There’s an entire industry that operates under a broken thesis — Customer Relationship Management (CRM). The reality is quite simple. The term CRM infers a company can manage your perspective, your engagement and your preferences / biases. In truth, CRM is an unsophisticated, Neanderthal, knuckle dragging approach to getting you to buy more or remain “loyal” to a brand. Let’s be clear, people don’t want:
- To be “managed”
- A relationship that’s all about the other entity — think about that for a moment
- To be seen exclusively through the lens of lifetime value (LTV)
The amount of data created each year per person as of ’20 was 1.7MB of information per second. In a single year, the global online population generates approx. 44 ZB, that’s 44 trillion gigabytes. If we have this much data, why do businesses continue to engage customers and prospects through a lens of data that’s supposed to be incredibly sophisticated? Companies spend 10’s to 100’s of millions on CRM platforms that leverage ML and AI for look-alike and propensity modeling. These same platforms leverage volumes of first and third-party data; yet, the end result remains — irrelevant offers, ineffective channel reach, etc. The reality is simple. Even the most sophisticated platforms are built on a legacy approach to customers. In fact, the truth is that companies “pretend” to know their customers. Companies don’t want a relationship. They only want you to buy more products, and they’re willing to spend significant amounts of money to attempt to generate a momentary dopamine hit of interest.
The question that has to be asked is why do companies not simply ask existing customers questions. Why don’t companies reveal what they know about an individual in order to actually get to know them? The simplicity of revealing what data they have and allowing the individual to:
a. cleanse the information for them in order to make the relationship more valuable.
b. obtain tangible / valuable rewards and outcomes that align to the updates and changes provided.
c. to opt out of specific data that they don’t want a company capturing or purchasing from data brokers.
These three empowering steps would reduce ad spend waste, increase engagement, facilitate higher conversion, address commitments to reducing waste and emissions (i.e. the petroleum burning USPS mail truck delivery that goes directly into an individual’s trash receptacle) and, ultimately build two-way engagement resulting in an actual “relationship.”
The pressure to change is growing. A terrific example is the California State Teacher’s Retirement System (CalSTRS) — https://www.calstrs.com/esg-investment-policy. CalSTRS is the nation’s second largest public pension fund with assets totaling approximately $283.4 billion as of December 31, 2020. CalSTRS policy mandates an aggressive policy of compliance with environmental policies in order to remain within or to be considered for investment by the fund.
Beyond the issue of environmental pressure faced by companies, the stark reality is that individuals want to be treated differently. However, in order to build a tangible, valuable relationship, the first step is to change legacy approaches to data by asking the customer or prospect to participate in the process of actually knowing the individual.
And by the way, after 15+ years living in the same home, State Farm — my wife’s name is Kristin, not Kirstan and no, my kids are no longer 1 and 4 years old.
It’s beyond time for change.
Share your thoughts.