Business Strategy Series

Creating competitive edge through improved customer relationship management

Tajinder Pal Singh Toor

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Tajinder Pal Singh Toor, (2008),"Creating competitive edge through improved customer relationship management", Business Strategy
Series, Vol. 10 Iss 1 pp. 55 - 60
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Creating competitive edge through

improved customer relationship
management

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Tajinder Pal Singh Toor

Tajinder Pal Singh Toor is a

Project Management
Professional Consultant/
Advisory System Analyst
based at IBM, Merrillville,
Indiana, USA.

Introduction
This article describes some of the Best Practices for Improved Customer Relationship
Management in order to gain competitive edge and market dominance. According to the
2008 Executive Survey by Gartner and Forbes.com, retaining and enhancing relationships
with current customers is the number one business issue, followed by attracting new
customers. There is an increased need to constantly reengineer business strategies that
improve the customer experience and increase profitability for the company. Decision
makers should investigate the attractiveness and suitability of sales solutions targeted
towards improved customer relationship in order to advance revenue growth and margin
expansion.
This paper lists some key factors/practices for Improved Customer Relationship
Management. The factors/practices are listed below:
(1) Reach more Customers and Markets.
(2) Keep Scores and Feedbacks.
(3) Building Partnerships.
(4) The Importance of Customer Profitability.
(5) Manage Customer Experience.
(6) Make Customers Insiders.

Reach more customers and markets

Success story: Chicago Spa an absolute hit with the men folk
When Tiffani Kim noticed female customers of Tiffani Kim Institute Medical Spa bringing in
husbands and boyfriends, she started reaching out to the male market. After renaming
mens manicure/pedicure treatments sports buffs, instituting couples nights to encourage
women to introduce men to the Chicago spa and otherwise exploring the new demographic,
Kim, 47, reports that a significant portion of the 80-person companys revenue now comes
from men. It will never be like the womens spa business, Kim says. But it has gotten to be
a good 30 percent of the business.
Some key points:
B

DOI 10.1108/17515630910937797

Do no harm. Dont expand in such a way that its going to get you hurt, says Clarkson
University marketing professor Larry Compeau. Appealing to a new demography
requires changing something about your offering. Before doing it, make sure the changes

VOL. 10 NO. 1 2009, pp. 55-60, Q Emerald Group Publishing Limited, ISSN 1751-5637

BUSINESS STRATEGY SERIES

PAGE 55

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will not alienate the customers who got you where you are. Retail businesses should be
especially aware of how a new group of patrons can change the experience for existing
customers. Kim clearly had to make sure that having increasing numbers of men in her
spa did not turn it into a boys club.
B

Look before you leap. Do your homework first, Compeau urges. Make sure the new
demographic market values your product. Your market research could consist of hiring a
research company, talking to potential customers in the demographic group or, as Kim
did, just paying attention to what goes on at the front desk.

Go slowly. Kim modified her offerings incrementally over a period of years to make sure
the effort and risk were worth doing more. Thats the way to go, according to Compeau.
Id advise changing as little as possible at the outset to see how the market responds.
The last things to change should be the hardest to undo. And you do not want the
experiment to be irreversible.

Consider Multi-branding. Its what Toyota does with Lexus and what countless other
corporations do with their own brands. Entrepreneurs can reach new demographics
without alienating old ones by giving new offerings different identities. It can be as simple
as a restaurant using the same kitchen to serve two dining rooms, each with its own
entrance, signage, pricing and demographic market.

Look at everything connected with your business and its value proposition to see how it
might be modified to enhance its appeal to a different demography. While its easy and
sensible to do as Kim did and change little more than the label affixed to new offerings,
you might need to do more. Look at your: pricing; associated services; promotional
techniques; and distribution methods. For example: Everyone knows Toyota makes
Lexus, but you cannot go into a Toyota dealer and buy a Lexus. The products have
completely separate distribution systems, which helps keep them separate in the minds
of completely different demographics. For example: Wal-Mart has seriously embarked on
a series of initiatives to drive two key ideas sustainability and relevance. Not only is
Wal-Mart going upscale, but Wal-Mart is going green.

Keep scores and feedbacks

Key fact: Feedback is the essence of an organizations success
Organizations are increasingly dependent on accurate feedback in all areas of operation,
from marketing and CRM to employee management and training. Feedback management
has become a vital part of every companys efforts to increase efficiency, achieve continual
and ongoing improvement and ensure customer satisfaction leading ultimately to a more
successful business. Traditional methods no longer meet the requirements of collecting,
analyzing and managing feedback from all relevant players. A new approach is required,
with a new range of sophisticated yet user-friendly tools.
Advanced feedback solutions help companies
Some key points:

Prioritize action through real-time analytics.

Increase enterprise knowledge and focus through push reports.

