Companies used to focus on making new, better, or cheaper products and servicwhateveres. . . .Now the game is to create wonderful and emotional experiences for consumers around is being sold.It’s the experience that counts, not the product. . . .People . . .want capabilities and options, not uniform products. . . .business is there to provide the tools.
Business Week, December 19, 2005
We have to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion.We try to make a customer’s experience better, but better in her terms.
A. G. Lafley, CEO, Proctor & Gamble
Why should customer experience supersede customer management as the operating paradigm for a successful CRM strategy?Simply, customers are demanding it, and customers are human beings like you, who I presume remember that you are a customer too.
This is more than just a nice homily to the personal side of human beings.This is a foundation for CRM if it’s to be done successfully.The premises are not too complex:
Those premises are the entire practical foundation for Social CRM.Simple, but the rest can be complex.I’ll simplify the complex for you throughout this book.I promise.
The Experience Economy Realized
In 1998, Joe Pine (whom you met in “Social CRM Leaders Speak from Out There”) and James Gilmore wrote what has since become a classic, The Experience Economy:Work Is Theater and Every Business a Stage.Their central premise was that customers were looking to businesses to provide them not with products and services, but with experiences.Products and services, the backbone of the old business model, were created to be in service of the experience.They also made the point that customers would pay premiums for those experiences.
What Pine and Gilmore make clear is that these experiences are the foundation for how the company constructs its business model.Products become the props and services the stage for the experience.The enterprise is able to charge for the experience, which is both personal and memorable.I would add sharable to their equation.
This is perhaps the most important aspect of Social CRM.A personalized experience that is shared or at least can be shared is what differentiates one company from another and engages the customer in ways that are unique and immersing.
The way that Pine and Gilmore put it was that this could be a commoditized experience.Put more simply, if the customers find it valuable, they’ll pay for it.
How do you pay for an experience?Easy.With money.
Let’s get real for a second.No one is talking about those who are having difficulties meeting bills or who have to scrape by each paycheck or have no way of earning a living.These experiences are for those people who can afford it.This is a business strategy, not a social strategy.Many businesses, like salesforce.com, have strong philanthropic programs that aren’t just for PR purposes.But what we are talking about now is something that people pay for, like any other commodity.This is not to be confused with their deeply personal and organic experiences that happen spontaneously.These are created experiences designed to delight and be memorable.They are authentic only in the sense that they are what they are openly intended to be.Please don’t confuse authenticity with spontaneity or natural growth.
Pine and Gilmore knocked it out of the park with their notion of how business experiences work.As the millennial divide was crossed, customers demanded personalized experiences as part of the way they were engaged and treated by the companies they were choosing to deal with.
Starbucks, now in trouble, is the classic experience that, since Pine and Gilmore, has been used by the rest of the known universe.But the experience economy is best reflected by one even more calculatedly encompassing experience:Mattel’s American Girl dolls and the world that has been built around them.
American Girl:A Cup of Tea and $200
The average cost of a pair of Fisher Price dolls is $38.The average cost of a Mattel American Girl doll duo is $205.Yikes.Why is that?Because American Girl has been intelligent enough to understand that their market is the mothers and grandmothers of the little girls whose imaginations they intend to capture.Rather than just sell a product, they are selling a story.This is an experience, not just a plastic object.Here’s how it works.
American Girl:The Company
Whereas Fashionology LA is new, American Girl is an iconic company to both young girls and businesses looking for a model of success.It was founded in 1986 and became a wholly owned subsidiary of Mattel, Inc., in 1998.The numbers of staff are between 1, 800 and 4, 700 (during the holiday rush).They have their headquarters in Middleton, Wisconsin, with 560, 000 square feet of doll brainpower.More than a million people a year visit their American Girl Place stores, and 650, 000 subscribe to American Girl magazine, making it among the top 10 children’s magazines in the United States.All in all, the numbers are big, but as you’ll see, the customer experience is even bigger, which makes for an even bigger return on investment (ROI).
American Girl:The Movie
In July 2008, a movie starring in-demand kid actress Abigail Breslin, Chris O’Donnell, and Julia Ormond hit the theaters, to primarily positive (81 percent) reviews.It was called Kit Kittredge:An American Girl.Note the title.Yes, this movie was based on the American Girl doll character Kit Kittredge, a doll with a life history in the 1930s U.S. Depression era.
