Customer Centricity : Customer Dialogue Builds Loyalty & Profit

Michael Meltzer is the co founder and a managing partner of Active Management Techniques that specialises in improving organisations performance through applying the human aspects and benefits of relationship management in all its forms.

He is a hands on partner who has experience spanning general and IT management, financial services, public sector, telecommunications, education and retailing. He has specialised in applying the human aspect approach to support internal and external customer relationship management, change management, customer knowledge and organisational design where innovation and learning can flourish. 

He is a respected author, sought after speaker, educator, consultant and experienced business manager.

Check out Michael's website

Customers and potential customers are getting more sophisticated. The very marketing techniques used to separate the customer from their hard earned cash are helping to train both the old and newer generations of customers to be more wary and become smarter. Customers want to trust the companies they buy from and in some case may even value a relationship of sorts. However old style relationship marketing even if you call it one-to-one marketing is becoming less effective in a world where commoditisation of both products and services is becoming the norm.

There is a need for more innovative and creative approaches to gaining customer trust and enhancing the customer experience. Only through an enhanced branded customer experience can any player expect to differentiate themselves in the market today. Dialogue with the customer may be one of the oldest ways of knowing the customer has been lost sight of. But newer technologies and processes to action customer knowledge gained through dialogue are readily available today. Yet managers need to further refine their products/services positioning, message and brand experience. The dialogues must be viewed as a positive link between company and customer and only valued as long at it provides value to both parties. This may not be for you but be assured doing things in the same old way may just result in the same old results.

Neglecting Existing Customers

Keeping your customers and finding new ones has always been tough. Many organisations have invested in technologies and sophisticated software to help them gain and retain who they perceive are their most valuable customers. However we regularly read that one organisation or another has apparently neglected some portion of its customer base and when that organisation is Citigroup we all take notice ( 1 ). They appear to have been neglecting their core retail banking base ( hard to believe ) and are now refocusing their efforts on getting back lost customers and making their existing base more profitable. You would think that relationship building should be on their mind and dialogue might form a basis upon which to create differentiated services and valued customer experiences. 

Significant ROI on Classical CRM Investments

Yet financial institutions such as Citigroup represents one of the organisations that have poured literally 100’s of millions of Dollars, Pounds and Euros into buying and using specialised software and hardware to effectively create one-to-one marketing. The reality is that no matter how much money you spend on technology unless your organisation adapts to customer needs and behaviours systems and processes can do little. Some of the organisations have actually done the right things such as: have senior management lead the effort, getting the employees on side and really measuring their ROI on customer equity. If many of the services you offer however, have been commoditized then how can you differentiate yourself from the rest ? Technology is not a magic wand. Consider the enormous amounts of money spent on so called CRM solutions ( in reality Sales Force Automation ( 2 ) ) that seem to go nowhere.

Many early investments in smart database marketing that evolved into relationship marketing have shown significant returns on the original investment – but times they are a changing. What happens when everyone has learnt how to better segment their customers using the standard approaches: geography, demography, psychographics, value and behaviours ?

Get a Bad Name

In this section I am not attempting to put Citigroup down but articles and books have described some of their recent history that helps to illustrate the need for careful attention to not only what you market but the way you market and reward your employee’s. Their history and current approach to growing business illustrates ways of working with customers that appear in some ways old fashioned and not appropriate today.

Consider Citigroup’s recent experience in Japan. “In September 2004 Japan’s Financial Services Agency ordered Citigroup to close its four private banking offices in that country, following an investigation into problems that included possible money laundering, stock manipulation, and misleading investors” ( 3 ). The agency said that Citigroup had exploited their 5,000 wealthy Japanese private banking clients by overcharging, selling unrealistic returns, selling complicated derivatives products the customer did not understand and “even pushing second-rate art as an investment”. This was on top of an earlier investigation into the loss of credit card, banking and investment management transaction data. The Japan Times attributed their behaviour to a culture that demanded unrealistically high sales targets coupled with a remuneration structure tied to those targets. The news about their actions was published widely by the world press hungry for stories of financial improprieties. If you want to destroy the customers trust then focus on short term gain set against long term value. Customer trust is a fragile commodity and providing a bad experience is one of the best ways to destroy trust.

