by John Hunter

QVC: Using Technology to Build Relationships

Jun 01, 20036 mins
CRM Systems

Would you like a magazine subscription with that? How about a time-share in Florida? Maybe some hot-pink lipstick to go with that new power tool? Not interested? Well, we’re not surprised. We’re not interested either.

At QVC, we run the opposite way from customer relationship management companies that want to teach us how to sell a screwdriver to someone who bought a diamond ring. CRM may sound like a customer-friendly strategy, but it’s really just a marketing tool that helps departments within a company work together to cross-sell and upsell to customers. Although cross-selling and upselling can be appropriate and effective under the right conditions, we’ve found that maximizing the sale generally doesn’t help to achieve customer loyalty and repeat purchases. Building trust and consistency in consumer relationships is the key to success in the retail business.

We know that trust works, and we have evidence to prove it: More than three-quarters of our customers rated QVC 7 out of 7 for trustworthiness. Those customers tend to repurchase at a rate 80 percent higher than those who rate us a 6. They are also more willing to recommend us to a friend.

But while building trust is a very smart business strategy, it’s not easy to pull off. As Doug Rose, QVC’s vice president of merchandising brand development, says, trust-building is a time-consuming pain in the neck. Sure, it’s tempting to skip all the boring stuff—including answering phones quickly and efficiently, keeping reps informed, making sure everything is customer-friendly—and just maximize the dollar productivity for the moment by constantly pushing products at customers. But we’ve learned that the best long-term strategy is to let the customer decide what to buy—in effect, to opt in to our system.

Focus on Tomorrow, Not Today

Sure, upselling and cross-selling can be effective when done properly. But at QVC we believe that it is more important for our long-term success to focus on creating a positive customer experience. So unlike fast-food chains that always ask “Do you want fries with that?” we carefully limit the amount and kind of upselling we do. We never upsell more than 15 percent of our customers in a given month and never make more than one offer a month to a customer. And we offer only products that are related to what the customer is buying. Whereas most companies would be thrilled with, say, an 8 percent upsell, our main concern would be not annoying the other 92 percent of customers by trying to sell them a Craftsman drill with their Birkenstock sandals.

CRM is not just about slick technology and seeing how much you can sell to your customers today; it’s about building relationships so that you can sell to them tomorrow. If the technology doesn’t suit our core beliefs, we don’t invest in it.

We realize our views diverge from conventional CRM wisdom, but we believe that QVC customers sense and appreciate our efforts. While they might not come right out and say, “Thank you for not trying to sell me a bunch of stuff that I don’t want or need,” they vocalize it in other ways with their on-air testimonials, positive recommendations to others and their high satisfaction ratings. In fact, more than 25 percent of our customers come to us by word of mouth.

Don’t Assume

How, then, do we build trust? We start by being careful not to be presumptuous about what might interest the customer. Human beings are individuals. They are not motivated by demographics or marketing variables. They are often motivated by circumstances. So, rather than assume we always know what our customers want and bombard them with offers, we restrict our upselling efforts to a very small, targeted segment. The rest of the time, we are content to know that customers are calling simply to place an order for a particular item, and we strive to make that as easy as possible for them.

Our ability to give customers a positive experience depends on our customer service representatives, whom we refer to as customer advocates. Calling them advocates encourages them to listen for ways that QVC can best serve the customers. They then raise those concerns up the ladder. For example, our entire Denim & Co. proprietary fashion line was built on suggestions and comments from customers. It works too, since 93 percent of our customers rate their overall satisfaction with our representatives as excellent.

As the Internet started to take hold in the mid-’90s, customers began to expect instant access to a wealth of information. But our customer advocates were using an old, text-only “green screen” system, so they couldn’t always answer customers’ questions about products. In 1997, we began looking for more visual technology that would give reps better product information and help them serve customers more efficiently. We quickly decided to steer clear of CRM vendors who were touting cross-selling technologies and whose products didn’t lend themselves to customization. Instead, we chose to build our own thin-client, browser-based customer service system. We developed it from the representatives’ point of view based on how they interact with customers.

The customer service system doesn’t have any function keys or green screen text that reps have to read. It is set up thematically with help tips strategically placed throughout. No matter what screen the reps are looking at within the system, it tells them what they could be doing for the customer and gives them a variety of options. The intelligence and processing power in the system allows reps to spend more time actually hearing and dealing with the customers’ issues and less time trying to figure out how to navigate among screens. Customers have told us they value fast ordering. The new system has allowed us to decrease our average order-entry talk-time from two minutes to one and a half, and our average customer service talk-time from four minutes to three. We know the system enhances our strong relationship with our customers because the number of customers who gave us an excellent service rating went up from 87 percent to 91 percent. And our business continues to grow: Last year we sent out 90 million packages and handled more than 130 million phone calls. Beyond being a “nice” strategy that helps us interact better with our customers, QVC has saved approximately $4 million a year as a result of faster customer data processing and shorter talk-times.

QVC will continue to focus on providing an exceptional and satisfying customer experience, using technology when appropriate as an enabler. After all, it’s the people behind the technology who create the magic. We respect our customers’ privacy and will keep working to earn their trust, and not let CRM hype or the fad of the day distract us from focusing on customers. We’ve given our people great tools and the power to advocate for the customer, and they do. Fortunately for us, it seems to work.