CRM is about developing and implementing business strategies and supporting technologies that enable companies to capture, analyze and track detailed customer data. Databases can make this customer information accessible enterprise-wide, ensuring that customers' needs are met consistently and efficiently. Although a customer-centric approach is not a novel idea CRM is currently a key issue for global companies. The potential is enormous. So, why for some, is CRM not delivering the goods?
Early indications are that two-thirds of all CRM projects are failing. Sensible businesses have always striven to serve their customers. The entire focus of requirements engineering, and for that matter of sales and marketing, has always been to enable customers to get the products and services that they want. So if CRM is to be worth anything, it must offer something new, and show that it provides a return on investment.
Andersen Consulting (now Accenture) claim in a new report that the financial performance of companies in electronics, communications and other sectors strongly links to how well they interact with their customers. They analyze a list of CRM skills including sales, service and mining customer data that potentially could raise profits by 5% or more.
Critics reply that the big consultancies do not have a good record of backing winners, at least from their clients' points of view, but that sales of CRM software are likely to be lucrative for the consultancies. Nor do they all have a good reputation for treating their customers well. In addition, using technology to raise profits is quite a different thing from attending to customers to improve service. Better services make customers happier, so profits should rise; whereas using data to squeeze more profits out of customers in the short term does not necessarily make them happier.
So what are the consequences of placing the customer, as opposed to markets, at the core of a company's processes and practices? It means that the organization genuinely:
Phil Tamminga and Pat O'Halloran, writing in the Cutter IT Journal (October 2000) point to the opportunity offered by e-commerce to improve service to customers, using IT to guide the firm's CRM tactics. Simply putting up a website with a sales catalogue is not nearly enough, they argue. Taking orders and payments over the web both increase profit, but the single e-CRM activity that does most for profitability is sharing knowledge and information on products. If that seems a surprise, Rick Levine and co-authors of the ClueTrain Manifesto argue that it is a fundamental aspect of the change that the Internet is now wreaking on the business world. Customers are finding their voice, and they are demanding the right to be heard. That means that businesses must listen and then give customers the information they want, individually if necessary. Websites, email, mailing lists, newsgroups, FAQs, as long as they are authentic, and not least online support desks staffed by real people, are ideal for this task.
The challenge for CRM is to help businesses move smoothly from mass-marketing of products and services targeted on the imaginary average consumer, to one-to-one marketing designed exactly for each individual customer. Obviously this is only possible for a large organization if it has very good and up-to-date information, combined with the will to provide customers with the genuine experience of individual attention in a way that ensures traceability to requirements.
Converting data into knowledge of customers is not easy. Organizations used to focusing on technologies, products and markets need to turn inside out to achieve it. Andersen Consulting are not inventing this: customers really are getting smarter, and they really will do business only with the firms that answer their email queries personally.
Markets are changing rapidly - for the better. Customers are better informed about products, and are gaining a determination to obtain good service as well as good value. They have unprecedented access to information. E-commerce is bi-directional, so your customers find out about you as quickly as you learn about them. The Internet gives ordinary consumers and small companies rapid access to accurate and independent information - and to each other. In this savvy marketplace, customers will soon find out which CRM initiatives are genuine.
Partial implementations of CRM are therefore not likely to succeed. The requirements for a business' CRM strategy need to be thought out carefully. For example, it is no good attracting customers with a catalogue of products and instant delivery if your organization cannot follow up with properly tailored help and support. Building part of the highway is worse than useless if it leaves your customers far from home with no place to go. The technical problems may be solved, but the human and organizational issues in CRM are equally important. Requirements tools and data-mining capabilities are important and useful components of CRM, but they'll only deliver when the organization seriously changes its focus from markets to people. Addressing individual customer requirements is not something that can be sprayed onto a business, or bought in a software package.
How should CRM be implemented in an organization? Transforming a business is like a large-scale IT system. First the business problem needs to be defined. Next, the feasibility and impact of the changes need to be assessed. Only then can a solution be specified - not just the CRM functionality and capturing customer data, but also the constraints and relationships between different functions. Then the business can choose and implement a suitable solution, whether that is a specific CRM system or a selection of CRM-enabling tools as part of a wider suite of data-handling facilities.
Once a CRM capability has been acquired, it needs to be consolidated and enhanced. The business should monitor staff and customer suggestions and problems, and seek to improve and personalize the service. Changes are as likely to involve work practices as technological developments. The good news is that these need not be complicated. If you want to offer individual customers better service, then you can begin by looking at what your customers actually see when they contact your organization. Interaction centers (telephone call center, website, fax, email), retail, dealerships and distributors, advertising campaigns and telemarketing, helpdesk, sales leads, installation and maintenance among others should all contribute to a consistent, helpful, well-informed, and immediate experience for the consumer.
'How Much are CRM Capabilities Really Worth? What Every CEO Should Know', AC Report, 2000
© Ian Alexander 2001