The plot in a nutshell:Kit Kittredge, daughter of a dad with a failed car dealership and a mom taking in boarders to make ends meet, writes articles on a typewriter in a tree house.She writes an article on a hobo camp that she tries to get a mean newspaper editor to publish.He refuses.In the meantime, her mom buys chickens and Kit goes around selling the eggs.Her mom’s locked-up treasures are stolen, and all signs (a footprint) point to a hobo boy named Will.Kit and her friends Zach and Ruthie (another actual doll) investigate to prove Will innocent.
What makes this truly amazing is that this is the fourth film production for American Girl;the first three were made-for-TV movies.Even more amazing is the web page shown in Figure.
Look at the prices for the various products.Kit and Ruthie are $205 for the pair plus a few accessories, though you can buy them separately.Then there are coordinating items like Kit’s dog, Grace (adopted in the movie), for $18 or her tree house for $250.Plus there are the “you might also like” items like Kit’s bedroom collection ($135) or Kit’s bed and quilt set ($80).This might seem insane to you if you’re a guy without a daughter, but there are parents and grandparents paying for this without reservation even if a large gulp precedes the unreserved payment.
But the experience doesn’t stop with American Girl movies.That’s just a small part of this.
American Girl:The Store Experience
Four hundred dollars for a visit to an American Girl store is de rigueur.When you go to the store, you can have lunch with your doll in the café mom and youngster enjoying hot dogs, lemonade, and dessert while their dolls sit next to them in special doll chairs attached to the table.
The experience counts:American Girl and the movies
Of course, in keeping with what you will see is their model, the chairs are also for sale.Now look at what varying permutations of the hot dogs and lemonade will cost you in the American Girl Place (one of two types of experience) store at Chicago’s highend Water Tower Place:
It doesn’t stop with just food.There is a theater where you, your child, and her doll can watch The American Girls Revue for $28 per person.In case you were wondering, the doll is not a “person” as far as the price goes.There is also always Bitty Bear’s Matinee:The Family Tree, for a mere $15 per person.
In preparation for that big matinee, you can get your doll’s hair styled for between $10 and $20.If your doll is in need of further pampering, how about a facial, an ear-piercing, or some nail decals? For an additional price, you can get a photo taken of you and your doll that is placed on the cover of a souvenir copy of American Girl magazine (only $22.95 for six issues of the real deal).Needless to say, each store has books with the stories of the dolls, and clothing and accessories for the dolls to buy.There are special services such as birthday parties, personalized tours, and activities and . . .
Then there’s the dolls themselves.
American Girl:The Dolls
The American Girl experience is of course organized around the dolls themselves.There is an almost scary brilliance about how the dolls are used.They are not just products;the dolls are the centerpiece of the new business model that drives Social CRM , an aggregation of products, services, tools, and crafted experiences that are made available to customers to fulfill their own agendas and personalize their own experiences.
There are multiple lines of American Girl dolls, but two are significant for us.The most famous line is the American Girl Collection line.The dolls each represent a period in history that contains a story for the dolls themselves.For some reason, the years that they represent all end in 4 (1934, 1944, and so on).Each doll has a book that tells her story and a line of accessories and clothing that reflects her heritage and history.For example, here is the Kit Kittredge story according to Wikipedia:“Kit Kittredge is growing up in the early years of the Great Depression in Cincinnati, Ohio.Her family struggles to adjust to the realities of the economy after Kit’s father loses his job.Although referred to as ‘Kit’ in almost all books and promotional material, Kit’s full name is Margaret Mildred Kittredge.She got this name when her father kept singing her the song, ‘Put All Your Troubles In Your Old Kit Bag, ’after he learned it when fighting in World War I.It should be noted that although the year 1934 appears on the cover of the book, ‘Meet Kit’ is actually set in 1932.The Kit books were illustrated by Walter Rane.
”There is also a line of contemporary dolls that becomes significant (more or less) if you remember the Edelman Trust Barometer.They were called “American Girl Today” but in December 2005, the name changed to “Just Like You” dolls.2005 was a year after “someone like me” became the most trusted source.I’m not sure they are directly related, but this reinforces the trend that occurred around that time a nodal shift toward a customer ecosystem dominated by peer trust and moving away from corporate trust.