Increase response rates through multi-channel delivery (web, phone, paper).

Optimize channel selection to minimize feedback process expense.

Optimize the number of survey responses.

Save at-risk customers before they are lost.

Save time through easy-to-use survey creation, deployment and management features.

Reduce survey deployment time through easy-to-use hosted solutions.

PAGE 56 BUSINESS STRATEGY SERIES VOL. 10 NO. 1 2009

Building partnerships
Key fact: Joint-venturing a stepping stone to unanimous growth
Why partner with others?
Meaningful partnerships are the foundation for success. Partnership is what enables many
companies to make continuous improvements. By sharing with others, you can direct your
resources and capabilities to projects you consider most important.

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Businesses increasingly need to develop and manage complex ecologies or organizations

around themselves so as to succeed. The selection of strategic partners with whom to
collaborate is now becoming a life or death issue for most firms.
Barriers between companies, which used to be solid and absolute, are now permeable.
Iconoclasm and creativity are now the keys to success. For generations companies built
moats between themselves and their competitors. Today the most successful companies
build bridges. And that is only the beginning.
Growing role of partnerships in the new economy
Corporate leaders must adopt, practice, and orchestrate what appears to be conflicting
policies, such as joint-venturing with competitors. In todays new world, the competitive
pressure has been intensifying, it is becoming harder to achieve leadership and stay on top,
and, thus, competitor in one market may establish alliances in another. Acquisitions of and
mergers with competitors have also become a common practice. More and more, those
who can examine the code, challenge it, and rewrite it for success in their companies, fields,
and industries will be the leaders and role models.
Strategic alliances
Strategic alliances enable business to gain competitive advantage through access to a
partners resources, including markets, technologies, capital and people.
Teaming up with other adds complementary resources and capabilities, enabling participants
to grow and expand more quickly and efficiently is beneficial for fast growing economies. In the
process, they save time and boost productivity by not having to develop their own, from
scratch. They are thus freed to concentrate on innovation and their core business.
Joint ventures
Joint ventures involve sharing the risks and rewards in an enterprise or project co-owned
and operated for mutual benefit by two or more business partners. There are good business
and accounting reasons to create joint venture with a company that has complementary
resources, skills or assets, such as distribution channels, technology, or finance.
Business Process Outsourcing (BPO)
Although the quest for cost savings inspired initial forays into offshore outsourcing,
companies are now using offshore delivery to achieve significant improvements in business
performancetransforming outsourcing from a tactical and technical point solution to a
long-term business strategy for creating and defending competitive advantage. The decision
makers are looking to leverage global sourcing to gain long-term process optimization,
business-oriented measurements, and enhanced control over IT assets and activities.
Extended enterprise: virtual integration
Through virtual integration, the walls between enterprises crumble. Companies stop being
self-contained business units that produce products or services, and become integral
elements in a larger system. In the new world of virtual integration, no matter who signs the
check, all the people are working together for a common cause. Vertical integration
performs, virtual integration innovates.

VOL. 10 NO. 1 2009 BUSINESS STRATEGY SERIES PAGE 57

Customer partnership
Customer partnership is a shared journey to create a future for both parties that is better
than that either could have developed alone. The customer is the foundation of your
organizations success.
Helps your organization to maintain the focus you need to make good decisions and harness
the power and commitment you need to weather volatile times.
Commitment to long-term relationships that create synergies of knowledge, security, and
adaptability for both parties

The importance of customer profitability

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Key fact: profitability requires comprehensive review of the business relationships with
Customer
To support vital resources, businesses spend a significant amount of time and effort
maintaining customer satisfaction. Within the automotive supplier sector, many, of these
relationships have been strained by the incessant need for annual cost reductions. As
companies continue to scramble to react to this pressure, the fundamental economic issue
becomes whether or not there is room in the supply chain for profitability and return on
investment.
The profit dilemma
The most significant issue is whether the suppliers feel as though they have a reasonable
shot at making money in this sector.
Many suppliers have had to face the possibility that a valued customer is not generating
revenues equivalent to the resources required to provide the best possible product. At some
point, every supplier faces the following question: Does the revenue from existing customer
X fall short of the costs and investment needed to provide continued exceptional service?
Determining profitability considering example of automotive industry
To properly determine the accuracy of any cost/profit report, the management team should
conduct a thorough assessment of it. Verifying that bills of material and routings have been
updated to reflect current production and ensuring that all direct costs are accumulated is
just the first step. Given the growth in overhead expenses relative to direct costs, evaluating
whether burden is allocated consistently with what drives these costs is paramount. Without
this rigorous periodic evaluation of direct costs and overhead, a supplier can be
short-sighted in its evaluation of where it is making or losing money.
Generally (though not always), the findings of a thoroughly vetted report will be relatively
consistent with the owners intuitive sense. To the extent there are inconsistencies, a
re-evaluation of the assumptions is necessitated. An accurate cost report will quantify and
weigh all costs associated with doing business with a particular customer, enabling a true
evaluation of whether a further investment of resources is justified.
Developing alternatives
If a comprehensive review of the business relationship reveals that a further investment in the
customer is no longer profitable, what can be done? While terminating the relationship is an
option, it is important to consider the full effect that this action will have on other customer
relationships. Would it be more beneficial to reduce the costs associated with serving the
customer in question?
What alternatives exist?
Eliminate non-valued costs and/or identify savings that do not impact the end customer.
There are numerous instances where suppliers have improved their profitability by reducing

