What is NOT Customer Relationship Management

A Customer Interaction Centre is not CRM, a Sales Force Automation package is not CRM and nor is your Campaign Management software or your Data Mining application. Why not? Because they are merely technology components of a CRM system that act as enablers.

CRM itself is a business philosophy that spans the entire value chain within an organisation. If adopted properly it will affect everything from the technological infrastructure of a company to the weave of its cultural blanket.

To be successful in a CRM implementation there are a number of factors that must be considered, many of which are overlooked by companies intent on winning the competitive advantage race. This article will highlight the key failure points for organisations that have recognised the vast potential of CRM enhancing bottom line results.

Why does it all go wrong?

Knowing what to say: Operational CRM v Analytical CRM

The question we should ask ourselves is not about how often we have communicated with the customer, but how often has that communication been relevant to them?

Many organisations focus on operational CRM i.e. those tools at the front end of CRM that allow employees to build better relationships with customers through more efficient processing of transactions and synchronisation of interactions. Examples include contact centres and sales force automation software, which should be integrated with back office systems and, perhaps most importantly, to a single comprehensive data source. We will delve deeper into this subject matter later on as all too often this is not the case.

The problem is that organisations often overlook the critical importance of analytical CRM, the underpin of any CRM solution. This involves the utilisation of information gathered from a variety of sources to ensure a better understanding of customer behaviour, needs and propensities to make buying decisions.

Far from being some arcane art - data analysis is really only about using a series of techniques to ask questions of the data in order to surface the information it contains. Questions such as;

"which customers are likely to respond best to a particular channel of communication?";

"which customers are the most valuable to the organisation in order that we can focus resources on their needs?"

"which customers are about to stop being customers and how do we make them stay?".

Without the answers to these kind of questions, how will an organisation know how to interact with a customer both in terms of what to offer, how to offer it and through which channel, let alone ensuring that the most appropriate customer group is being approached? Analytical CRM provides the knowledge about an organisations customers enabling more effective customer interactions through the operational CRM channels.

Lack of Integration

When we watch "changing rooms" on the television, the colours of a newly decorated room flow seamlessly from the walls, to the flooring to the furniture and finally to the ornaments and accessories. Well at least this happens on occasion. Twice from memory! The point being that unlike the colours chosen by the T.V. design teams, seamless integration is paramount for any CRM system. The integration required can be viewed from a number of different perspectives including strategy, data, processes and technology. These are explained more fully below.

Strategic Integration

As with any major initiative CRM requires a board level sponsor to own and drive it through to success. Before embarking on the programme a degree of strategising will be required to understand the impact it will have on long-term objectives. This in turn, implies that it should form an integrated part of an organisations overall strategy, and be embraced at all levels from the directors, call centre agents and web designers to the warehouse staff and point of sale clerks. Failure on this point is likely to give rise to a lack of adoption and direction, potentially leading to a negative ROI.

Integrated Data Source

It is not uncommon to find organisations with literally hundreds of data sources spread across the globe, some internal and some external. Individually these data sources have a limited value, but combined, the data is likely to tell a different story. A jigsaw is of little use without having all of the pieces, and the same principles can be applied to a customer database.

The consolidation of data, into an enterprise wide data repository is key to a successful CRM implementation. This single, comprehensive view of the customer will not only support the operational CRM applications but will also be the platform on which the analytics will be performed.

Process and Technology

We have talked about operational CRM being effective in building better relationships with customers through more efficient processing of transactions. To ensure transactional efficiency a high degree of integration between the back office and front office functions must exist in terms of both process integration and technology integration.

An example of this is where a customer places a sales order over the Internet channel. The item they want isn't in stock and so they request a telephone call once it becomes available in order to arrange delivery. The sales order is flagged to the Sales order team for approval by e-mail and once checked, the item required is placed on the production schedule. The Manufacturing Resource Planning (MRP) software will order the necessary components and once in stock, production will begin. Eventually when the item is produced and booked into finished goods stock, an outbound call will be placed in the relevant call centre agents 'out-bound call queue' to inform the client and arrange delivery.

The less integration in place, the less efficient the process will be, leading to erosion in the level of service provided. From the above example it can be seen that it is important to integrate both technology and process across all customer touch-points (channels to market) as well as between the front and back office. Without this, a CRM program can only be partially successful.

Counter Culture

CRM is an enterprise wide concept that will eventually touch every part of the organisation and should extend far beyond strategy, technology and processes. True customer centricity comes from within the organisation, starting with the employees themselves. After all, a best of breed contact centre product with up-sell, cross-sell and dynamic scripting capability that is fully integrated to your back office system cannot alone create the right customer experience. A large portion of goodwill enhancement will be down to the manner in which the agent or the point of sale personnel conducts the transaction.

Something to remember is that cultural changes do not happen overnight, but can take many months, even years to effect. This can be achieved through a variety of means such as training or setting strategic Key Performance Indicators (KPI's) to reflect customer satisfaction levels, but then filtering these measures down to the lowest levels. This will help to ensure that a customer focus is created at all levels and that strategic objectives are in line with an individuals. Examples of such measures could be;

"average number of transactions per customer / month"

"% of renewals : active customer base"

"average complaints / customer".

Conclusion

When embarking on a CRM programme there are a number of considerations beyond those appear the most obvious. Some of these have been highlighted above, but care must also be given to the implementation approach. The underlying rule is to think big but start small, concentrating on those areas that will provide the greatest ROI. Additionally ensure that some form of performance measure is put in place before implementation so that the ROI can be properly judged. Without this, success can't be measured even when it exists.

Care taken in the areas mentioned above will not ensure that your CRM project goes without hitch but it will ensure that you don't fall into the same trap as many other organisations that have gone before you.

Jason Goodwin
CRM Programme Manager
SAS UK and Ireland

CRM Weblinks

CRM News of Moreover.com
http://www.moreover.com

eCRM guide: source for CRM technology and news
http://www.ecrmguide.com

Listing and links to software tools & suppliers
http://www.crm-forum.com/tosy/ppr.htm

Hewson - CRM Software Suppliers and articles
http://www.hewson.co.uk

Softworld - CRM database information
http://www.softworld.co.uk/

Customer Relationship Management for Small Businesses - free registration for access to software suppliers etc.
http://www.crm4sme.com/

Definition of CRM

'Customer Relationship Management (CRM) is developing into a major
element of corporate strategy for many organisations. Also known by
other terms such a relationship marketing and customer management, CRM
is concerned with the creation, development and enhancement of
individualised relationships with carefully targeted customers and
customer groups, the desired result being to maximise the total
customer lifetime value.' By Professor Adrian Payne, from Customer
Relationship Management, CBI 2000.

''Customer Relationship Management (CRM) is an enterprise approach to understanding and influencing customer behaviour through meaningful communications in order to improve customer acquisition, customer retention, customer loyalty and customer profitability."
Ron Swift, Accelerating Customer Relationships