The Haunting of Citigroup

The problems that Citigroup had have come back to haunt them. They want to grow their business on their home turf in the USA and especially New York. They believe that they have problems with their retail banking client base. Their current customers buy fewer products or services like credit cards, mortgage, or checking accounts ( current accounts ) than customers of their competitors such as Banc of America and JP Morgan Chase. This results in Citigroup having a less profitable customer portfolio than their competitors. They however cannot get out of this the traditional way by acquisition – that is buying more customers. The Federal Reserve noting the number of regulatory run-ins Citigroup has had since 2002 has stopped them making any worthwhile acquisitions for now. So they must do what every other player has to do that cannot grow simply by acquisition; get out there and work at getting their existing customers to buy more services/products and find new profitable customers just like everyone else.

Steven Freiberg the co-head of Citi’s Global Consumer group says “If we’re going to grow, we can’t rely mainly on the old model anymore. We are taking a much more focused view of organic growth”. As he sees it Citi has enough customers they just need them to buy more! That is focus on improving customer profitability. To achieve this he has reorganised the division and is reorganising around the customers not its products. The most interesting part of this change is that he intends to use trusted approaches ( read legacy ) such as better targeting, special offers and discounts in the form of loyalty points to win more business.

Existing reward systems that give customers points that they can redeem at stores will be revamped and used more extensively. They even intend to track their customers ( just like other banks ) so that they can ply them with special offers and discounts. New branches will be built at a far faster pace than ever before. They are even getting the tellers to try and sell as does the market leader Wells Fargo who gets some 40% of their retail sales from their tellers. However no where in the articles I have read do we get the idea that Citi is going to do anything more than try to sell more services/products to its customers ( they may be keeping their actions a secret – a first ). Are they going to build new levels of trust through ethical sales techniques ? Are they creating a more rewarding customer experience through their products or services ? I think all they are going to do is go for price and rewards whilst ignoring the need to build trusting relationships. Some of these so called relationships will not last any longer than when the next bank comes along and makes a more attractive offer. 

The Same Old Thing

What I wonder about the whole Citigroup approach today is that it appears to be the same old thing of reducing costs and maximising profitability within the customer base. Now few people would believe that Citigroup personnel lacked drive, motivation or sheer will in their quest to win business in the past. If that is the case unless they try some innovation on the positive customer experience and differentiation front tomorrow their efforts will have minimal impact. Doing the same thing over and over again and expecting a different result is often seen as a sign of madness. I really believe that Citigroup will do much more than what read in the press to woo their customers – they just have to.

Authenticity and trust in an organisation that it will do the right thing can make or break relationships with vendors whatever they offer. Forrester Research Inc suggests that the way forward for financial services firms is to build on “customer advocacy.” They define customer advocacy as the perception that the firm does what’s best for its customers, not just what’s best for its own bottom line. They published a survey in June 2005 ( 4 ) that had Citibank tie with JP Morgan Chase for last place among 34 financial companies on the extent with which consumers view them as advocates. For Citibank the only way is up.

Forrester Research Inc own statistical model shows that customer advocacy has the highest strength of association and the highest predictive power for cross-sell potential among banking consumers, outpacing other factors such as customer satisfaction with branches and cross-channel service interactions. Doing the right thing for the customer is profitable.

It is certain that customers are becoming more sophisticated in their approach to their purchases. The Internet, terrestrial publications and word of mouth has made the lot of the marketer more of a challenge to get the message across to the right customers. It is much more difficult today to just push product and hope people will buy. Yet the role of the marketer could be more rewarding because now they can focus through the use of new technologies and methods on real customer needs, delivering a valued customer experience, real value that customers want and to the vendor real differentiation.

