TORONTO (06/27/2000) - CRM often stands for "clear as mud" for companies attempting to get beyond vendor hype to clear, actionable customer strategies.
Customer relationship management is essentially about optimizing customer relationships, creating mutually beneficial interactions that attract new customers, keeping existing customers, and increasing customer value. Clever names (enterprise relationship management, Internet relationship management, e-CRM) and "must have" technology-features tend to turn complex business issues into simplistic technology choices -- if companies can even understand the differences.
Companies need to recognize there are no e-CRM magic bullets. Companies building CRM strategies must address emerging technology issues -- such as the role of the Internet, personalization, multichannel integration and enterprise coordination -- in terms of business and customer impact, and employ strict prioritization mechanisms in order to turn hype into results.
THE INTERNET AND CRM
The Internet makes CRM much more achievable by creating a channel for real-time interaction with customers and allowing companies to capture much more information about their customers and what they want. It also makes CRM more important, as companies now face a greater need to manage customer relationships across channels or use the Internet as a key new channel for building multiproduct customer relationships.
The Internet also makes CRM more challenging. The capture of on-line data creates privacy issues. New intermediaries such as hub sites and portals will come between companies and customers. And sales-channel business integration issues, as well as technical integration, mean that incremental progress rather than "big bang" implementations may be the way to go for most companies. This incremental progress could include Web support for existing brick-and-mortar stores, incremental analysis, and unobtrusive Web personalization.
PITFALLS OF PERSONALIZATION
Speaking of personalization, Giga sees the term -- and the products -- becoming a catch-all with, as of yet, very little meaning and few compelling customer examples. The goal of personalization is to provide specific, selective content and offers based on customer preferences and characteristics. For example, if you buy a book through Amazon.com you will be presented with a list of books purchased by others who also bought the same book. But just because you bought a novel by P.D. James doesn't mean you necessarily also want to buy a Martha Grimes mystery, giving the recommendation limited value. And the risks of false personalization often outweigh the rewards of valid connections. For example, one company found that customers who purchased a duvet were also likely to buy a push-up bra. This may be a perfectly correct connection but would probably be a high-risk marketing initiative.
Organizations need to make sure their personalization efforts are proactive, not reactive, projecting future connections rather than just recognizing past events. So, for example, rather than just making the connection that sales of fans increase in hot weather and then placing them on sale, a retailer could promote fans based on geography and/or weather forecasts. And this type of personalization shouldn't be distinct, depending on the entry point of the customer, be it the Web, in person or over the phone.
Cross-channel customer management is receiving increasing attention. Companies should view the customer as a single account and manage the individual equally, regardless of how he or she chooses to contact a company. As business becomes increasingly complex across departments and the enterprise, and between customers and the internal organization, channel distribution conflicts will impact efforts.
Many businesses are pulling together the components for a contact centre but have little previous knowledge of the infrastructure required to support their CRM initiatives. Contact centres span the entire organization, requiring that several business units become involved in their planning and implementation.
Cross-organizational planning, however, is still not prevalent for most companies. Although current deployment is limited primarily to large enterprises and a few vertical markets, such as finance and retail, the business imperative of retaining on-line customers is driving many organizations to accelerate multichannel customer support.
ORGANIZING AROUND PROCESSES
One of the benefits of CRM is that it links data, applications and business processes across marketing, sales and customer service. When CRM is implemented as an integrated business process, rather than just as automation of departmental processes, functional silos are eliminated and the effectiveness of efforts to attract, retain and derive value from customers is greatly enhanced.
However, the business processes don't stop at front-office boundaries.
Companies need to organize their enterprises around the effective execution of business processes such as product and market planning, closing sales, fulfilling orders and retaining customers. These process teams need to transcend the traditional department boundaries of sales, marketing, distribution and production. In order to develop effective process teams, it is not necessary to abolish functional departments. Functionally and professionally oriented departments have important roles to play in terms of recruitment, training and maintenance of professional standards. But process teams must be bound together by a common understanding of the primacy of the process over departmental objectives, and must be measured according to process metrics, not departmental metrics.
RANKING CRM PROJECTS
While companies must establish long-term customer strategies, CRM initiatives are often too large to safely implement all at once. One approach to assessing and prioritizing CRM projects is to rank each project on its technical complexity and business impact. Projects with high business impact and low to medium technical complexity (such as customer self-service, Web collaboration, and e-marketing) may be prioritized higher than more difficult and more technically complex projects (ERP integration, unified messaging, single customer view). Each project must be tied back to the overall CRM strategy and architecture goals, and manual processes defined to supplement near-term technology gaps.
Whatever you call it, CRM is about focused interaction and optimization strategies for your company's customers, and must be implemented at a business level, not a technology level, to be effective. The introduction of the Internet, as well as enhanced coordination with the rest of the enterprise provides a fuller set of technologies to achieve long-term customer relationships, but does not alter the fundamental business imperative.
Erin Kinikin is Vice-President, Giga Information Group Inc. Giga analysts Thomas Harwick, Elizabeth Herrell, Andrew Bartels and Tony White also contributed to this collaborative research.