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Kallol Das CRM Consultant, Professor of Management & Author

The Smart Company
“We are going through a very bad phase with sales and profits falling sharply. We attribute our poor business performance to overall recession in the market,” says Mr. CEO of a Traditional Company.

“What is recession?
We are continuously increasing our sales and profits year after year,” says Mr. Leader of a Smart Company belonging to the same industry.

Strange, isn’t it?
Two companies giving two very conflicting opinions about the business climate.You will meet the first kind of companies quite often. The second kind of companies — the smart companies — is a minority community. They are the jewels in the corporate world. They are very successful and will always remain successful.
The Traditional Company works for immediate profits. They have a short-term approach to business. Someone has nicely said, “Working for profits is like playing tennis with your eyes on the scoreboard.” They look at customers as a by-product of the business. They may be doing very well. But their success is short lived.
Let us take the example of Fortune 500 companies. These are the largest and most profitable corporations of the world. But if you consider them to be invincible, then think again. According to a research study, only 3 of the Fortune 500 companies from year 1900 still exist, without merger or acquisition.
The Smart Company works for customers. They have a long-term approach to business. Customer retention is the purpose of their business. Profit is just the by-product. And my God! They make huge amount of by-products.
John Stubbs, CEO of the UK-based The Chartered Institute of Marketing (CIM), spoke to one Indian business magazine: “We started five years ago by sponsoring research through the London Business School to establish the relationship between customer focus and business success. From a statistical base of 5,000 companies, where we wrote to the Chief Executives and analysed the responses from around 500 companies, we were able to establish that the greatest correlation is between companies that cared for their customers and also gave highest returns to their shareholders.”
McDonald’s is an example of a smart company. It has Indianised many offerings to suit local needs. It came out with Mr. Shahkahari Treat that included Chatpatey Potato Wedges, McAloo Tikkas, McVeggies, etc.
Patricia Seybold, renowned Customer Guru in her seminar at Mumbai had this to say: “Until we redesign our entire business to be customer-driven, we won’t be able to meet the needs of the 21st century customers.”

Now, the big question: How do you retain customers for life?
Simply by building lifelong relationships with them. What does that mean?

Well, let us understand what relationship really means. First, it is just not knowing each other or liking each other. It goes beyond. It is all about loving and trusting each other. A strong relationship will create a bond that no outside attraction can break.
In business context, building lifelong relationship between the supplier and the customer means creating a strong bond - a strong bond of love and trust that cannot be broken by any competitor; a strong bond that grows stronger everyday. Simple words but how often do we see them happening?
Scott Bedbury, global brand consultant and former head of marketing at Nike and Starbucks, says, “Companies have been disrespecting people’s intelligence, with product claims they don’t back up, horrible customer service… People are saying, why trust corporations that don’t respect us anyway?”
Consider LG India. It advertises “wrinkle free eyes” promising lower eye strain from watching its TVs, but apparently uses the same picture tube as its rivals. All the airlines treat economy class travellers shabbily. And the service quality of most of the ISPs remains pathetic.
Now, if you are the supplier, you cannot build lifelong relationship with your customer just like that. You need the active involvement of your employees. In other words, you need to build lifelong relationships with your employees towards building lifelong relationships with your customers.
Ashank Desai, chairman, Mastek, one of the top IT companies of India, says, “We encourage warm, friendly, honest and co-operative relationships among the employees. Only when the relationships within the company are warm and friendly would we be able to extend the same to our customers.”

