To be successful with CRM, you must start by understanding your customers and do the best job you can of listening to their needs. As Michael Dell said in his book, Direct From Dell: Strategies That Revolutionized an Industry, "If you're constantly getting feedback from your customers, and you're willing to listen, you can make the most of the opportunities implicit in those needs."

In CRMGuru's research, customers speaking about a great relationship use terms that imply the relationship is win-win. Only about 20 percent of the time do customers talk about the functionality of the product or service*#151;or about the price. There seems to be an implicit assumption that these are competitive but not differentiating factors. Common phrases used to describe loyal supplier relationships include:

Easy to do business with
Responsive and proactive
A service and a value just for me
Consistent performance over time
They ask me questions
Great expertise
Gerald Zaltman, professor of marketing at Harvard Business School and author of How Customers Think: Essential Insights into the Mind of the Market, reached similar conclusions from a massive study of consumer behavior. He found that similar phrases emerged from consumer interviews about their "ideal company," such as: "I want it to be easy, pain-free"; "they (the supplier) want to take care of their customers"; and "I like the teamwork and cooperation."

Are your customers saying these things about your company? Every company has happy and loyal customers. Learn from them! Ask your most loyal customers why they continue to do business with your company. You may be surprised how seldom your customers mention your product/service or price. Learn what they do value, then work with other not-so-loyal customers to find how to get them to feel the same way.

Heeding the Warning Signs
There are many ways to identify whether your organization is at risk of customer defections. An analysis of purchase or payment trends showing that customers have stopped buying a service or have reduced their purchase amount might be a tip off. Your frontline staff can let management know about customer complaints or changes in the relationship. You can do research with focus groups, online surveys and secret shoppers. Or, if you're dealing with thousands or even millions of customers, sophisticated analytical software tools can identify at-risk customers, based on a combination of factors, such as purchase patterns, usage and service calls.

Here's a personal example. I had been paying $50 a month for several years to a DSL provider, before having a service issue. But I was too busy to make a service call and feared a long frustrating experience on the phone. After four months of my not using the service, another DSL provider mailed me a start-up promotion, and I switched. To me, it was simpler to go to a new service than to make even one call to the company I'd been doing business with for several years.

My original DSL provider lost $50 per month multiplied by several years—almost pure profit—when it lost me as a customer. Sadly, it should have known from its systems that I was paying my bills but not using the service. Sooner or later, that would have to stop. A simple solution would have been to monitor usage patterns and send an automated email or schedule a phone call to ask me, "How's it going?"

This simple example illustrates why you need leading indicators of the health of the relationship you have with your customer. Don't wait for a complaint or satisfaction survey! Instead, consider all of the activities your customers engage in when they are successfully using the product or service you provide. The right list of indicators will be a cue to potential defections or opportunities to improve that relationship.

Relationship Health Indicators
RightNow® Technologies, which provides on-demand CRM solutions, puts this theory into practice very effectively. To stay in better alignment with its customers, the company created a "customer-success indicator" (CSI) measurement process. This creates an overall "health score" for its customers, based on a number of factors that indicate whether the customer is effectively using RightNow's solution.

For example, one category is the last time a customer used RightNow's free Tune Up consulting service. More recent is better. Other scores represent the version of the RightNow software the customer is using; the customer's attendance at RightNow events; the customer's use of integration; and usage volume on the customer's RightNow implementation.

Taken as a whole, the CSI program helps customers achieve success by optimizing the usage and value they receive from RightNow's solution. RightNow wins, too, because the company has found a strong correlation between the CSI score and the likelihood that customers would renew their contract. Not surprisingly, since this CSI process has been implemented, RightNow says it has reduced its churn (defection) rate dramatically.

A case in point is Invitrogen, which provides biotechnology for scientists in research labs and such organizations as the National Institutes of Health. Invitrogen uses the RightNow system to provide technical support to customers, generally scientists or doctoral researchers. In such an environment, customers can have very technical or complex questions. According to Kira Sevene, Assistant Project Manager for Invitrogen Technical Service, the core differentiator at Invitrogen is the service it provides. Going out of its way to serve the customer earned Invitrogen an award for "most helpful or responsive customer support" by The Scientist magazine.

Invitrogen began using RightNow's CSI system about a year ago. Sevene called it "an awesome tool," because it helped Invitrogen focus on areas that needed improvement. In general, Invitrogen Technical Service felt that having metrics broken down in a form that was easy to understand and use was very helpful. RightNow's CSI report follows an easy-to-understand traffic-light metaphor, with red meaning attention is needed; yellow serving as a warning; and green meaning that things were OK.

Sevene says Invitrogen is very pleased with the support the company received from RightNow and regards proactive initiatives such as RightNow's Tune Up program, as "over and above the call of duty." When asked to describe the company's relationship with RightNow, Sevene said, "We feel like we are their No. 1 customer." It's easy to see why, considering the effort RightNow puts into monitoring and facilitating the successful use of its solution.