Trigger / Source

The outer blue circle contains trigger and impulse sources on which the framework is based. These are:

• Customer life cycle
• Life stages
• Events

The triggers and impulse sources describe customer situations from different perspectives and complement each other.

Customer Life Cycle

The customer life cycle is a frequently used model in marketing. It describes the phases that a customer goes through in a model. These are:

• Interest
• Acquisition / Engagement
• Onboarding
• Loyalty / customer retention
• Avoidance of departure / termination (retention)
• Recruitment

Life Stages

Life stages describe phases of life that a person (can also be applied to companies) goes through as an example. A new phase of life brings with it new or changed needs. Life phases can look like this:

* Childhood

* Adolescence

* Vocational training / studies

* Working life

* Family life (from single to DINK to large family)

* Retirement

* Twilight years

Events / Incidences

Events supplement the framework with "incidences" that trigger an action or result in an interaction between the customer and the company. Events are temporary in nature, examples include:

• Birth of a child: I need diapers, health insurance, a nursery, etc.
• Loss of credit card: I need protection against unjustified charges and a replacement card as quickly as possible, etc.
• Purchase of a car: I need a parking space or garage, car insurance, etc.
• Laptop no longer works: I need a working laptop again as quickly as possible...
• etc.

Interaction layers

In the central yellow circle, you’ll find the interaction levels within the CRM framework. The necessary level of engagement varies based on the trigger or source of the impulse. Depending on the specific company and industry, these interactions can significantly differ in terms of tone, intensity, and speed.

Need layer

The needs level involves interactions that stem from the customer’s life stage or a particular event, directly targeting their requirements. This level facilitates engagement with customers to fulfill their needs using your services and products. The CRM framework not only enables reactive handling of these needs but also supports proactive addressing.

Operational layer

The operational level originates from specific events or the customer life cycle and is characterized by transactional interactions. These interactions serve to manage operational processes, including tasks like resolving customer issues.

Emotional layer

The emotional engagement is tailored to the customer’s life cycle or current phase. The goal is to express appreciation and evoke positive feelings. For instance, sending a greeting card for an 18th birthday or a gift for five years of loyalty. These heartfelt interactions enhance the customer relationship and have a lasting positive effect.

Interaction

The inner green circle symbolizes the actual interaction with the customer. This encompasses one-way communication, which can elicit a response from the customer without being directly observed.

Derivation of the interaction strategy

The CRM framework aids in crafting an interaction strategy and defining a portfolio of actions. Depending on the level, there is varying flexibility in defining these actions.

At the operational level, many interactions are predefined, as customers have clear expectations, particularly regarding problem resolution.

Conversely, at the needs and emotional levels, there is greater flexibility. Actions at the needs level can yield short-term benefits, such as through cross-selling and up-selling campaigns. As previously mentioned, interactions at the emotional level have a long-term positive impact. Striking the right balance is crucial.

It is recommended that the higher the customer lifetime value and the easier it is for customers to switch to competitors, the more emphasis should be placed on the emotional level. Naturally, the portfolio of actions must be continuously optimized and adapted.

Measuring success

The actions derived from the CRM framework must support the company’s success. While cross-selling and up-selling campaigns are straightforward to measure, assessing customer retention efforts is more challenging. To keep this article concise, a detailed discussion is omitted. However, I would like to offer some food for thought without delving into specifics:

• Cross-selling and up-selling: additional sales vs. cost of interaction (cost of a campaign).
• Improving the churn rate: Development of the churn rate over time and the "saved" profit from this.
• Increase in loyalty: This measurement only works if a churn score is already in use. Development of the number of customers (or ratio) over time that are identified as having a high risk of churn.
• Engagement / repurchase rate: Number of uses of a service or number of repeat purchases.
• Recommendation / social interaction: Here you can look at the number of interactions or positive comments on social media channels, for example.
• Customer Lifetime Value: Customer Lifetime Value has a longer-term horizon and measures the estimated value of a customer over their "lifetime".

Ultimately, each company must define the relevant key figures for itself.

Conclusions

A comprehensive perspective on interactions enhances the value of the customer portfolio. Naturally, additional tools and instruments are necessary to support the CRM framework. Understanding customers is crucial for crafting effective measures and interactions, and data plays a key role in this process.

Tools like personalization, omni-channel management, marketing automation, and storytelling can further boost success. Despite the complexity and breadth of the topic, beginning with the framework is worthwhile. The frequent marketing analogy to the “corner store” illustrates that you can start without an array of tools.