The way the Just Like You doll works is that you get 28 options, each with a unique combination of face mold, skin, hair, and eye color.This is directly in line with Pine and Gilmore’s concept of the commoditization of experiences.You provide the customer with choices that are substantial and flexible, and they pick and choose according to their personal desire.That’s exactly what the story is with the Just Like You dolls.
Why It Works
American Girl seems to be pretty money hungry, exceptionally pricey, and yet, parents I’ve spoken to who can afford to provide their children with this experience have no problem with the cost because of the incredible thrill that their kids get from the visit, the stories being told, and the totality of the experience.What you are paying for here are not dolls but tools for the child’s imagination and the memory of it all.The child is engrossed in the story of her doll.It has a specifically imagined personality and also an actual written story to go with that personality.That story is supported by the accessories, the clothes, the furniture, and then the ambiance and attention that they and the doll get when they go to the store.
Yet, the target market is the parents and grandparents who can pay for it.People are willing to pay for a premium if they see the value in paying for it.They are willing to pay the extra if there is a memorable and sharable experience associated with the purchased goods.Social CRM aims at that experience squarely because it is the experience that binds the customer to the company in ways that a product sale alone never can.
Think of it this way.The memory of the experience will be there when the dolls have long turned to whatever it is plastic degrades to.
Want some numbers?While Barbie sales in 2008 were down 9 percent, American Girl sales were up 7 percent to $463, 000, 000.That represented 8 percent of Mattel’s gross sales and about 15 percent of their operating profit.To continue this string of left-brained return, there were more than a million store visitors in 2006 and their revenue per square foot topped $500, which outside of Apple stores, at an insane $2, 800 per square foot, is the highest rate in the world.
Not too shabby for dolls.
Voice of the Customer vs. Corporate Calculations
What does this mean for you?How do you create this kind of experience and then generate the numbers that something like American Girl does?The first maxim I’ll give you to memorize is “Know thy customers.”Rather than do what most marketing departments do, which is to assume that you know your customers, actually listen to real customers.That’s what they call “the voice of the customer.”
Far too often, companies make assumptions on behalf of their customers.For example, I had a client who developed a campaign to make sure that a consistent marketing message was transmitted across all channels.The words “multichannel message” resonated through the proposed program planning document.This client asked me to check out the document to make sure it could be deemed “customer-centric.”Their assumption was that because the message was consistent and being delivered through eight different channels, that it must be customer- centric.
I asked them a simple question:“Did you ask the customers if they wanted that many messages?” “No.” “Then it isn’t customer-centric.
”The principle is simple.To provide the customers with an optimal experience, ask them what they want.We’ll cover how to do that in the chapter on strategy and on mapping the customer experience.Suffice it to say, while you have business imperatives, understanding the customer’s experiences with you and listening to their voice are the most important things you can do.That means their real voice, not the voice echoing in your head.
It’s Really Very Personal
I’m not sure how many of you reading this book have metrics that characterize the lifetime value of your customers and, if you’re more advanced than most, of their households.Customer lifetime value (CLV) can be important because it can help you determine how to allocate what are most likely limited resources.Clearly, if you determine, using CLV assessments, that this customer group is highly profitable and low maintenance or that this is a profitable but very high maintenance group or that this group is losing you dollars, then you can make some decisions on where to invest time and money to optimize the use of the resources and the return on the investment of those resources.
But there is a problem when you rely on assessments as a substitute for judgment, which is, unfortunately, the usual way.A story to illustrate:Orbitel, a Colombian telco, had an interesting policy.Anyone who was a CTO who had Orbitel’s residential service was considered a high value customer, even if they didn’t spend more than the monthly absolute minimum needed to make them a customer.
With a classic CLV analysis, this kind of person would be low value, barely worthy of the expenditure of a breath, much less resources of some magnitude.But Orbitel was smart enough to recognize that context mattered.While these were residential customers, it was in their business environment that they could be a potentially viable high value customer, if they were treated like that in their residential environment.
Nothing that algorithms do can substitute for judgment.
