First, a Happy New Year to the E-consultancy community. I was delighted to be asked by E-consultancy to write a blog about customer management. I am a passionate believer in providing customers with a great experience and, like many people, the start of a New Year is a good time for looking forward. I want to use my first blog here to kick off a discussion, so here’s a starter for ten.

2006 was the year when Web 2.0 generated a following in the business community. I think 2007 will be the year when it really starts to change how those companies think about managing their customers.

The first change that we will have to get to grips with is the very nature of customer management. 

In the past and still in most companies today, the concept of customer management means what the company does to its customers. But in the world of Customer Management 2.0 (a term I first heard from Graham Hill of Sophron, a UK consultant living and working in Germany) this one way street no longer works. 

In CM2.0, customers are active participants in a dialogue - indeed in many areas, they are taking control. Like many changes, they will trickle through slowly and there will be much more talk than walk for many, but case studies will begin to show just what is possible. 

Here are a few ideas about what matters in the world of CM2.0.

Communities shape your world

Whilst much of the Web 2.0 hype and activity focus on consumer-based social networks such as YouTube, MySpace and Friends Reunited, it is important to remember that businesses are also social networks – employees, customers, partners, influencers, those things called stakeholders.

According to WikipediaLinkedIn, the business network, has more than 8.5m members and is used regularly for business development and job-hunting. Social networking will have a massive impact on business. 

Knowing who your key communities are and where they talk is an important starting point for CM2.0. Whilst you might offer your own vehicles for enabling this dialogue, it is unlikely that people in the communities of importance to you will operate there and nowhere else.

Reputation is everything

How many of you have heard the infamous AOL customer service call on YouTube? Think how hard AOL has to work to overcome such a negative and widespread comment on its service. 

Companies will have to be much more active in tracking what is being said about them. Reputation, or the perception of quality and service, is everything. Knowing your standing in the communities that you do business in is vital. 

With blogs, podcasts, wikis and websites generally, the opportunity for customers to comment on your performance is growing. 

And it’s not just customers. Industry commentators, analysts and even your competitors can shape what communities think about you. Making sure that you are being fairly represented and address any incorrect claims will demand more and more time. 

The Word of Mouth Marketing Association (WOMMA) provides useful help and is proposing a series of common measures for tracking what is being said about a company. This is not new. Customers have always had their say. 

If they had a bad experience, they were quick to spread the word to friends and family, more so than when they have had a good experience. What differs today and is increasing rapidly are the ways that they can vent their feelings. 

Voice of the customer really matters

Measuring the customer experience by gathering feedback is already becoming much more sophisticated. 

Whilst still used by a few companies, the days of the annual ‘do you love us?’ survey are gone. Measuring the customer experience at each stage of the customer journey is essential if companies are to remove the (often little) things that they do to frustrate us. 

Using feedback to make a company easy to do business with is essential. And increasingly, that has to be multi-channel (web, email, phone, mobile) and in real time. 

Companies that fail to continually collect, share and act on customer feedback are not only missing out on opportunities to improve; closing the feedback loop with customers demonstrates a willingness to listen and act and thus strengthens the customer relationship.

Customer knowledge is powerful stuff

Your customers are experts in being customers. That might sound silly, but all too often, their expertise in what they do with your product/service or how they do business is overlooked.

Panels have long been used by market research organisations to identify un-met needs and test new products. The most significant section of a market, however, is often a company’s existing customers.

Customer panels - a representative sample of a company’s customer base - are being used by an increasing number of companies to test new products and ways of doing business before they are launched. Much more of this will come ‘in-house’ as technologies enable companies to do it for themselves and the recognition of the competitive value of this information grows. 

The act of involving customers, often without reward, helps to develop advocates, strengthening the positive word of mouth in the community. On-line panels will grow as companies seek to tap into customer knowledge increasingly.

Active participation

Customer panels are a small step towards much more active participation of customers.

The software world has led this with the open source movement, with the operating system Linux as its guiding light. Initially dismissed as unworkable, Linux has become widely used by large companies, as well as enthusiasts. Even proprietary software companies are using mash-ups to enable users to become much more active in the design and build of their implementations.

Wikis bring the same capability to support and service companies. “When Rod Smith, IBM’s vice-president for emerging internet technologies, told the information technology chief at Royal Bank of Scotland about wikis last year, the exec shook his head and said the bank didn’t use them. But when Smith looked at the other participants in the meeting, 30 of them were nodding their heads.” [Business Week]. 

The boundary between the producer and the user is increasingly blurred and will become more so. Whilst lawyers might argue about intellectual property, smart companies will press ahead with enrolling customers in the design and build process.

Unstructured data is difficult but vital

Much of what people talk about is unstructured, such as a comment to a friend about a good restaurant or a recommendation to a colleague to try a different supplier. 

Experiences and feedback are often distilled down to numbers, but many of the real insights come from the comments customers make in support of their ratings: they are the source of ideas for improvements and new products. 

There are approaches to dealing with such data, such as post-process categorisation, self-categorisation or simple word/phrase count and there are an increasing number of software applications that can be applied to crack this particular nut. 

Still, the best approach to date is to get this data into the right hands. This is not a new problem and much has been written about it under the guise of knowledge management. 

Many-to-many and one-to-one communications

What all the above adds up to is a shift in emphasis in communication with one-to-one and peer-to-peer taking precedence over broadcast methods. 

Social networking in a customer management context means enabling customers to talk to each other. Of course, they do this anyway, but unless your company is involved in facilitating this, you might be unaware of what is happening. 

You might not like what people say about you, but at least you will be aware and there may well be some gems in these customer-to-customer communications that you can exploit. 

When it comes to transacting with a customer however, companies need to keep it personal. Use everything that you have learned about the individual to tailor the offering and the message to them. 

Personalisation that is recognised and valued by the target is what one to one marketing has always been about. CM2.0 will require a significant increase in the integration of customer data. 

A single and integrated view of the customer is an essential foundation. The boundary between transactional, service and marketing will have to disappear. 

Prepare for culture shock

CM2.0 has the potential to challenge the culture of many companies, particularly the larger and more fragmented ones. 

Many will struggle with the realisation that the only way to retain real influence is to cede much of the traditional control over marketplace communication to customers. 

CM2.0 will also put a strain on the internal structure and power base of many companies. The integrated customer view is at odds with the fragmented structure and systems of many organisations. 

Some IT departments will also struggle as the boundaries of their systems broaden to provide access to customers and other influencers.

So what do you think?

Dave J