An interview with Professor Andreas Schmidt, Head of the Center for Customer Relationship Management at Osnabrück University of Applied Sciences
"Providing an Advantage and Authenticity"
As products and services become increasingly exchangeable, the relationship between a company and its customers becomes a crucial success factor. Prof. Dr. Andreas Schmidt, of Osnabrück University of Applied Sciences, shares how this relationship can best be structured.
Customer relationship management is a buzzword receiving a lot of attention in both theory and practice. How do you define the term?
Andreas Schmidt: Customer relationship management involves companies strategically aligning all of their activities with the customer and the customer’s needs. The development in this direction began in the 1990s. Prior to this, companies’ strategies centered primarily on their technology, and secondarily on their products.
What areas of a company are impacted by this focus on customer needs?
Andreas Schmidt: All of them. For one thing, customer relationship management affects the areas that traditionally involve direct contact with the customer – namely, marketing, sales and services. But at the same time, customers can also provide companies with valuable insights in other areas, such as product development. For example, Lego has an online platform where users can interact and present new ideas for Lego sets. Rather than specifying what the building bricks can be used for, the company has encouraged its customers to be creative with the products and to contribute their own ideas. But, of course, development does not stop in the area of customer relationship management. Analytics will become increasingly important in the future.
What advantages does customer relationship management offer to companies?
Andreas Schmidt: By focusing on their customers, companies find out who the customers are and what they want. Many companies have been convinced that they already know these things – only to realize that they were wrong. This new knowledge about the customers most directly benefits a company’s marketing and sales activities – which companies can use to increase and ensure their long-term competitiveness. Indeed, a company that understands its customers’ needs has a much better chance of gaining their loyalty. Customer retention involves more than just handing out a customer card or setting up a loyalty program that is ultimately just based on discounts. Because when customers stop receiving the discounts, they no longer have an incentive to remain loyal to the business. The aforementioned Lego platform is a much more sustainable example of possible CRM measures. That’s the way to ensure that customers remain involved with, and enthusiastic about, the company.
Speaking of enthusiasm, how can companies generate excitement among their customers?
Andreas Schmidt: In my view, there are two important aspects here. First, a company needs to offer very good products or services that provide customers with a strong advantage. And not just the advantage that the customers already expect. If I’m merely fulfilling expectations, customers will simply be satisfied. But if I offer more – if the customers are pleasantly surprised – then this generates excitement.
Second, the company must be authentic in its actions. It has to be true to how it presents itself. Only then can customers identify with the company. And this applies to all areas of the company.
What does this mean for the area of customer service, for example?
Andreas Schmidt: It means that I take customers and their concerns seriously and am attentive to them. Nice words on the company website won’t get us very far. It only takes a single call to the service center or a single reply to an email for customers to know if the company takes them seriously. And it’s very easy for customers to share these experiences with each other these days – whether positive or negative. Every company needs to be aware of this.
One good example of customer service is the tool manufacturer Hilti. If a machine malfunctions, the mechanic is immediately provided with a replacement. In other words, Hilti is essentially selling the advantage of a functional machine – and ensures that customers can benefit from this advantage without interruption. This is a completely different approach than saying, “Please send us the equipment, and then we’ll see what can be done…”
You offer consultation for small- and medium-sized companies that want to implement CRM. What do these companies need to consider in this process?
Andreas Schmidt: I wish I were able to provide a ten-step guide here, but the fact is that every business has its own unique challenges to consider. In many cases, for instance, information about customers is stored in several different, heterogeneous sources – in the worst case, only in the heads of a few employees. In other cases, the corporate strategy is still technology-driven, which is simply an outdated approach now. As previously mentioned, customers are paying for an advantage, not for technology.
Ultimately, it comes down to viewing the company holistically, with four levels of focus: strategy, processes, IT systems and controlling. Typical questions include the following: Is the corporate strategy geared more toward technology or the customer? Where does the company store its knowledge about the customers? Does the company employ campaign management and have clearly defined processes for quality assurance? These are just a few examples.
Should the implementation and operation of a CRM system be mapped out internally or externally?
Andreas Schmidt: I generally recommend that companies consult with an external partner that thinks strategically and can see the full picture. Because, in most cases, if a company is shifting its focus to the customer across all areas of activity, this will come with changes to its organizational structure and corporate culture. These are issues that can be much better addressed by an external consultant with a neutral perspective. An external partner is particularly important in areas that are not among a company’s core competencies. And besides technological systems, this also includes the critical aspect of customer dialogue.
Prof. Dr. Andreas Schmidt
Professor Andreas Schmidt (Dr.-Ing.) represents the field of business information systems within the Faculty of Business Management and Social Sciences at Osnabrück University of Applied Sciences and is head of the center for customer relationship management. Schmidt previously served as corporate consultant, as managing director of the collaborative research center “Self-Optimizing Concepts and Structures in Mechanical Engineering” at the Heinz Nixdorf Institute of Paderborn University, and as associated researcher at the German Research Center for Artificial Intelligence in Kaiserslautern. Find out more here.