Building A Customer Relationship Infrastructure

I’m assuming that you’re sitting inside a nice comfortable building right now.

(If you’re out by a pool, drinking a pina colada, then I have two things to say to you: 1) I hate you, and 2) Why are you reading this out by the pool?)

Are you worried that the building that you’re sitting in is going to fall down and crumble around you?

Of course not. You’re confident that there is a foundation upon which the building was built that will keep it from falling down, and that there’s an infrastructure that enables you to do things like hang pictures on the wall, or draw power from outlets in the wall.

The concept of an “infrastructure” is very common in business, especially in the world of IT. The IT department in your company understands that your firm needs an IT infrastructure — servers, routers, PCs printers, etc. — upon which applications run.

The IT department also knows — after many years of trying — that you can’t calculate an ROI on the investment in IT infrastructure. The return comes from the applications that use the infrastructure — not the infrastructure itself.

All of this is gobbledygook to marketers. While marketers might understand that there needs to be an infrastructure to support the CRM apps they use, the concept of an infrastructure to support customer relationships is a foreign concept to them.

While the world is marketing is obsessed with figuring out what to do with social media, or how to tack the label “social” onto their CRM investments, there’s something I believe that marketers are missing: Building strong customer relationships require a “infrastructure” upon which to build those relationships.

Conceptually, a customer relationship infrastructure boils down to two things: Engagement and Trust.

It’s no different  in a business context than it is in a personal context. Strong personal relationships are built when two people engage (in meaningful ways) and develop a bond of trust.

The word “meaningful” is critical in that previous sentence. You might “engage” everyday with the person behind the counter at Dunkin Donuts where you buy your coffee every morning, but there really isn’t much of a relationship there because those interactions aren’t very meaningful.

What this means, from a practical perspective, will be very troublesome for marketers.

If marketers need to build a customer relationship infrastructure, that means that they will need to make investments in things that — by definition — will not produce a return on that investment.

I think this is going to be the case with many social media investments.  The benefit (just because an investment doesn’t produce a return does not mean that it doesn’t produce benefits) of these efforts will be to engage customers and prospects more often, and in more meaningful ways, than firms have been able to do in the past.

And the result of that meaningful engagement will be higher levels of trust… which will (should?) ultimately result in stronger levels of relationship, as measured by loyalty and purchase behavior. But attributing the increase in loyalty or purchase behavior directly to the investments in social media will be a tricky proposition, since direct marketing and sales efforts will still continue to be executed.

A good example of this kind of investment in the world of banking is personal financial management (PFM). Many banks will be searching for the “ROI on PFM” this year, and many banks will be either be frustrated by what they find or will fall prey to what I like to call the “correlation delusion” (i.e., they will attribute an increase in retention among PRM users to PFM even though many other factors may have played a role).

If, instead, banks look at PFM as an engagement platform — a way to interact meaningfully (i.e, helping users make smart decisions about their financial lives, and not just pushing offers at them) — then PFM becomes a component of the customer relationship infrastructure.

This is a big change in perception for marketers. IT had to go through it. Marketing will too.

This also means that measuring engagement and trust will become important, as well. Since investments in the infrastructure won’t produce a direct return, the benefits will have to be measured in terms in improvements in engagement and trust.

And guess what? Measuring how many pages web site visitors hit, or the amount of time they spend on the site won’t cut it as a measure of engagement. Nor will the “time spend interacting with an ad”, which seems to be the advertising community’s favorite measure of engagement.

And trust measurement will need to evolve as well. You can’t simply ask “do you trust us?”

These are the things marketers should be wrestling with in 2010. Social media is a tool. It’s like a hammer. If you’re building a house, sure, you need a good hammer. But if you don’t have a good blueprint for what you’re building, the best tool in the world won’t be of that much help.

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