7 questions to assess your customer management risks

May 9, 2010 at 5:31 pm Leave a comment

Effective management of customer relationships is at the heart of every business. Customer satisfaction and retention is at the top of the mind for every CEO and business manager. Failure to appropriately manage the customer relationship is among the biggest risks facing a business. 

However, I believe that management of customer relationship risk has not been given its due importance, commensurate with the criticality of the process. Managers need to recognize this is not an empty theoretical risk management exercise, but that there are real dollars at risk here. Not managing the risks of the customer management process could potentially lead to lost sales, customer attrition, declining revenues and margins, loss of reputation etc.

 A cornerstone of managing customer relationships is  maintaining transparent flow of information and communications with your customers. Withholding critical information about your products from your clients and customers can lead to severe impairment of corporate reputation, as has been seen in the recent troubles of well known companies in the financial services and automobile industries.

In an intensely competitive business environment, exacerbated by the deep and severe economic recession, every customer interaction has to be managed to perfection. Today we are in an “experience economy.” Customer satisfaction depends not just on the quality of the product or service, but the total experience around it, including the quality and depth of information about the product or service, the functional and pricing options available, the process of purchase itself, the knowledge and friendliness of the staff and the level of utility of the product and service in fulfilling the need.   

Key moments of interaction with customers, known as “Moments of Truth” need to be managed effectively, as they can have a disproportionately large impact on customer satisfaction.  Automation of customer relationship management processes through Interactive Voice Response Systems (IVRS) and Customer Relationship Management (CRM) tools has led to increased efficiencies and cost savings for many organizations. However, implementing technologies should not come at the cost of quality of service. Many marketing organizations have ceded control of their CRM implementations to their IT groups and consequently are unable to realize desired returns on investments and improved customer service levels

Companies can address these risks by subjecting their customer management process to a rigorous risk assessment which would seek answers to critical, probing questions. Ask yourself the following 7 questions:

  • Do we have processes to assess the needs and feedback of  customers about  the quality of our products, services, the delivery experience and the product ownership or usage experience?
  • Do we have practices to identify and resolve potential or actual quality problems with the products or services and effective communication policies and damage containment measures?
  • Do we have a common view of our customer relationships across all transactions and all interactions the customer has with the organization?
  • Is our technology enabling us to enhance the quality of interactions with customers cost effectively?
  • Do we have clear measures to monitor and track customer satisfaction and incorporate the insights into the design of products and services?
  • Do we have measures to stem the risk of lost sales from customers that defect to competitors?  
  • Do we understand and assess reasons of lost customers to identify reasons for the same?  

Organizations that focus on customer relationship risk management will find that their investments in enhancing this capability flows straight to the bottom line.

Entry filed under: Business Management, Corporate Governance, Customer Management, Enterprise Risk Management, Leadership and Culture.

How Leadership and Culture shape Risk Management Six Secrets to Creating a Culture of Innovation – HBR Blog

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