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CX, CRM & Customer Loyalty: What's The Difference & Why It Matters?

by Simon Spyer on Feb 16, 2017 12:17:51 PM

CRM Solutions Should Support Great CX & Build Loyalty

CX, CRM & Customer Loyalty: What's The Difference & Why It Matters?

Customer Experience, Customer Relationship Management and Customer Loyalty are critical components of effective marketing.

But they're not the same thing and shouldn't be used interchangably.

It's important to understand the differences and inter-relationships so that you can achieve the ultimate aim of all marketing: earning the lifetime loyalty of customers.

 

The 3 Cs of Customer Marketing

3 Cs - Customer Loyalty, Customer Experience, CRM

 

Customer Loyalty

Loyalty is the outcome that all marketers should be aiming for.

The case for loyalty is compelling.

Creating value for customers creates a cycle of growth for your business:

  • It costs 5 times more to attract a new customer than to keep an existing one;
  • The probability of selling to an existing customer is 60-70% compared to 5-20% of selling to a new prospect;

As Frederick Reichheld has written at length, loyalty creates economic benefits that cascade through a business.

Revenue grows as the 'best' customers are converted. They repeat purchase and may well refer others. Businesses with a strong value proposition can be selective in their customer acquisition and can concentrate on those with the greatest 

Strangely though, in many cases, loyalty plays second fiddle (in terms of attention and budget) to acquisition.

It's worth noting loyalty scheme isn't the same thing.

A loyalty scheme is a tactic normally used to gather customer data and permission to use it. In a minority of cases, a loyalty scheme may help to build customer loyalty but they aren't the same thing.

Customer Experience

CX is how you build loyalty and is a strategic challenge as it encompasses all interactions with a brand.

Typically this is post conversion as it’s ‘customer’ experience but in some instances it can be used more generally to look at the entire customer journey (from suspect to fan) or sales funnel (from top of funnel to bottom of funnel).

It deliberately encompasses all touchpoints, both on- and off-line, and stretches well beyond the direct remit of the marketing department into customer service and operations.

The facets of CX can include:

  • Customer service
  • Marketing communications
  • Brand delivery
  • Sales and onboarding
  • Product/service delivery and fulfilment
  • Price and promotions
  • Customer lifecycle management

Brand and culture play a pivotal role in delivering remarkable customer experience as they align staff, help to break down silos and focus the business on the most important thing: delivering for the customer.

CRM

Customer Relationship Management is a process for delivering managing customers through their lifecycle with a brand. It seeks to build positive customer experience by personally relevant to each customer every time they interact with.

Done well, Customer Relationship Management will encourage customers to stay longer, buy more and recommend a brand - the very essence of customer loyalty.

It is a data-driven approach and should be based on your understanding of:

And from this understanding you can build a contact strategy.

A contact strategy defines how you will engage with your customers to meet their needs. Inevitably the contact strategy will be enabled by data and martech.

This doesn't mean that you need a loyalty programme.

You do need a compelling value proposition that gives you customer consent to collect and use their data. This value proposition should be based on your customer understanding and can be a combination of core benefits, incentives and rewards.

However, modern CRM approaches seek to build an emotional relationship with customers using 5 powerful levers:

  • Autonomy - Control over interactions with programmes - the touchpoints that they want to use, the access to their information and the the content that they wish to use.
  • Mastery - Helping customers to get better at the things that are personally important to them.
  • Purpose - The desire to do what we do in the service of something that is larger than ourselves.
  • Progress - We all want to see results and feel a sense of achievement; tiers, privileges and badges have been developed to build a sense of progress - the more your visit, the more you will get.
  • Social - Brands can certainly play a role in facilitating connections and interactions and engendering a sense of belonging.

Developing value propositions on these levers is normally more effective that transactional or promotional incentives.

One final point: 'CRM' means slightly different things in B2B and B2C environments. Typically in B2B, it's focused on the sales funnel and the process from customer awareness to conversion; in the B2C world, it is focused on post-conversion experience and cross- and up-selling.

In Summary

Loyalty, experience and Customer Relationship Management are three different things. They should be aligned and based on deep customer insight.

Your marketing objectives should be to build customer loyalty. The case is compelling.

Your customer experience should unite your whole business and deliver effortless experience for your customers.

And your CRM solutions should provide a robust process that allows you to manage the customer lifecycle, testing and optimising your marketing activities as you go and delivering a positive, effortless customer experience.

 

Fixed Price CRM Solutions: Strategy, Data & Martech Experts

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This post was written by Simon Spyer

Co-founder & Insight Partner at Conduit, professional insight-monger, dad, lover of all sport and Spurs.

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