In a market riddled with increasing competition, price wars and clamor to be heard, organizations like Wal-Mart are taking a hard look at how they can improve the interaction between the organization and the customer. The education sector is no different.
Critical to the organization’s ability to sustain its competitive advantage and generate sustainable revenue streams is its ability to develop long-lasting relationships with students—prospective, current and alumni—by employing Customer Relationship Management, (CRM) principles to shape the customer experience.
In simple terms, CRM is the use of technology and data to create a customized interaction with the organization that results in the customer returning again and again. For most, this is not a new call to action. In an earlier article, Alumni Matter, we discussed the benefits of employing CRM principles to generate lifetime value from the alumni relationship.
Since then, in discussions with higher education leaders and with clients, the question does not become whether the institution would benefit from a CRM strategy, but rather, “How can we get started?”
Step 1: Institutional buy-in. Are we in or out?
CRM is not a “marketing method,” nor is it technology or data. To be effective, the decision to engage in developing lifetime value from the customer relation requires a holistic view and deliberate approach to the customer’s interaction with the organization.
In an interview for Weekend Today, Jonathan Tisch, CEO for one of the world’s largest hotel chains and author of Chocolates On The Pillow Aren’t Enough, pointed out, “Customers will no longer simply gravitate to the brands, products, services, and organizations their parents trusted. Instead, they will continue to experiment, change, talk back, and exercise their new-found freedom of choice in ways that make life for organizational leaders increasingly challenging.”
For Tisch, the answer was an organization-wide strategy to create the customer-centric experience. “Organizations that can provide such opportunities by reimagining the customer experience—whether they are businesses, nonprofits, or government agencies—will attract an enormous number of customers in the years ahead and keep them coming back.”
Few could argue with the growth of for-profit institutions in recent years—a growth frequently attributed to the use of robust CRM marketing methods. Understanding how each business process contributes to the customer’s interaction and ultimate perception of the organization is the first step in developing a cohesive strategy grounded in mission and long-term sustainability.
The state of Arizona engaged the Hezel team to identify a strategy to propel forward the Board of Regents' long-term vision to provide state residents increased accessibility to higher education. A strategic initiative, the project required an organizational assessment taking into consideration the touch-points and processes that resonated for Arizona’s higher education providers while meeting the needs of all external constituencies. Hezel Associates research resulted in a roadmap that, when implemented, would contribute to institutional goals and meet the changing needs of external audiences.
Step 2: Please understand me…
“It's Not Only About Price at Wal-Mart,” read the headline of an article exploring Wal-Mart’s strategy for gaining new customers and retaining those who already shop there. For years, brand clarity helped Wal-Mart gain ground against its competition. The low-price leader made inroads across consumer segments fueling exponential growth and expansion to become what we now know as the world’s largest retailer. In 2006, Wal-Mart‘s focus shifted: inviting customers to "Look beyond the basics, and try costlier products like 500-thread count sheets.” The results: not so pleasant headlines. The mixed message failed to resonate with the customer responsible for Wal-Mart’s success.
In response, Wal-Mart spent the last year conducting an intense analysis of its estimated 200 million customers. The retail giant found that its customers belong to one of three segments:
There are "brand aspirationals" (people with low incomes who are obsessed with names like KitchenAid), "price-sensitive affluents" (wealthier shoppers who love deals), and "value-price shoppers" (who like low prices and cannot afford much more).
The new categories are significant because for the first time, Wal-Mart thinks it finally understands not just how people shop at its stores, but why they shop the way they do.
The impact of the findings is significant. Understanding the value of the Wal-Mart brand, executives resolve to create a shopping experience reflecting the unique needs of each customer and creating long-term value for the company.
According to Tisch, “The ability to create comfortable, intimate, exciting, and rewarding life experiences for customers is the crucial organizational skill for our time. Many of today’s smartest companies are already acting on this insight, finding innovative ways of getting inside the minds of customers and responding to the needs and desires they discover there.
Last year, Hezel Associates’ market research team surveyed more than 20,000 graduates of a private liberal arts college. A first for the institution, the survey uncovered the alumni needs and provided college leaders with the necessary insight as to how they could meet emergent expectations both in the long and short-term.
Step 3: Be relevant—It’s more than a personalized email invitation to sign-up for a course
Relationships don’t just happen—they are cultivated and developed. “It’s like dating,” said a friend of as we chatted on the phone, “You start out slowly, decide if you like the experience, then decide whether or not you want another date. It is a slow process.”
Have you seen the recent ads for the University of Phoenix (UOP)? Its solid messaging clearly identifies how UOP can meet the needs of its target audience. The campaign further extends itself to the web, print material, sales and support staff interaction with customers.
Can you get CRM off the ground with a less robust budget? Sure. If you need to start small, we suggest you start with one segment of your target population—such as alumni—and build from there. Start collecting data on their needs and identify ways in which you can utilize technology to deliver relevant messages and capture the response.
Step 4: Measure success
What does your dashboard look like?
Return On Customer SM (ROC) can be measured mathematically. Sophisticated CRM software often provides customized documents aligned with individual reporting requirements. Another option is to seek out an expert with the understanding of CRM, its role in your institution, and the ability to assist in the development of metrics that accurately reflect your success.
The CRM discussion in education is just getting started. As the total supply of prospective customers (students) begins to plateau (and eventually shift downward) institutions that nurture their relationship with all students, and deliver on the promise, will find themselves with a competitive advantage over those who do not.
Tisch, J. (2007), Lessons from a hotel mogel, Today Show. http://today.msnbc.msn.com/id/17402838/