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A New Window onto CRM Success

A concept from 1950s psychology can elevate contemporary customer relationship programs.

(originally published by Booz & Company)

Illustration by Lars Leetaru
Customer relationship management (CRM) is one of the most widely implemented management concepts of the decade, yet after hundreds of millions of dollars in systems and process investment, most companies are still waiting to see its vaunted benefits realized — in customer understanding, customer satisfaction, and financial returns. Why aren’t firms achieving the customer intimacy they desire?

One answer is that companies have yet to apply some relatively simple lessons that derive from several decades of social science research into the dynamics of human relationships. Like the Prisoner’s Dilemma and the Nash Equilibrium, an element of game theory known as the Johari Window can help illuminate rules that guide the behavior of people involved in transactions with each other. Looking at CRM through the Johari Window can assist organizations that are reliant on customer interactions — which is to say, most organizations — in building more open, transparent, trust-based, satisfying, and mutually profitable relationships with their customers.

Customer Strategy
A CRM program should build on a well-formed customer strategy to improve penetration into a customer or a market segment, increase sales force effectiveness, and help a company build loyalty with its most valuable customers. However, successful CRM implementation depends critically on how the relationship challenge is framed.

Too often, CRM technology is focused on capturing customer information and distributing it within the company. By observing customers and annotating their activities at all interaction points with what amounts to a hidden camera, a typical CRM system grabs information for later playback, which may take the form of cross-selling suggestions and, sometimes, relationship “health checks,” such as the dinnertime “courtesy calls” placed by one’s bank or telephone company. From this perspective, the primary role of CRM is to capture relevant customer information, economically extract the most cogent meaning, and deliver this insight to the widest possible set of potential users in the organization.

To customers, this kind of CRM system is a black box: They are aware that information is being captured and recorded, but they are unable to see how it is used and may be only dimly aware of when and how it is being played back to them. If information is power, then the power in this relationship is with the supplier. Used without sensitivity, “black box” CRM can prompt customer concerns about privacy and lead to distrust.

An alternative approach is to take a broader view of CRM — to look at it not as an unseen, exploitative eye on customer activities, but as an opportunity to create and expand relationships between an institution and its customers. The challenges for companies are to create an open and transparent environment that encourages customers to contribute more, and to improve the accuracy of information that is shared. If this greater level of information-sharing demonstrably leads to improved service, trust will be enhanced, which in turn will reinforce the benefits and likelihood of future sharing and interaction.

Human Relations
The Johari Window — a highly influential framework from the social sciences that has been used to explain and facilitate the deepening and strengthening of interpersonal relationships — clarifies this alternative approach to customer–supplier relationships. Invented by University of California psychologists Joseph Luft and Harry Ingham in the 1950s (and labeled with a combination of their names), the Johari Window is a conceptual model of interpersonal communication developed through the study of individual relationships, which also had clear applicability to the understanding of group dynamics, including the relationships between individuals and organizations, such as schools, hospitals, and companies.

The window divides all personal data into four categories. (See Exhibit 1.) The categories concern whether the personal information is known to the individual or revealed to the world at large:

  • The Open Self is the most widely available information — information the individual sees and shares with the world, such as the color of his or her own hair.
  • The Blind Self is information that the individual cannot see but that is apparent to the world — say, a “kick me” sign surreptitiously stuck on one’s back.
  • The Hidden Self is information known to the individual but kept private from the world, such as the personal contents of a safe-deposit box.
  • The Unknown Self is the set of information unknown to both the individual and the world — one’s vote in the next national election, for example.

Communication between parties typically “moves” the Johari panes by shifting information from one quadrant to another. By revealing a personal secret, an individual expands the Open Self to include information that was previously part of the Hidden Self. Similarly, when feedback is communicated that increases a person’s self-awareness, the information moves from the Blind Self to the Open Self.

Beyond the Black Box
The Johari model of information exchange offers an opportunity to go beyond the black-box approach to data capture, to improve the health of customer–supplier relationships. The window encourages people and institutions to consider the information available in a relationship, and the actions that each member can take to improve mutual understanding and build trust.

In a customer–supplier relationship, there are two central opportunities: (1) Create an environment where both parties can share information more readily; increasing levels of trust and reciprocity will encourage increased sharing of the “private self,” just as is true in interpersonal relations. And (2) Give customers information that can improve their position — feedback, education, and other information currently unknown to them that might enable them to increase their self-awareness.

Take the relationship between a retail customer and a bank. Information readily maps to the four quadrants of the Johari Window. Open Self information — data shared and known by both parties — includes account numbers, transaction histories, and balances. Both the customer and the bank put information into this domain through transactions, statements, and other actions. The relationship also has a set of private or hidden information that is not revealed to the other party. This closely held Hidden Self information might include the customer’s other banking relationships, life events, or aspirations.

