Friday, November 13, 2009

Statistics Is Not Everything

CRM strategies get a lot of attentions of CEOs due to its capabilities to measure campaigns efficiency. Thanks to new customer relationship management tools, you are able to get clear pictures of the efficiency of your marketing programs, and what your customers' value is.

But this system is biased as multi channel distribution has become common nowadays. Business has become more and more complex. Now online retailers are opening stores like Dell, and also brick and mortar companies like Wall Mart are setting up online stores. Moreover, brands are also getting more and more online as Apple or Nike do with their concept stores.

Also, social communities have enable customers to speak about brands and their customer experience, which is valuable information that still need to be explore.

I have read not so long ago that customer to customer (CtoC) business is also growing, and we are going from an ownership society, where people owns things they use, to a user society, where the use primes to the ownership, and where renting and borrowing becomes more attractive than buying. 60% of French Internet users have at least bought or sold something online to another person.

Hence, it multiplies the number of information sources, which makes it complex to get clear stats about customers.

The utopia of knowing everything about your customer has probably gone away. Macy's has declared that it generated $50 billion thanks to its Online activities, either it is shopping online or getting traffic out of their websites, but was not able to explain exactly how they have figured it out.

Statistics is not everything
I wanted to correlate this fact with an article I found about basketball. Basketball is a sport about stats, where you can have a clear picture of the individual performance thanks to the number of points, rebounds, assists, blocks, or shot percentage a player had. There is also an indicator, called the PER (Player Efficiency Rating), that mixes all this factor to rank the best players in the game. Here is a table showing up the performance of the bests.

N#NomPER1Lebron James31.762Dwyane Wade30.463Chris Paul30.044Dwight Howard25.445Tim Duncan24.516Kobe Bryant24.467Brandon Roy24.348Tony Parker23.479Dirk Nowitzki23.2010Al Jefferson23.16

If you know a little about the NBA, you must know that Kobe Bryant is considered as one of the best player to have ever played, and one of the best right now. According to this table, Kobe would not even be in the top 3, but only the 6th player. Actually Kobe in his whole career would have never reached the score of 28, and never been part of the top 3, even when he's been named the MVP of the league last year.

The conclusion is that statistic is not the whole picture. Kobe Bryant's greatness go beyond his stats, but his capability to be a leader in the money time. Statistics can't measure the number of games he won by making the last shot, by cheering up his teammates, or by defending hard.

That is actually the reason why the Most Valuable Player (MVP) trophy doesn't reward the best player of the league, but the most valuable, the one that contributes the most to the team's success.

Customer relationship management should not be seen as a way to measure efficiency or to get accurate stats about its clients. It should be seen as a whole idea and will of a company to get superior customer service. A lot of companies doesn't own a loyalty reward program but provides superior customer service which leads to high revenues.

Hence, customer relationship management must be considered not only on an information system point of view, but also in terms of customer experience, which is the ultimate goal of such a strategy.