Understanding Business
Before trying to understand business, let us understand customers. We overlook our customer because we don’t have a clear definition of this creature.
We all know Mahatma Gandhi as the Father of our Nation. However, very few know him to be the Father of Customer Care. Gandhiji came out with a revealing description of customer. (See Box “Mahatma Gandhi’s Definition of Customer”)
Unfortunately, very few companies look at customers this way. In fact, there are many well-known firms who were late in understanding their customers and had to pay a heavy price for that.
Domino’s started their Indian operations in 1998 with a lot of hustle and bustle. Its then CEO, Pawan Bhatia (now no more with the company), had an ambitious dream of being the first chain to have 100 outlets. However, the hurry to open 100 restaurants left holes in the company’s planning. The outlets ate into each other’s business, quality suffered and promotions got the customer hooked onto discounts. Today, Domino’s has closed outlets in smaller towns and is relocating outlets even within metros.
Similarly, erstwhile market leaders of television sets in the Black & White era, viz. Uptron, Keltron, etc are extinct species today. They failed to understand and satisfy the changing needs of customers.
Many more examples can be cited to show the importance of customers in any business enterprise. If there are no customers, then there is no business. In short, Customers=Business.
Let us find out the participants in any business and their different relationships.
The participants are normally called ‘stakeholders’ who have direct interest in the success of the business.
Let us understand the information conveyed by figure 1. The customers pay money for acquiring your product. This money compensates all other stakeholders viz. shareholders, financiers, suppliers, society and last but not the least, employees for investments they have made in the organisation.
If your customers desert you or if you fail to attract them, your business will close down.
The customer has a special stake in your organisation. If the product he purchases does not provide him the desired performance, his hard-earned money is wasted. Thus, the customer has great interest in efficient functioning of your organisation. He is, therefore, a stakeholder of your business.
The employees buy your organisation’s business concept and concretise it by providing their knowledge, skill, effort and time. They interact with all other stakeholders and satisfy the interest of each of the stakeholders. Your organisation, in turn, fulfils the needs of the employees like physiological, security, social needs, etc.
There is similarity in the interests of both customers and employees vis-à-vis the business organisation. If you look at the definition of Customers, you will find that Employees have many of the attributes of the former. And, therefore, the Employees can also be described as ‘Internal Customers’. If the Customer is the purpose of the business, then the employee as the Internal Customer is the means.
Organisations having satisfied employees create satisfied customers. Employees of Infosys are always proud of their company. Customers of Infosys are always proud of their supplier.
An enlightened management should try to bring synergy of all the different stakeholders so that business is able to flourish. And satisfy to a great extent the needs of the shareholders, financiers, suppliers and also the society.
From the discussion so far, we can say that customer relationship management cannot be successful without employee relationship management.
The figure 2 says it all. It is not enough to be a customer centric organisation! A truly smart company is one that is centred on both customers and employees. Customers are the primary (core) focus and employees are the secondary focus of such an organisation. The management of such companies focuses on building relationships with their customers and employees. That makes the relationships enduring and lifelong.

What is h-CRM?
Here we talk about a very powerful strategy - h-CRM — that can transform your business into a market leader. But first, what is h-CRM?

h-CRM=
HRM (Human Response Management) + CRM (Customer Relationship Management)
So h-CRM is really an amalgamation of two concepts viz. CRM, which is a very popular but unfortunately

MAHATMA GANDHI’S DEFINITION OF CUSTOMER

• A customer is not an outsider to our business. He is a definite part of it. A customer is not an interruption of our work. He is the purpose of it.
• A customer is doing us a favour by letting us serve him. We are not doing him any favour.
• A customer is not a cold statistic; he is a flesh and blood human being with feelings and emotions like our own.
• A customer is not someone to argue or match wits with. He deserves courteous and attentive treatment.
• A customer is not dependent on us. We are dependent on him.
• A customer brings us his wants. It is our job to handle them properly and profitably - both to him and us.
• A customer makes it possible to pay our salary, whether we are a driver, plant or office employ

a badly misunderstood concept, and HRM (a beautifully coined Human Response Management by Prof. S. K. Chakraborty of IIM Calcutta because human beings are the only resource that can respond), a highly neglected management discipline.

CRM is understood by the majority as Database Marketing System. It enables one to treat different customers differently using high technology. It is also known as One-to-One Marketing. This is what most of us know about CRM today. Right?

Well, if this is what you had known about CRM, then you should also know that 75 per cent of all CRM projects have failed (according to Arun Thiagarajan, Former Managing Director, HP India). And there is a strong correlation between this CRM definition and failure results.Ranjan Banerjee, director of Pune-based Renaissance Management Consultants, says, “The sad thing about CRM is that it has been packaged as a technology solution, thereby dehumanising a lot of the personalization that CRM brings.”
Patricia Seybold recently said about CRM: “The ‘problem’ with CRM is that capturing customer information and acting upon it is only one piece of a much larger challenge confronting today’s businesses. Customers don’t just want to be marketed to; they want to be well served. And companies are notoriously ill-prepared to meet today’s challenges.”
Time has come for us to look at CRM in a holistic manner. And the solution is h-CRM. The ‘h’ stands for the human element needed to make CRM successful.
h-CRM is all about People: Customers andv Employees.And there is only one objective: build lifelong relationships with them.