CURARE and the ( Customer ) Experience

To be successful in highly competitive markets companies have to create innovative customer experiences that demonstrate that they are putting the customer first. The CURARE ( 5 ) ( Cross-sell, Up-sell, Retention, Acquisition, Reactivation and Experience ) approach is often cited as a means of targeting customers for more customer valued treatments. CURARE is not a poison dart approach but a way focusing on customer benefits and valued ( customer ) Experiences. A company must create a particular perception backed up by real world actions. The perception that is the customer reality is all about how they feel about the company, a set of expectations, a viewpoint, a positive or negative image and the impression they absorbed from their last encounter with the company, brand, advertisement or representative. Citi for example has always had a philanthropic streak from Carnegie hall to Cornell University and support in London for relief of Pakistan has shown their more caring side. Philanthropy well publicised can help remove the tarnish of bad business practices.

Customer experiences have both emotional elements and physical components that need addressing across the spectrum of business interactions from the influence to buy, the point of sale and to the eventual service call.

Dell May be Changing and not for the Good

Now just in case you think I have it in for the banks I must quote a letter sent to Business Week where Jennifer Kirley of Maine writes about Dell that doyen of good customer experience ( 6 ). Now her experience may not be yours but she believes that Dell are dancing to the short termism of Wall Street as they:

  • Ensure that your customers must keep buying bid by making upgrades difficult without replacing the entire machine.
  • Cut back on service – availability, quality, or both – and train your customers to gradually expect less of you.
  • Make it clear that time is worth money only if it is Dell Inc.’s time.
  • Divide your customers into classes, improving your service ( business sector ) but not others ( private sector )
  • Blame the others for being “too demanding” after building up a brand of second-to-none customer services for years.
  • After allowing your product/services to degrade, charge extra for the offerings you built your brand upon.
  • Allow your market share and stock price to fall before correcting the problems.

Short term gains destroy value, relationships and the trust that forms the foundation of the brand experience.

Value Customer Perceptions

Organisations can stop the erosion of their brand and all the associated feelings that make up the customer experience. The first step is being aware of what your customers perceive your brand represents and the value the customer perceives. You must listen to your customer. Yet listening is not enough. You have to interpret and understand the sub-contexts of what is being said. Furthermore it may be necessary to ignore some of the voices as in reality you no longer wish to serve your historic customer base in the same old ways. You face increasing competition from businesses with lower cost business models that are forcing you continuously to innovate and be creative – the elephant can learn to dance if survival depends on it. What you must do as a first step however is to make sure your strategic intents are clear to your employees who will make or break your future. Unclear messages, poorly delivered without ‘fair process’ leads to discontented staff who directly communicate their feelings and their frustration with the customer when the ‘moment of truth’ comes about – and it will.

Use Technology Carefully

Technology has its place to support well thought out strategic intent and practical tactical actions supported by senior management. The technology has existed for a number of years that can review purchase behaviours and identify propensities – including the propensity to defect to a competitor. Propensities can help organisations focus their activities on customers that have potential and have the ability to sway markets. You can couple propensities with tools and techniques to gather customer experiences and perception to further enhance the overall offer.

Word of mouth marketing has its place as does so-called one-to-one marketing. The technologies that make this possible rests on the old venerable scaleable data warehouse coupled with analytical extensions and in some cases real times feeds. The real time system feeds data marts that are focused for example on creating event driven marketing. I assume Citi is using this technology to support their old campaign driven approach. Whilst an advocacy/dialogue based approach would be of greater benefit to their bottom line.