PAGE 58 BUSINESS STRATEGY SERIES VOL. 10 NO. 1 2009

material content or by substituting or eliminating packaging requirements resulting in no

appreciable impact to reliability, safety or quality.
Source components or tooling to Low Cost Countries (LCCs). Most suppliers are at least
considering whether an LCC strategy will benefit them in the short run. Many suppliers have
recognized this possibility for years and have embraced this change in their business
model. While the cost savings appear enticing, a supplier must compare the existing costs
of producing domestically with the full costs of an LCC product, including additional
non-production costs to ensure the savings are not illusory.

Manage customers experience

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Incident example: my dining experience at the Palm Desert Marriott

The Palm Desert Marriott is a beautiful resort near Palm Springs, California. This past March,
I was at the resort to speak to the American Hardware Manufacturing Association. The night
before my breakfast presentation, I dined in one of the resorts fine restaurants, the Tuscany.
While the food and ambiance were very good, the standout of my dining experience was my
wait person. She was prompt, attentive, and pleasant. But what I remember most happened
at the end of the meal.
Thank you for dining with us, she said as she shook my hand. Each year, because of my
business travel and love of fine food, I eat at least 300 meals outside my home. And yet, this
was the first time anyone had thanked me and shaken my hand! While such a move on the
part of a restaurant employee might strike most customers as odd, this wait person extended
her hand in a manner that I found to be classy and natural.
Then she added, And dont miss the comet, Halle Bopp, tonight the sky is especially
clear. Also at 7 p.m., youll want to watch for the lunar eclipse.
In those two closing gestures, a handshake and a suggestion to view the night sky, my wait
person added immensely to my enjoyment of the evening. In fact, the real treat of my dining
experience had nothing to do with northern Italian cuisine! It was about courtesy and
astronomy. She managed my dining experience so that it was particularly enjoyable,
personal, and memorable.
Some key points:
B

No matter what business you are in, it is critical that you manage your customers
experience. Customer experience is a broader canvas for the service artist to paint on. It
is those seemingly little touches and comments that often have nothing to do with your
specific business that will make your customers remember doing business with you as
personal and enjoyable

Your competitors are managing product or service delivery. You can leapfrog them all by
focusing on managing the customers total experience.

Make customers insiders

Incident example: when I felt like an absolute outsider
I was seated in 3B of the first-class cabin of the slowly taxiing flight 675. The door was open
to the cockpit, where the captain and first officer were pointing out to two flight attendants at
something outside, to the right of the plane. One of the flight attendants came back to the
first row to share her findings with some friends who were on board. She pointed out the
window toward a hangar, and soon her friends joined her in fascinated attention.
The rest of us in the first-class cabin were at least mildly curious about what the crew and a
few favored flyers were observing. And we felt like outsiders. Since we were not part of the

VOL. 10 NO. 1 2009 BUSINESS STRATEGY SERIES PAGE 59

inner circle, we had to just sit there and wonder what interesting thing there was to see. The
crew was too preoccupied to worry about such customer concerns.
Customers want to be treated like insiders, not outsiders. They want to feel that the flight
crew is interested in letting them in on information that affects their travel plans, allays their
anxieties, and enhances their enjoyment.

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Some key points:

B

Todays leading-edge companies make their customers insiders. FedEx, for example, has
a web site that receives 108,000 hits every day. That is because their site allows
customers to track their own packages. You cannot get much more insider than that!

What are you doing to make your customers feel like insiders?

About the author

Tajinder Pal Singh Toor, PMP, PMI-SP has more than eight years of IT industry experience
encompassing a wide range of skill set, roles, and industry verticals. He has experience in
leading and managing complex projects. He has handled multiple roles Project
Management Professional, Advisory/Senior Quality Consultant, Lead Process Reviewer,
Advisory IBM Audit etc. He acts as Expert Reviewer for Business Process Management
Journal (BPMJ) and is a member of Emerald Literati Network. Tajinder Pal Singh Toor can be
contacted at: Toor.tajinder@yahoo.com

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PAGE 60 BUSINESS STRATEGY SERIES VOL. 10 NO. 1 2009