Here is 'an oldie but goodie' I wrote for the British Quality Foundation in London - keeper of the EFQM Business Excellence framework. You will be able to see how things have evolved by comparing to recent materials on this subject - but still lots of nuggets! Enjoy

1. 10 U KEXCELLENCE APRIL/MAY 2001
Feature Customer loyalty
C
RE enables an organisation to
position itself as the preferred and
recommended supplier of goods
or services, whether in the con-
sumer or business-to-business
market. Achieving this excellence requires a sys-
tematic approach that considers the value pro-
vided to the customer and the organisation’s
strategy to achieve competitive advantage.
While CRM is concerned with ensuring that
organisations have the necessary information to
effectively identify and manage customer rela-
tionships, CRE focuses on the processes neces-
sary for effectively building and managing
customer relationships. Clearly the two are
complementary and provide a total solution.
CRE primarily addresses the fifth criterion of
the Excellence Model (customer processes) and
particularly 5e (customer relationships are
managed and enhanced). The full benefit of a
CRMimplementation will be slow to come or
may never arrive, if the organisation is not truly
customer focused.
For the past eight years, MQI has been develop-
ing an integrated CRE framework that is consis-
tent with both the Malcolm Baldrige Award and
the Excellence Model. CRE has come from 15
years of worldwide consultations in areas relat-
ed to customer processes:
• gathering customer requirements and
expectations
• adding value
• measuring satisfaction and loyalty
• call centres
• complaint and enquiry management
• developing relationship strategies
A truly systematic process for building and
maintaining superior relationships with impor-
tant customers, while making life for all cus-
tomers easier, faster and less costly, CRE is the
highest level to which an organisation can
aspire. At this level, the customer relationship
strategy and alignment approach is critical to its
success. CRE integrates all the approaches con-
tained in the inner concentric circles (see figure
1, page 12) into a macro level process or system
- an organisation becomes increasingly pro-
active as it moves through the circles. There are
a number of key factors which must increase in
their levels of sophistication as the transition to
CRE occurs. For example, the strategy for cus-
tomer problem/complaint management is often
short-term damage-control and preservation or
recovery of relationships. At the outer circle the
strategy is on building long-term customer loy-
alty and competitive advantage.
Two factors in particular affect customers’ per-
ceptions of how well their needs are being met:
• market volatility - the current price wars in
the telecommunications and credit card
industries are examples of this
• changing technology - two industries
transforming through technological
changes are mailing and banking
Organisations tend to shift from an internal
focus to an external (customer) focus as they
MQI believes that the route to customer loyalty is through building and
maintaining excellent relationships. It has taken the well-known management
strategy of customer relationship management (CRM) to new heights with its
development of customer relationship excellence (CRE). MQI’s president,
Ted Marra, explains how CRE can change businesses for the better
put excellence into
your CRM
PROFILE
MQI provides training,
facilitation and con-
sulting services. Its
specialist areas are
relationship excel-
lence - a system
which integrates all
critical customer
processes of an
organisation - and
performance excel-
lence - the integration
of the Excellence
Model into an organi-
sation’s strategy.
INFO
Marra Quality Inc
(MQI)
12136 Chancery
Station Circle, Reston,
Virginia 20190
T: 001 703 435 4113
W: www.marraquality
.com

2. THE BENEFITS OF CRE:
• lasting and positive cultural change
through customer-focused drive
• enhanced customer loyalty
• increased market differentiation and
competitive advantage
• improvements in employee satisfaction
and morale
• growth in market share, particularly
through positive referrals
• innovative improvements in product,
service, processes, policies and strategy
THE PRICE OF LOYALTY
Data from the Technical Assistance Research
Programs (TARP) shows:
• a typical customer may be worth more
than $300,000 over a lifetime
• some customers will switch to a
competitor over issues such as a $25
service charge disagreement.
move from a stable environment of slow tech-
nological change to one of high volatility and
constant technological change. These competi-
tive challenges create opportunities for organi-
sations to establish strong enough relationships
with customers to discourage them from con-
sidering the competition, and to reduce the
impact of constant change.
So why is CRE important? The main reason is
customer retention; most companies lose 15-20
per cent of their customers each year1, for rea-
sons such as inability to prove themselves as a
valuable resource to customers, changing
customer expectations, more aggressive compe-
tition and lack of recognition of the lifelong
cashflows derived from customer loyalty.
GETTING TO GRIPS WITH CRE
A major factor in building relationships is
knowing the stages of the customer relationship
lifecycle:
• potential
• new
• mature
• in process of defecting
Each stage brings with it unique requirements
and expectations. Many organisations miss
opportunities to understand the customer’s
critera for choosing the organisations with
which they do business, or to capture competi-
tive information while it is still fresh. Resolving
customer issues in the product or service design
stage will strengthen customer relationships.
Ted Marra is an inter-
nationally-known
management consult-
ant and president of
Marra Quality Inc. His
clients have included
such companies as
Xerox, IBM, Motorola,
Boeing, Electrolux,
DuPont, Nortel
Networks and
Siemens. He previ-
ously held manage-
ment positions at a
number of companies
including: General
Motors, Firestone,
Babcock and Wilcox,
and Goodyear. He has
been involved with the
Malcolm Baldrige
Award for 12 years, is
a judge for the Air
Force Quality Award,
and has been a judge
and member of the
Board of Directors for
the Massachusetts
Council for Quality.
CUSTOMER
FOCUS
MQI recommends
assessing your organ-
isation annually on the
dimension of cus-
tomer focus across all
Excellence Model cri-
teria. An example can
be found on the MQI
website and will be
discussed in the BQF
Excellence Awareness
2001 workshop:
Customer relation-
ship excellence
25 June
Dunchurch
Advert
half page vertical