Some believe that customers actually seek a learning and co-collaborative relationship with the organisation that provides them with products and services. This may be the case for some and a dialogue based relationship would benefit both the customer and the supplier. By taking up the position of customer advocacy ( doing what’s right for the customer ) an organisation can become a trusted advisor. This advocacy approach after an interactive dialogue machine or human based may advise the customer to shop elsewhere for the product/service that meets their needs if they cannot fulfil their needs ( 7 ). To change the customer experience and expectations you need to find the best solutions for your customers, offer transparency in partnering with the customer, provide quality products and services and offer a means of comparison to prove your overall superiority.


To some extent the ability to have dialogue and event based relationships rests on the same database technology of old but with the added dimension of intelligent process engines and scaleable web services. However this data must be used with care and bear in mind that you have the customers’ interests in mind. Some of the older event driven systems will only act when they perceive critical events occur ( rules based ). They believe their systems will be overwhelmed with data if they tried to track every event. Yet with better segmentation these systems can be focused on those customers with whom the organisations want to actually have a dialogue. You could use customer propensities more effectively and employ a more granular segmentation approach. With other customers you can create rules based processes to identify times when intensified positive dialogue will be required and valued. To have a dialogue requires the time between awareness and action is commensurate with the customer need and profile.


Even a simple notification can turn into an opportunity for a valued dialogue. For a financial services company informing someone of a renewal date for service and or product is an opportunity to focus on the customers financial needs. The notification should require a response that can then form the basis of a valued dialogue for both parties. So many direct mail, e-mail and SMS messages sent don’t create dialogue as their offer may not be strong enough or may not even exist. The customer must have a reason to respond. If you have an offer from a retail store that requires registration for a discount, a prize and or some valuable ( to the recipient ) offer you will more likely get some response. To really be worthwhile to the customer your offer should be based on past purchases or behaviour patterns that identify some worthwhile ( to both parties ) propensities that requires a more direct dialogue based relationship. Some of the more useful dialogues are:

  • Acquisitions: To bring in more customers – from a wide to narrow focus.
  • Service-Follow-Ups: A thank you, a satisfaction check, another offer
  • Win-Back: A special dialogue when someone wants to close a relationship.
  • Reactivation: Provide dormant customers with a reason to communicate.
  • Event Notifications: For focused marketing actions- category, theme, type or season.
  • Repurchase reminders: Maybe for consumables, subscriptions, toner and so on based on the average life-span of the product they purchased.
  • Inventory and Price Alerts: They may be seasonal for clothes or when a new CD comes out by an artist you have been noted to have bought before. For financial it might be a new loan rate that has just become available.
  • Overstock or Clearance Opportunities: By identifying customers that have bought items like this before and informing them of an opportunity to pick up a bargain.
  • Defection Interventions: Triggered by identifying purchase and usage patterns. This can fire off a win-back dialogue.
  • Product/services development: Ask customers to help you design the future through co-collaborative solution developments.
  • Reward Information: Keeping customers appraised of what they have accumulated or could accumulate if they took advantage of a special offer ( 8 ).

The list above is a starter as there are probably many other opportunities to create a valued dialogue that can add to the total positive customer ( brand ) experience.

Build Barriers

Dialogue based relationships can help to build barriers to poaching and levels of trust that even allow for mistakes. The CURARE mindset sets high value on building valued relationships one dialogue at a time. The cost need not be high given the sheer range of channels with which the customer and potential customer can be touched and motivated to respond to the corporate initiated conversation. The cost of the dialogue varies with the kind of customer with whom you want to interact, the experience you want to provide, their value to you, your value to them, the complexity of the message and the type of response required. Figure 1 is my attempt to show how the cost of interaction, conversation initiation and desired dialogue can vary dependent on the technologies applied and the numbers of customers you are trying to communicate with. The initial cost of setting up some of the more sophisticated web based systems that have the power to engage a customer could be high but the volume they can handle lowers the unit cost dramatically. Whilst the cost of using specialists may appear high it all depends on the products and services on offer and the potential value of the relationships you are trying to support or build.