There is a much bigger issue than that.There is also no substituting algorithm for reality.As a business, there is definitely some value in running CLV assessments on your customers and their households.The results give you the ability to make judgments as to who is going to be high value or low value to you.But jump into your customer shoes (ordered from Zappos, of course) for a second.As a customer, is there any company you deal with regularly where you think of yourself as a low value customer?
Do you honestly think, when the world is controlled by customers like you, that there is a customer even one who will say, “Well, yes, I’m low value and I appreciate being treated that way with degraded service, or lower priority, or fewer discounts, because, hey, company, the numbers I provide just bear that out”? Are you that gracious and understanding as a customer? Is there a single customer who thinks of himself or herself as low value and expects to be treated as such?If there is, lock me up.
Of course there isn’t.You wouldn’t think that way.But, you say, then I’ll just do what Sprint/Nextel did with their low value nuisance customers:I’ll fire them.Cut them from the rolls of my corporate benevolence.
You could do that.Before you do, check out of this book, on blogging.Because it isn’t those particular low value customers I would be concerned with.It’s all those trusted peers who listen to them complain.They could do far more damage to you than the cost of keeping them on the rolls as a reasonably satisfied low value customer.
It’s not the same cut and dried world it was.Corporate expectations that were in vogue just three or four years ago are as extinct as a passenger pigeon.So here are some rules of thumb:
Customer Experience Management (CEM):Different from CRM?
About three years ago, there was a discussion going on in the CRM community about how customer experience management (CEM) “fit in” with CRM.Was it a subset? Was CRM a subset of it?Was it a superset?Was it a superset of a subset?
The discussion was even more ridiculous than it appears which is pretty lame.There has been a CEM dicipline for about 60 years, with the mainline company Cheskin and Associates leading the charge.But to make the argument/discussion even sillier, the CEM guys thought that CRM was useless or next to useless.
While there is certainly a difference in approaches and methodology, both disciplines are attempting to do the same thing:attract customers in ways that are sticky.Sticky means keeping customers around once they sign up.
However, there are some differences in approach between CEM and CRM 1.0 in particular that surfaced in the discussion .
Table: Some High Level Differences Between CRM and CEM
Social CRM and Knowing the Customer the Right Way
How does this apply to Social CRM?Because Social CRM is focused on customer engagement, and the acknowledgment that the customer controls the conversation, then the purely “inside out” (a.k.a.internal) approach of CRM is now null and void.Social CRM is an outside-in program and methodology for intelligent customer interactions with a company, and the company’s response to the customer’s control.That means that we’ve taken the concepts of CRM 1.0 and CEM and effectively merged them.
IBM certainly agrees.Look at this quote from Computer Zeitung on July 15, 2008, in “IBM:Next Generation CRM Will Be a Customer Experience Engineering”:
According to IBM’s most recent CEO survey, company leaders expect massive changes for their businesses by a new category of so-called inquisitive consumers.More than 22% of CEOs feel the need to better service this demanding clientele, planning to raise their investments in modern CRM systems, analysis tools, Web 2.0 and information on demand over the next three years.“There will be a next generation CRM, which we call Customer Experience Engineering, ”said Michael Bauer, head of IBM Global Business Services, which consults clients on CRM.“Customer Experience Engineering will include an active and consistent management of all contacts, to improve interaction and experience of customers.This also covers functional aspects such as products, services and distribution channels, ”Bauer added.Modern, open infrastructures for collaboration, called “Enterprise 2.0, ”would also play a crucial role.
Okay, the debate is now over and done, though traditional CRMers and CEM mavens will continue it despite the rest of the world not caring.The question becomes, how do you begin to provide that highly personalized experience we’ve spoken of throughout this chapter to the potentially millions of customers that your large enterprise might have?Or even the thousands that your midsized business or hundreds that your small business interacts with all the time?
The answer is:you don’t.You provide them with what they need to interact with you on their time, with their specific needs, and then you meet their specific expectations.You do not have to hug and kiss eachof them.If that were the case, Chapstick sales would be over the top.
But for now, realize that to truly understand the requirements, the customer has to be engaged with you, you need a granular map of every customer interaction at each touchpoint.The web experience as well as the store experience as well as the phone experience, etc., have to be discovered from the standpoint of the customer, not the company.That involves interviews with those customers that will take time, and yet, the results are extraordinary.
