZ that attracts customers and stimulates the desire to build a relationship with the individuals in this company.

In the absence of this buzz everything comes across as 'flat'. A customer will walk into a store and sense there is no energy, or will ring up a call centre and receive a mechanistic response. When the energy level is low and everything is 'flat' relationships deteriorate and there is a perception that standards of customer service are poor. A report in the Sunday Express (October 1st 2000) stated that 'more than half of British consumers have walked out of shops because they are so fed up with bad service'. Another report in the Evening Stanrd (April 9th 2001) stated that 'customer service has sunk to a new low'. This deterioration in service and thus in customer relations is not just confined to the UK. A report in the journal Business Week (October 23rd 2000) indicated that the number of complaints about service in the USA had doubled over the last five years and furthermore that measured customer satisfaction levels had declined dramatically in most industries during this period. My own research (for my book 'What Customers Like About You' - Nicholas Brealey Publishers 1998) showed that companies which provided poor service were those that were autocratic, bureaucratic, financially driven and tended to treat their employees like robots - whereas those that excelled at service (like Nordstrom, Starbucks, Pret A Manger and Bank Atlantic) were buzzing and created an immense array of motivational stimuli - which motivated customers to buy and employees to perform.

In my seminars I give plenty of examples of the practical application of these motivational stimuli in relation to customer relations. For example I quote from a young lady Charlotte Horne who until recently worked as a customer service agent for BT Cellnet in a call centre. She told me: "It's all about giving something extra to your customers. Every evening I go home I challenge myself to think of something special I have done for my customers today." Another customer service agent Sharon Salehi who works in customer relations for Bradford and Bingley told me "I want every single customer who rings in and speaks to me to have a good memory of me." These are both examples of the stimulus of aspiration. In these cases the stimulus is internal, it comes from within.

Another example of how motivational stimuli lead to excellent customer relations comes from the coffee bar and restaurant chain Puccino's. John Black the Chairman and founder spends much of his time getting out and about motivating his people - he does this by helping them out, sometimes cleaning toilets, other times sweeping floors. Such behaviours act as 'motivational stimuli' - they are altruistic (helping) as well as inspirational. The walls in their restaurants are decorated with jokes and cartoons (diversionary stimuli) whilst the company aims to make a difference by using the artistic flair of staff to decorate the tops of cappucino's with a variety of designs (the stimulus of inspiration). Overall the spirit of the company evolves from a deep belief (the spiritual stimulus) that 'service is our pleasure'. To this end the Chairman (John Black) has a little red book - full of cartoons which illustrate the underlying principles of the business. The Ritz Carlton hotel group is driven by a powerful motivational stimulus expressed in the form of a 'credo' which includes promises to both customers and employees. Nick Clayton who ran the Ritz Carlton Hotel in Singapore told me "In the last 12 years not a day has gone by with me picking up our 'credo' and challenging myself and my team as to whether or not we are putting them into practice."

However the most powerful motivational stimulus comes from the heart and is emotional. In fact the word 'emotion' has the same linguistic roots as the words 'motivation', 'motive' and 'to motor'. In other words 'emotion' is all to do with movement. If you want to influence somebody, persuade or convince them you must put 'feeling' into your communication. Too many written documents and conference speeches are plain boring because they are two dimensional - the third dimension of emotion is missing. Thus to develop outstanding customer relations it is essential that 'feeling' or 'emotion' is put into every single interaction with a customer. Such emotion can only come from the heart - and can never come from a robot or a computer. Customers connect with such emotions and value them. It is why I describe in my book 'What customers like about you' as 'added emotional value'. An article in Time magazine (September 15th 1997) quoted Princess Diana as saying, when she was alive: "I want William and Harry, my sons, to have an understanding of people's emotions, of people's insecurities, of people's distress, of their hopes and dreams'. She was much loved around the world because she had the 'common touch' (something other members of the royal family did not have). Touch is all about feeling - and Princess Diana had a good feeling for ordinary citizens like you and I. You can translate the above quotation into CRM language and state "I want my front-line customer facing people to have an understanding of our customer's emotions, of their insecurities, of their distress and of their hopes and dreams."

Most customer purchases are emotional and aimed at making people feel good (or avoid feeling bad). If a front-line person can 'sense' these emotions then there is a much higher probability of excellent customer relations than if the front-line person is indifferent towards them. If I have a problem with a piece of equipment I already feel bad before I ring the call centre - so when I ring through I need sympathy, compassion and understanding, three emotions that will help make me feel better. What I don't want is disinterest and disownership whereby my problem is shunted around five different people: that will only make me feel bad.

Summarily one of the most neglected area of customer relations is psychology. Too many companies rely on systems to build relationships and the drift into e-commerce is exacerbating this. However most customers are social animals and the social interaction that arises from a transaction with a real person adds immense emotional value in establishing and reinforcing that relationship. Companies therefore need to focus much more attention on the psychology of emotions in their business dealings and how these influence, through motivational stimuli, the behaviors and attitudes of customers and employees. In task-driven companies (and there are a large number of companies I have come across which are task-driven) this aspect of psychology is ignored and results in customer alienation and a perception of service deterioration. Conversely in people-oriented companies much attention is given to motivation and making people, both customers and employees, really feel good. In these companies there is a genuine interest in people and a sincere attempt to make them feel special. For example, Gerry Busk, Senior Vice President Marketing with Bank Atlantic (USA) told me "I only have one job and that is to motivate my people. As soon as I step through that door in the morning that is my sole objective." Alan Jones, Managing Director of TNT (UK) said exactly the same thing. "When I visit a depot I only have one aim - and that is to leave that depot with the people on a high " Putting people on a high, motivating them, making them feel special should be the sole objective of customer relations management.

The following are ten practical steps which can be used to apply the psychology of CRM.

Dr David Freemantle is one of the world's leading authorities on the subject of customer relations, leadership and motivation. He is the author of fourteen best-selling business books. He also tours the world speaking at conferences and running seminars on customer relations, leadership and motivation. His clients around the world include Zurich Financial Services, Bank Atlantic (USA), Singapore Airlines, Nike (Europe) and The John Lewis Partnership (UK).

Prior to founding his own company SUPERBOSS LTD he was a main board director of the airline British Caledonian Airways. He began his career as a production manager with the American company Mars Ltd.

Article 16 THE PSYCHOLOGY OF CRM

Article 16
THE PSYCHOLOGY OF CRM