Touch points only have Value in the Eyes of the Customer

The value of touch points varies according to what the company is trying to achieve and the value perception the customer has of that touch point. Any attempt to have a dialogue with actual and potential customers provides an opportunity to capture valuable information that can be used to improve or create a new product or service and may even help to resolve future problems. Unsolicited contact with the expectation of a positive customer response normally just does not happen unless the source is well known then a level of trust already exists. When contact is actually made the recipient normally has a set of hidden expectations of the encounter:

  • There will be value of some kind to come out of the dialogue
  • Any information provided is timely and useful
  • There is some level of personalisation just for them
  • Any information they provide will not be misused
  • They feel a degree of comfort with the means, method and mode of dialogue
  • There is a set of actions that will proceed from this dialogue.

Customer Initiated Dialogue

Customers and potential customers will more likely respond to communications if they see the value in it for themselves. Consider one of the newest ways of creating opportunities to create a dialogue is through Google. Adwords have become a very useful way to gain visibility in a crowded market but as their popularity has increased so has cost and value to the company placing the Adwords. But Google continues to innovate now enabling even small companies to take advantage of the web even if that company does not even have a website. Some AdWords have started ( in the US ) to appear with a telephone icon alongside. By clicking on the icon a box appears in which you type your number and click on 'dial for free'. Google will then dial the advertiser and when you pick up your phone, you can hear the phone ringing at the other end. There are no call charges for landlines although Google says it may charge for calls to mobiles. Thus we have a customer initiated dialogue. ‘Google is not the first to provide a click to call service. A similar initiative was launched by Miva ( formerly eSpotting ) pioneered its own Pay Per Call service several months ago. Meanwhile arch rival Yahoo! has been trialling its own version of Pay Per Call in the UK since August through the Kelkoo online shopping portal. It is also reported to be testing a similar service in the US with Ingenio.’( 9 )
Dialogues can Build Relationships

Marketing dialogues have value in building relationships and helping to differentiate organisations one from another through the pertinent and careful use of customer information and propensities. The customer is an asset to the business and their potential lifetime value should be carefully weighed against any short term sales plan. To sell short term is a way of destroying future earnings. By becoming a customer advocate and provide value for money products and services serves the business and the investors interests.

We are not Prey

There is a need to establish that customers are not mere targets but are valuable business assets. They require nurturing and investment over time. Customers and potential customers must be offered valued services and a valued brand experience. Negative images and word of mouth coupled with real world fiascos do little to make customers ‘loyal’ and retain their trust. Trust is built on valued interactions and with it comes forgiveness. Customers forgive the blunder and will allow the organisation a second chance. Yet even here some customers are finding that organisations are trying to take advantage of them. An uninvited or valued dialogue starts through mail or tele-salesperson relating the unfortunate incident and how that organisation rectified it and with that as a start they then attempt to sell another product/service. The sales psychology may be right but the ever more sophisticated customers see the ploy for what it is.

Get the reason, method and advocacy based dialogue right and you will build a ‘loyal’ customer base. Play psychological games and target individuals as if they are prey and you are asking for real trouble.

© Copyright Michael Meltzer, 2005


( 1 ) Business Week, 25th October 2005

( 2 ) Real CRM SFA success” – Michael Meltzer

( 3 ) Return On Customer – Don Peppers and Martha Rogers – Marshall Cavendish -2005

( 4 ) How Financial Firms Rank On Customer Advocacy - June 10, 2005 Consumers Rate 34 Top Firms On The Trait That Deepens Customer Relationships - Bill Doyle

( 5 ) “CURARE it could happen to you” - Michael Meltzer

( 6 ) Readers report – Business Week 31st October 2005.

( 7 ) “Building trust and relationships through customer advocacy” – Chris Lawer

( 8 ) Adapted from “The Perfect Message at the Perfect Moment” - Kirthi Kalyanam and Monte Zweben – HBR November 2005

( 9 ) PC Pro November 2005 – Steve Malone

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