Your purpose for this granular look at the customer’s specific experience is to find out what you need to provide them with that is actually important to them.It allows you to understand what it will take to reinforce the positive, reduce or eliminate the negative, and meet or exceed customer expectations.You can’t ask for more than that.
What happens once you find out what the customer experience is?How do you create it?How do you design it?How do you measure it, when experiences are so emotional?Do you measure the delight of the little one who goes to American Girl?Or what their parents spend?But is the money spent a measurement of the experience that’s reflective of what happened a true measure?
Quantifying the Customer Experience:An Oxymoron?
Two more questions:Can you quantify the customer experience?Is it an oxymoron?
Not exactly, but correlation can be a bitch.
In a March 2008 study, Forrester Group senior analyst Megan Burns found that more than 80 percent of the respondents said they were increasingly concerned (more than in the past several years) with improvements of the online experience particularly when it comes to enjoyment, usability, and usefulness.Their top two Web spending priorities were Web analytics good and customer satisfaction surveys bad, very bad.
Burns says that there is a growing focus on measurement of core components of customer experience and that seems to be a good thing.I would agree there.So would Burns’s colleague, Bruce Temkin, a highly respected Forrester principal analyst in customer experience, who echoed Burns’s thinking in his report released in 2008, “The Business Impact of Customer Experience, ”in which he identified the correlation between customer experience and customer loyalty.
What bothers me is not the Burns finding, which is right on, but the spending priorities that the respondent companies are giving to the so-called CEM online efforts.To type customer satisfaction as a core component should be a cause of concern, given the escalationof customer demands and the generally diminishing value that customer satisfaction has as a metric.Companies are apparently aware of the importance of improving the emotional connection of the customers to them, but are misplacing what to discover about that connection.
Temkin’s study was a little more calming.It showed the strong correlation between customer experience and customer loyalty, not satisfaction.What was surprising to him, though not to me, was that bank customers showed the strongest relationship between experience and loyalty.“Banking relationships have a little bit of an emotional factor to it, ”he says.“Customers are influenced by the trust in the institution, which is influenced by how they’re treated.The experience plays into perception of trust, which plays into their loyalty with the institution.”
In fact, what could be more emotional than the relationship of a household to their future, often determined by their ability to save for when they can no longer, willingly or unwillingly, work?To put it another way, how emotional have you been in the midst of the incredible up and down vagaries of the stock market, throughout 2009?
Really, really upset, is what I think.But if I trusted the company I was dealing with to do the right thing with my dollars my most sacred nest egg as a customer I’d be intensely loyal, because my experience with the company was one that allowed me to trust it.
Customer Value Just Ain’t the Same
One of the reasons this is all so difficult to understand is that what the enterprise thinks of value is entirely different from what the customer finds is value.Check out Table and you can see what I mean.
Table:Company and Customer Differences in Value
It’s easy to see from the table that there is a distinct difference in what constitutes value to a company and to a customer.Corporate values are often based on the components of shareholder value what returns shareholders are looking for.The metrics are very much leftbrained.Customer values are quite different.The ones that are measurable are typically what the companies are looking for from the customer such as repurchase rates rather than what the customeris looking to get from the company.The customer is looking for emotionalsatisfaction, something that allows them to say always with differing criteria and differing levels of importance of that criteria I like these guys.They are a great company.
When I speak in public, I often ask people if they can tell me about a company they think is fantastic.Everyone has at least one they cantell me about, and when I ask them to talk about it they wax rhapsodic, meaning they go wild and talk it up.That is customer value a memory an set of relationships in combination with a valid consumer experience that turns the customer into an advocate.
The Importance of Style, or a String of Pearls for BlackBerry
“Life imitates art.”Well, every now and then life doesn’t imitate anything you could ever imagine from any recent experience you’ve had with art or your most fevered dreams.It’s usually when style is involved.Take my word for it, style plays a big part in Social CRM, the customer experience, and customer value.