Within the relationship there is also a Blind Self, consisting of information known to the bank but not to the customer. Examples include customer profitability, credit history, and the bank’s view of the customer’s needs. In some cases, banks might have better knowledge than the customer of, for example, the customer’s financial potential or opportunities for improving the customer’s use of banking services.

The final quadrant, the Unknown Self, might include the optimal product solution set for the customer or the customer’s own as-yet-undiscovered needs and desires.

Characterizing the information available within the relationship in the four Johari categories allows bank executives to analyze the professional relationship the way they would a personal relationship. The benefits of this simple, human approach become evident when one contrasts it to the ways financial institutions have typically used CRM systems, which have focused on capturing information from the customer’s Hidden Self. In the course of service or sales interactions, customers are encouraged to reveal information, which is logged and stored by the system for later use. Typically, information goes through a complex set of inference algorithms, with the objective of adding meaning. These processes are hidden from the customer, and the resulting output — assumptions about the customer’s value and needs — is not directly shared with the customer. It also may be incorrect. Customers have even become conditioned to expect that their own bank won’t know or remember them.

Compare this with interpersonal relationships, in which trust is built over time, and in which parties come to expect mutual sharing and retention of knowledge over the course of the relationship. When viewed through the Johari Window, the CRM challenge is no longer so much persuading or tricking a customer into revealing his or her Hidden Self; it is, rather, expanding the Open Self — increasing the amount of shared information that is valuable to both parties. For example, many banks conduct initial needs analyses when a customer first opens an account. Instead of filing the results of these interviews in a drawer, the bank could share them and make them available for continuous updating (e.g., through an Internet channel) throughout the bank–customer relationship — quite the opposite of hiding information away to be used (at best) in internal bank processes. Qantas Airways Ltd. has successfully implemented user-updatable profiles, which are mailed and e-mailed to customers. The open approach both improves information quality and reduces the privacy concerns that are increasingly voiced in response to more hidden CRM data collection.

Companies can also seek to reduce the customer’s Blind Self. The strength of a personal relationship depends in no small part on the degree to which individuals can sensitively offer one another feedback that increases self-awareness and deepens the feeling of sharing between them. The same is true in customer–supplier relationships.

In banking, for example, the organization can help shrink the customer’s Blind Self by sharing information (such as amount of home equity available), creating a simple personal balance sheet for the customer, or suggesting ways to improve returns or decrease fees. As in personal relationships, the bank’s role in throwing light on the blind quadrant needs to be approached with sensitivity, in a context sympathetic to the overall relationship. Successfully done, this type of feedback has the potential to allow the bank’s data to be available and open to its customers and allow its CRM processes to become integrated with individuals’ personal budgeting and financial management approach.

Relationships Recast
Increasing feedback between the individual and the institution supports customers’ own efforts to understand and develop their Blind Selves. Indeed, as consumer choice increases as an option or necessity in many spheres — in health care, finance, and retirement planning, for example — the mutual benefits of rich, open, and shared spaces become even more clear. They can help suppliers better determine the next logical product for the customer and aid the customer in recognizing and articulating needs for his or her current life stage.

Recast, the CRM challenge shifts from capturing customer information to enlarging the shared/revealed space in the customer relationship, delivering both greater intimacy as customers share their private selves and greater engagement as the institution leverages its available information to help people expand their Open Selves. The imperative for CRM is to shift from a focus on capturing information to a concentration on building a truly shared space that supports communication and increased customer engagement with the institution.

The new approach to CRM requires a mind-set change for many companies. Viewed through the Johari Window, customer relationship management requires that a culture of reciprocity replace the cult of secrecy that prevails at many institutions. Moreover, next-generation CRM requires the institution to invest in the customer as the customer invests in the institution, by helping customers realize value from revealing the Hidden and Blind Selves. Consistent with the objective of building an environment of reciprocity and trust, such investment must support customer empowerment, and it must manage the privacy concerns inherent in traditional CRM applications.

This newly constituted “Open CRM” should begin with an analysis of where increased information sharing and deeper relationships could add most value for customers and suppliers. Suppliers must react by realigning the capture of information and developing new, shared information channels. The U.S. bank Washington Mutual, for example, has developed “teller towers” where customers and staff stand side by side, jointly viewing the customer’s account information. This shared information must then be leveraged to demonstrate the value to customers of increased openness and closer relations.

Many companies that have invested heavily in CRM over the past decade are well placed to fully exploit their investment by reviewing CRM through the Johari Window and going back to relationship basics. The prize is stronger, deeper, trust-based relationships with customers.

Reprint No. 04103

Author profiles:

David Moloney ( is a vice president in Booz Allen Hamilton’s Sydney, Australia, office, where he specializes in retail banking strategy.
Robert Bustos-McNeil ( is a senior associate in Booz Allen Hamilton’s Sydney, Australia, office, where he works with clients on strategy and operations improvement.
Also assisting in developing this article were Joseph Luft, author of Group Processes: An Introduction to Group Dynamics (McGraw-Hill, 1984), and Rob Craig, general manager, product and process, the Westpac Banking Corporation.
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