THE h-CRM MODEL
Figure 3 shows the h-CRM model. As shown in the diagram, h-CRM is all about people. People here mean customers and employees. The end objective is to build enduring relationships with your customers and employees. Only this can lead to a prosperous business organisation.
Let us study the model in brief. The model has four elements viz. Leadership, Delight, and Loyalty with People at the centre. On interpretation, it means following three things:

1. Lead people
You have to Lead People to Delight and Loyalty. That’s Leadership. That’s the foundation of a strong relationship building exercise. Only a leader (and not a CEO) can make a company customer-focussed and make its customers supplier-crazy.

But what makes a great leader?
A leader has an attitude, which makes him do things differently. The right attitude is the key to success — both in life and in the business world. According to a recent survey by Princeton University, success rate depends on 85 per cent attitude and only 15 per cent ability.
Only the right attitude towards customers and towards employees will yield the right behaviour —essential for proper relationship building.
Now the biggest question is how to develop a positive attitude towards customers and employees and thereby, start the h-CRM program?
The answer is simple and logical. The right attitude will come from right core values — the right moral principles. According to Stephen Covey, “The road to high quality product is paved by individuals who are not only competent, but whose lives are centred on enduring timeless principles.”
Some leadership examples from the corporate world: U Sundararajan, former chairman of Bharat Petroleum Corporation Ltd (BPCL), transformed his company’s culture and performance, even while it has remained a public sector corporation. Kumar Mangalam Birla leads an old, family-promoted conglomerate, two of whose international companies have done Indian management proud by winning the Deming Prize.

2. Delight people
Relationships are made only when promises are fulfilled consistently. Or better still over delivered. That creates happy customers and happy employees. That creates good business as well.
Want to experience delight? Then, visit a car showroom today. Soothing ambience, well-trained staff and a host of conveniences provided by the auto dealers make car shopping so comfortable. As you watch your favourite movie or surf through the Internet, the customer service staff clears your paper work and hands you over the car keys!
At Eli Lily India, the boss (the supervisor) meets every fresh recruit or transferred territory manager at the railway station. The supervisor also arranges accommodation for the newly arrived executive. Some even go to the extent of making arrangements for laundry and ironing of clothes in a conscious effort to make the move into a new city as smooth as possible. Great, isn’t it? Don’t you feel like joining them?

3. Make people loyal
Relationship building needs investment of time and efforts. All relationships are not equally profitable. You have to focus on those relationships — with your customers and employees — which are profitable or which have a great profit potential. And then strengthen those relationships so deeply that no outside attraction can shake those bonds.
Citibank has a special set up called CitiGold, which is meant only for its cream (Key) customers. The CitiGold office is the height of luxury. The people handling - sorry, pampering these customers have the highest professional qualification and finesse. CitiGold offers special and exclusive Wealth Management Consultancy, exclusive telephone numbers and special web page for its customers, plus many other benefits.
The A V Birla Group has a fair performance appraisal system that ensures that exceptional employees are rewarded. BPCL has a differential compensation system. Both these organisations have today become role models for other Indian companies.

To Sum Up
Businesses misunderstood CRM as a technology solution. The answer to this problem is h-CRM, which focuses on the human dimension with technology acting only as the enabler. Leadership, Delight and Loyalty are the three mantras of h-CRM that will help companies achieve lifelong relationships with their customers and employees. And that means lifelong happiness and prosperity.

References:

1. Chakraborty, S. K. (1989), Foundations of Managerial Work: Contributions from Indian Thought, Mumbai: Himalaya Publishing House
2. Covey, Stephen R. (1992), The Seven Habits of Highly Effective People, London: Simon & Schuster
3. DeVrye, Catherine (1999), The Customer Service Zoo, Hyderabad: EastWest Books (Madras) Pvt. Ltd.