Just another buzz word or is Customer Relationship
Management (CRM) here to stay? According to some CRM is already old
news unless you put an e (lower case of course) in front of it. The
latest three letter acronym from the world of Information Technology
begging for your time, attention and money certainly sounds like something
you ought to be interested in. But it does seem strange to be coming
from your IT department. What on earth do they know about customers?
That’s just the first problem facing many CEO’s, but judging
by the number of conferences on the topic over the last twelve to
eighteen months it looks like attention is finally being given to
the use of technology in managing that most neglected of creatures
— your customer.
In an Irish context we’ve a lot to learn. In
fact the emergence of the Internet and ebusiness as a fact of life
and the increasing globalisation of markets already makes it look
like game, set and match to the Americans. Born marketeers, salesmen
and entrepreneurs, this new eEconomy is made for them. How on earth
do we compete? From The Tin Men to Glengary Glen Ross the sales hero
has long since been immortalised in American culture. Mix that with
a talent for customer service (have a nice day y’all), throw
in some marketing genius and it does start to look bad. And now these
guys are coming after our customers!
Which brings us back to CRM.. Here’s one definition:
…"an integrated approach to maximising customer value,
through the differential management of customer relationships".
In plain English, it’s about engendering an almost religious
devotion to your customers throughout your organisation (acquiring,
servicing, keeping) but of course recognising, and this is the clever
bit, that some customers are more equal than others. This is how CRM
got started. Books like Peppers & Rogers - ‘Enterprise One
to One’ and earlier "The Loyalty Effect" by Reichhelds
began to highlight the costs of acquiring new customers, the value
of building loyalty from existing ones and the need to start segmenting
your customer base down to a group segment of one. Of course this
is old stuff by now and in a sense the real challenge facing many
business is not understanding the concepts but executing the strategy.
Getting Back to Basics
And this is difficult because it comes back to understanding
much more closely the needs of your customers and the value proposition
you are offering. The complications of multi-channel strategies and
the explosion of B2C (business-to-consumer) and now B2B (business-to-business)
ecommerce has forced companies more than ever to reevaluate their
basic business model. Why do your customers buy from you anyway? What
price your brand name and advertising budget when measured against
the latest search engines? The dot.coms may turn into dot.lemmings
and the current conviction that values intellectual capital over physical
assets may well be so much nonsense (we don’t want to make profits…we’re
learning!). But the sense of urgency is real and in business everybody
is feeling exposed.. The guerilla warfare in the Irish retail banking
market is a warning for us all but who’s to say those first
to feel its heat won’t emerge stronger than before. First Active
may well have the last laugh as they rethink the basics while many
of their competitors do not. According to Conal Henry, newly appointed
Head of Retail Banking,
Our aim is to give the customer what (s)he wants when(s)he
wants it. Our CRM initiative is addressing fundamental improvements
in how we treat our customers and is key to differentiating ourselves
in the market and this is the essence of any sensible CRM program.
Customer service is an integral part of the value equation, and in
an increasingly competitive environment will define a company's success
or failure.
Customers Expectations and Choice
Rising customer expectations and increased choice is
a key driver behind eCRM. As companies strive to build customer loyalty
they are facing an increasingly opinionated consumer base who hold
strong opinions on the type of service or even relationship they want
with you. In many cases that may be no relationship at all. Already
the world wide web offers the potential to answer the ‘am I
getting the best price’ question before proceeding to the virtual
check out. A recent article from the CRM-Forum offers an example of
an electricity consumer being offered a choice of energy sources depending
on type, e.g. Green or Fossil fuels. Imagine giving the customer the
chance of switching power source according to say price fluctuations.
He or she might be green ‘at heart’ but set an upper price
limit to greenness, switching to fossil fuel if green electricity
becomes too expensive. Phew. It’s a long way from the model
T Ford — black only of course. Again examples such as this serve
to illustrate the scale of change in some industries but before you
invest to manage a paradigm shift in your own customer behaviour make
sure that it’s real.
The Technology View
From a technology perspective CRM systems aim to integrate
a company’s sales, marketing and customer care processes within
one easy to use front-end software application. This provides the
required transactional data at the point of service to fully answer
a customers query in addition to marketing data to manage and spot
a sales opportunity. Although for many customers this doesn’t
quite describe the challenge. Many are in the business of fundamentally
redesigning a customer centric IT architecture which builds on top
of the existing systems the ability to deliver service across multiple
and more frequently electronic channels. The driver is increasingly
automated support for sale of often complex products to sophisticated
and demanding customers. Generating and managing continuous targeted
and focused campaigns are very often the top priority and a significant
challenge. According to Steve Collins, Director of London based Sophron
Partners, thought leaders in CRM:
'The challenge for serious CRM organisations is to
migrate away from batch, campaign management-centric systems toward
the development of a real-time CRM capability to intelligently manage
customer dialogue at the point of contact and optimise relationship
value. This is not an easy goal to attain given the considerable investment
many companies have already made in their existing CRM infrastructure.
A hand-full of progressive CRM players are, however, achieving this
by investing in 'customer labs' to develop and experiment with real-time
CRM processes and technology in a controlled testing environment.’
In addition to this the challenge of legacy systems
integration often requires a solution all of its own and this has
given a considerable boost to the market for clever middleware tools
or the more grandly titled Enterprise Application Integration (EAI)
software. Local heros Iona are strongly focused on this market and
position their software as key enablers in the building of eCRM solutions.
What Does A Project Involve?
If your CRM ideas and strategy at some point manage
to wind their way up the project priority list to the point of ‘must
do’ there are some rules of engagement worth keeping an eye
out for. Lesson number one — its not about technology it’s
the business. Remember those Data Warehousing projects that you signed
off on back in the late 80’s. Well, the potential for spending
money here is significant. However, more than most investments there
should be clear bottom line benefits in terms of profitability, competitiveness
or customer service. Lesson number 2 — the technology is important
and unfortunately complex. The lack of IT awareness on the part of
senior executives and the inability of the technologists to bridge
this gap is critical when it comes to CRM. If the technology is going
to give the competitive edge promised it requires ongoing and committed
input from the top management team. Lesson number 3 — sort out
the people and the process issues before bringing technology on board.
Again with CRM there is no place to hide. Lack of awareness, poor
internal communication and general operational upheaval if not managed
properly will be felt directly by your customers. Lesson 4 —
Start with the customer - Customer identification in terms of type
and profit to the organisation is a basic requirement to any CRM program.
Why after all invest top dollar in state of the art CRM systems to
service 100% of your customers when 80% of your profits come from
the top 20%. In other words segmentation, segmentation, segmentation.
Show Me The Money!
The cost of a project is the million-dollar question
and in the case of eCRM generally comes back with a million-dollar
plus answer. As always it all depends on the scale of your ambitions
and how quickly you want/need to achieve them. Expect to devote significant
senior management time internally in formulating a compelling business
proposition based around smart analysis and detailed understanding
of your markets. The outcome may require new channels, new campaigns,
or even new businesses. Alternatively, your eCRM project may focus
on improved service levels, sales efficiency, marketing intelligence
or management information. In almost every case technology will play
an important part in the programme. And risks? Plenty of them, but
you’re an entrepreneur and paid to take them. So get on with
it.
Source: Article by Paul Gannon,
General Manager, Sales & Marketing, CMS Division of Kainos Software
Ltd