3. 12 U KEXCELLENCE APRIL/MAY 2001
Feature Customer loyalty
products, services, technology and support. It
represents a true source of differentiation: com-
petitive advantage.
GET ALIGNED FOR SATISFACTION
Once this has been established, the organisation
is ready to develop the most effective relation-
ship strategy and alignment approach. Rela-
tionship strategies should be linked to the
overall strategic plan of the organisation.
Rather than trying to improve the situation of
all your customers at once, start where you are
likely to receive the best return for your invest-
ment. As you do this, it will positively improve
and innovate around the processes, people and
systems common to all customers. In the ‘do’
component, a company must ask ‘who will exe-
cute the relationship strategies?’ Primarily, this
will be the customer contact personnel, but
information systems will also be involved, as
will human resources and finance, providing
inputs critical to successful execution. The cus-
tomer response capability is actually a part of
the ‘do’ component of the process - the central
nervous system for many companies.
So how does a company know if it has been
successful? Clearly it must have an effective and
balanced relationship measurement system
(‘check’) in place to evaluate whether its
approaches are working. The final step (‘act’)
must be developed, in which approaches are
considered to address an effective and efficient
integration of a variety of customer relation-
ship feedback. Organisations should evolve
their customer processes in alignment with the
concentric model. Ideally, organisations begin
by building a strong base around complaint and
enquiry management. Then they must focus on
those processes that result in some interaction
between the company and customer (eg
requesting service, technical support) - to
achieve service excellence.
European business has not yet fully realised the
importance of customer loyalty. One of the
areas which MQI has found to have held back
the progress of European firms is investment in
employees, especially those who deal with cus-
tomers. In addition, in a recent EFQM survey of
member organisations, senior management
indicated that one of the most strategically
important areas for improvement was cus-
tomer-focus. CRE could be the tool to catalyse
customer-focus in European business and drive
excellence in organisations determined to take
their customers seriously
Figure 2.
Customer
relationship
excellence and
the plan-do-
check-act cycle
An organisation’s reputation often creates a
‘halo’ effect (I feel good about doing business
with this company) in the marketplace; if an
organisation has multiple business units, this
can enhance marketing and cross-selling. This
perceived value is a benefit they believe the
competition is unable or unwilling to provide.
Figure 1.
Evolution to
customer
relationship
excellence
Reference:
1Bain, The Loyalty
Effect, Harvard
Business School
Press, 1996
PLAN
Customer and market understanding
Relationship strategies
ACT
Fact-based
management
and improve-
ment
CHECK
Customer relationship measurement
CUSTOMER
RESPONSE CAPACITY
Call centres
Complaint and inquiry man-
agement
DO
Strategy execution
and alignment
Focus on customer
contact personnel
Business partners
Toll free call centres
Customer satisfaction and loyalty
measurement and management
Customer relationship excellence
Enquiry problem and
complaint management
Proactive
Proactive
Reactive
+ proactive
Reactive
Reactive
Process driven service excellence
Strategy
Listening posts
Analysis and
review
Human
resources
Information
technology
Perceptions of relative importance focus on
who, in the customer’s mind, is a competitor.
For example, the customers of an electric utility
may call their customer service centre for assis-
tance. In doing so, customers often go beyond
simply comparing their experiences with the
gas, telephone or water company, drawing on
experiences with facilities completely outside
the utility industry. This is the competitive (or
comparative) set that an organisation needs to
understand as it is driving customer expecta-
tion of the electric utility customers to levels
which, if not met, lead to dissatisfaction. At an
operational level, CRE follows a ‘plan-do-
check-act cycle (see figure 2).
Organisations must begin by identifying their
most important customers using effective, local
decision criteria and the requirements (needs),
expectations (wants), and sources of value for
these customers. Here the purpose is to invest
your resources wisely: target the things which
count the most with your most important cus-
tomers, thereby giving you a disproportionately
high return for the investment. Value is added
through an organisation’s processes, people,