A CRM Strategy for the Internet Age
By David Caruso -- Supply Chain Management Review, 3/1/2000
The competitive arena today has shifted from price, quality, and promotion to speed and customer service. In response, competitive companies are undertaking the introspective soul-searching necessary to let customers, not marketing or research and development, direct the future. They are putting into place Customer Relationship Management (CRM) strategies that attract the right customers, keep them coming back, and harvest them for quality profits.
Customer Relationship Management is a comprehensive and integrated approach to developing, supporting, and retaining quality customers. CRM software applications are used to view customer interactions and make the information available throughout the company. The most commonly defined components include sales and marketing automation, customer support/call center, field service, sales force automation, and product configuration. As shown in Exhibit 1 on page 24, the CRM solution market is projected to grow rapidly over the next few years.
Among other key benefits, successful CRM strategies will:
- Develop deep knowledge about your customers. Marketing- and sales-oriented data warehouses—a key component of CRM solutions—can identify buying habits, unprofitable customers, and upsell and cross-sell opportunities. Companies then can use those data to personalize Web sites, develop one-to-one marketing programs, and generate high-quality sales leads. All of these activities are powerful drivers of revenue growth.
- Support interactive selling. Through the Web, customers now can configure complex products and even services. They can place orders themselves. And they can sell to themselves at their own convenience and create as many self-generated quotations as they like. Advanced CRM systems lead salespeople and customers through an interactive configuration process and automatically upsell and cross sell based on customer profiles. Interactive selling improves revenue per customer and corporate profitability.
- Manage new channel selling opportunities. One of the most frequently asked questions today is "How can I sell over the Web and not alienate and compete with my resellers?" New Partner Relationship Management applications let companies sell directly to consumers—but through their reseller and distributor channels. The seller creates a Web presence and directs new sales and leads down to the appropriate channel partner.
- Enhance customer support. In the traditional approach, customers would contact call centers to follow up on orders or request technical support and on-site service visits. With the CRM solutions now available, call centers can be used in both inbound support and outbound telemarketing operations. They are becoming customer contact centers—the place where customer interactions from any and all channels are collected.
- Speed field-service delivery. Historically, companies have relied upon internal information technology resources to develop highly customized systems for field-service operations. Yet as product lifecycle cost and service have become selling factors, many companies are turning to packaged CRM applications to dispatch engineers, control spare-parts inventories, and manage repair operations. Look for remote workers to have expanded Web-based and wireless applications in the very near future.
- Provide customers with quality self-service. Customer interactions can be handled more efficiently and cost effectively through a variety of unattended response tools such as Integrated Voice Response (IVR), automated e-mail response generation, and intelligent FAQ data searching. IVR responses, for example, cost around a fourth as much as an agent-answered call; Web-based options cost about a tenth as much. The real benefit, however, is not so much the cost savings as the customer convenience of having access to self-service options seven days a week, 24 hours a day.
- Maximize the marketing dollar. CRM applications provide the tools necessary to enable marketers to budget promotions and campaigns and then roll them out to prospects via the Web site and e-mail as well as by traditional means. Closed-loop feedback now automatically generates real-time cost-per-lead information and measures campaign effectiveness.
The benefits of a well-conceived CRM strategy are proven and powerful. Managers want to make certain that when implementing such a strategy in a business-to-business environment, they capitalize on CRM's full potential. Several key actions can be taken to help ensure that the benefits are maximized.
First, companies need to realign and re-invent their business processes as part of the implementation process. Relationships are strongest when they result in mutual advantage. Accordingly, an effective CRM strategy embraces customers and channel partners, weaving them into the fabric of daily operations. Adopting such a customer-centric approach means letting go of traditional standards and measures. The new metrics must focus on such issues as how often each customer visits, how effectively customers' service problems are solved, and how often they abandon their "shopping carts" and why.
Clearly, order-fulfillment information is of paramount importance to customers. Therefore, the CRM strategy needs to integrate the supply chain and Web applications that plan and control the order-fulfillment processes. Customers have a zero-tolerance mindset here. Any information related to the delivery or fulfillment of services must be readily available in customer-facing applications. Otherwise, your company's credibility will suffer. Areas of primary concern are available-to-promise dates, product and skill set availability, and status of open-problem reports. Bear in mind, the fulfillment activities of a customer order will often span enterprise resource planning, warehouse management, and logistics systems. Data from every one of these systems are required to give the customer a true picture of order status.
Finally, successful CRM implementation means using the full range of technology. That range is, indeed, broad. New communications technology connects remote employees with the rest of the enterprise, the Internet expands self-service options, and sophisticated telecommunications technology makes possible virtual call-center operations. Workflow solutions accelerate the delivery of new marketing programs, while integrating the multiple organizations that must contribute to a customer-satisfaction goal. E-mail becomes a proactive method of updating customers, offering new products, and stimulating conversation with key clients.
Using the range of technology available also means putting transaction-related information at the call-center agents' fingertips ... the caller's name and phone number, his or her location, the products owned, which items are under warranty, what service calls are open, and so on. A full 360-degree customer view also would tell:
- Whether a customer is considered critical and has high lifetime value.
- Whether you shipped products late and the customer had to wait.
- Whether the customer completed your product training.
- How the customer rated your company on the last vendor-rating. Is there a risk of losing the business to the competition?
- If the customer uses the e-commerce site heavily and has explored certain pages before calling.
For years now, the business mantra has been "The Customer Is King." For many companies, however, this mantra is just sloganeering and not an operating philosophy. They need to recognize that the Internet has, in fact, shifted the balance of power to the buyer. Customers enjoy instant access to a wealth of information. They can comparison shop, bid on goods and services, and readily participate in auctions.
Savvy business managers understand this. They are focusing their efforts on improving the customer experience to gain more of the customer spend. A CRM strategy, properly implemented, can help them realize that goal.
| Author Information |
| David Caruso is vice president and service director, enterprise application strategies, at AMR Research. |
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