C R M
CRM is an acronym for "Customer Relationship Management." CRM can be defined as a collection of methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. CRM is typically thought of as encompassing the following capabilities.
- Helping an enterprise to enable its marketing department to identify and target their best customers, manage marketing campaigns with clear goals and objectives, and generate quality leads for the sales team.
- Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (e.g., taking orders using mobile devices).
- Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them with the highest level of service.
- Providing employees with the information and processes necessary to know their customers, understand their needs, and effectively build relationships between the company, its customer base, and distribution partners.
(Click here to link to "The CRM Forum.") (http://www.crm.com)
Today, the market for CRM is an estimated $40 billion industry. According to AMR Research, the industry is expected to grow at a rate nearly 5 times that of the overall software market. CRM projects are generally not cheap. Large companies engaged in CRM projects spend an average of $3.1 million of CRM hardware, software, and various support. In return, according to a recent study by Cap Gemini and International Data Corp., these companies expect revenues to grow by 8 percent, on average, within one year of CRM implementation.
One reason that retaining and cultivating an existing customer base is so important is the high cost of obtaining new customers. It has been estimated that attracting a new customer costs five times as much as holding onto an existing one. A good CRM tool with high-quality analytical capabilities should ideally help a company predict which customers are likely to take their business elsewhere. Using advanced analytical technology to sift through millions of customer transactions, some tools can find patterns among customers who have left in the past. The system then detects current customers who share these characteristics, identifies likely defectors, and gives the company a chance to keep them.
The CRM can be broken down into three discrete but interrelated functional categories:
1) Operational CRM: customer-facing applications that integrate the front, back, and mobile offices - including sales-force automation, enterprise marketing automation, and customer service and support.
2) Analytical CRM: Applications that analyze customer data generated by operational tools for the purpose of business performance management. Analytical CRM is inextricably tied to a data warehouse.
3) Collaborative CRM: collaborative services such as personalized publishing, E-mail, communities, conferencing, and Web-enabled customer interaction centers that facilitate interaction between customers and businesses. Collaborative CRM is used to establish the lifetime value of customers beyond the transaction by creating a partnering relationship.
From a more detailed perspective, CRM solutions must fulfill three essential requirements:
1) Provide a consistent and unified view of each customer for every customer interaction.
2) Enable the customer to have a complete view of the company regardless of the way the customer contacts it.
3) Let front-office staff perform sales, service, and marketing tasks more efficiently as a team, reducing costs and boosting efficiency.
Unfortunately, no CRM software product is a leader in all three areas. Each has strengths in one or two of these areas, and they all differ in functionality. The main deficiency one sees in today's CRM tools is that they lack high quality customer satisfaction measurement tools, data analysis tools, and the ability to integrate existing applications. Today, no single CRM tool meets all of these criteria. The vendor that can fulfill there goals will quickly leapfrog to the forefront.
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The electronic impact on CRM is nothing short of revolutionary. E-commerce and the Internet are transforming most companies' CRM processes - from understanding how customers make purchase decisions to developing differentiated, tiered customer service. It's an opportunity to do CRM even better.
Electronic mediums, or "e-channels," offer business advantages that complement high-impact CRM capabilities. These advantages include contact costs that are cheaper than those associated traditional call center channels, increased customer control and additional sales channels for revenue generation.
In addition, there are better one-to-one marketing relationships, as carriers have access to more individual-level information. The inherent ubiquity of the Internet enables to bring complete knowledge of the customer - buying histories, psychographics, profitability, service histories, etc. - to bear on each customer interaction. This allows companies to differentiate their treatment of valued customers and to differentiate themselves in the marketplace. The better the knowledge and the better the access the more successful the business.
Electronic CRM (e-CRM) is not just about faster electronic transactions. It's the ability to leverage the value of the electronic channel as a means to acquire, develop and retain the customer in a personalized, differentiated manner. Electronic channels allow CRM capabilities to be implemented at lower cost (electronic bills, for example, are expected to be half the cost of paper-based billing) and with less risk.
Much of the customer data in corporate databases is untapped, experts say, because there hasn't been an easy way to link information from multiple databases. Some vendors are stepping up with tools that use the Web to bridge multiple CRM relationships. An example is Neteos Inc.'s eRMNow service, introduced just last Spring. The service, hosted by GTE Internetworking, pulls customer information collected from Web sites into CRM systems. Web site customers, themselves, actually put lead information directly into the CRM applications. From there, the e-business can assign the leads to salespeople or resellers, also via the Web. The e-business can also configure the CRM software to reassign those Web-driven sales leads if a salesperson cannot act upon them in within a preset period of time.
Some experts predict that more companies will look to "rent" CRM through hosted services as CRM becomes more sophisticated. But many think that a Web-based approach alone may not suffice for e-businesses that still deal heavily with their customers via traditional channels such as telephone call centers and physical stores. The bottom-line is that there are very few companies that can survive with just an Internet focus.
It should be noted that most of the CRM systems existing today are still client-server. The big advantage that the Web approach offers over client-server is a certain "statelessness" - that is, an environment in which a request for a particular Web page can occur without systems needing any knowledge of other pages that were previously requested. Also, some experts contend that these client-server systems tend not to scale once you get beyond a certain mass - say, 100,000 - users. A client-server system will fall down because can't keep track of all of the information.
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A company considering a CRM system should not just plow blindly in. A good CRM strategy is to take some incremental steps to get where you need to be. A company should systematically develop a thorough understanding of the company's specific situation before making the next CRM move. This can be done using a three-step process.
1) Conduct a self-assessment. Assess the organization's current CRM performance, and estimate the potential improvement based on potential performance impact.
2) Review current investment. Review current capabilities, measuring initiatives against their anticipated value (e.g., potential return on sales impact) and costs (e.g., capital and human resources) and rationalize your CRM investments.
3) Identify additional investment and prioritize programs. Assess high-impact capability gaps consistent with the company's strategy, identify initiatives to fill the gaps, determine the value and costs of those initiatives, and prioritize current and future investments.
Once the decision has been made to go with a CRM system their are a few generalized tips for enhancing the probability of its success.
- use a phased implementation approach
- build a cross-functional project team
- partner and outsource as necessary
- focus on the customer, not the technology
- build for scalability
- choose open technologies
- build for speed
- expect hardware to get cheaper
- consider packaged data warehousing solutions
- remember that everything will soon revolve around the Web
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