In 2005, I was reading CPU magazine and I ran across a blurb that said that Intel and Toray Ultrasuede (I swear) were going to produce a “concept” high-end laptop that would use microfiber for a cover.Specifically, folks, that means creating an ultrasuede laptop.The soft, leathery microfibers would be in blocks of color that would look something like a Mondrian painting.This mutant alliance even went to the point of getting a quote from the totally hilarious Steven Cojocaru, an over-the-top fashion analyst who makes cogent and catty remarks at most of the awards ceremonies.Here’s his comment:
For many people, a laptop may be just as much an everyday accessory as a hip belt or skyscraper stilettos, so we’re seeing an image-conscious culture demanding that their laptop looks as great as it performs.The ultrafashionable concept is a very forward illustration of what can happen when unlikely partners shake up the status quo.This laptop is so eye-catchingly stunning, I’m trying to find a way to wear it as a necklace to the Golden Globe Awards.
When I read that quote I thought, “Is someone putting me on here, or what?Cojocaru is actually a funny guy so maybe this is a joke.A laptop and stilettos?
As nuts as this whole thing seems, there are underlying reasons for this strange example of accessorized technology.A study done in September 2005 by Harris Interactive called (naturally) “The Intel/Ultrasuede Laptop Style Study” came up with a number of very interesting insights.Here’s a few:
While it’s likely there is some fluff in this thing, what it shows is the laptop, a technology that has primarily been associated with business and road warriors, is now seen by the general population as more than just something whose value proposition is utilitarian.In fact, it has meaningful value as a lifestyle choice.
Style matters.And you’re willing to pay for it.Unless, of course, it’s an ultrasuede laptop.
So, Style Does Matter
Everything you consume or use, everything associated with whatever it is you do, has been purchased by you or by someone who gave it to you.Everything you use to make your life “feel good” or to have a “wonderful moment” is purchased somewhere.
“No!You unromantic SOB, ”you say.“What about love?” What about it?While ideals, romance, beauty, and love aren’t tangible items, there is a commerce decision somewhere in there.The commerce isn’t what makes you happy, but it provides you with what you need on the journey to being happy.If you are in love, odds are you are doing things that involve purchases.Even if it’s just a romantic walk in the park, you’re wearing clothes and shoes.You may have chosen just the right clothes to impress this person you are walking with.Which means you chose from multiple combinations of outfits you own that you bought or were bought for you.Did you take a shower before you went out?Did you make the soap out of thin air?You get my point.I’m not trying to take the romance or beauty out of that simple walk.Anyone who knows me knows I’m a romantic who prefers love and humor to CRM any day.I’m just pointing out that commerce, the purchase activities of consumers, and their relationships to businesses are a part of life, not something separate and not something you can ignore either as the consumer in question or the business providing the services.But how the things you buy make you feel when you use them is almost as important as the use you expect from them.Style, not just utility, is a part of your life.
For example, if I say “priceless.”What do you think?Unless you watch no TV at all, the first thing that came to your mind was MasterCard.What do you think makes that MasterCard commercial so memorable and timeless and provides endless possibilities for its future?Because it is conceived around exactly what I’m saying.“Your journey through life is intangible and meaningful (priceless), but we give you the instrument to buy those things that aid you in the transport along that priceless, beautiful journey of life.We can’t be your life, we can only give you an instrument that supports your chosen lifestyle and selected style choices.”Compare that to the totally lame and clueless “Life Takes Visa, ”which I trust someday will be changed to “Life Takes Visa Away from Us” so we no longer have to endure the torture of its incomprehensible message.MasterCard gets the idea of the “era of the social customer.”Visa doesn’t.
There is incredible depth in every decision you make in your life, even a purchasing decision.For example, when you make the decision to choose that laptop or cellphone, you are also choosing, although opaquely here, the web services architecture it will run on, and then, more consciously, the specific services you need or want.You are also choosing features that are not just functional and utilitarian but are cool and make you feel good using them.The service-oriented architecture doesn’t make you feel good.The services you need are practical.The services you pay a premium for and want are both practical and make you feel good.And the style oh baby, the style is valued for its coolness and how that makes you feel with your peers, or even just for yourself.That coolness, that style, is responsiblefor 1 million 3G iPhones sold between July 11 13, 2008 the first three days on the market and the additional 1 million 3G S iPhones sold the last weekend of June 2009.That would be totaling about 21 million iPhones sold since their inception.One final test.Take a look at the following figures.Given that these two BlackBerrys do the same thing, which one would you buy?
Or this one?
Sure.The cool one.Stylish choice.
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