Roi from CRM
http://news.yahoo.com/news?tmpl=story&u=/nf/20050824/bs_nf/37751
Business executives must start to view customer-relationship management (CRM) technology as a way to drive corporate growth, not cut costs. That is the key adjustment business leaders must make in finding success with CRM products, according to Tom Johnson, a managing director with business-consulting firm BearingPoint. He sees CRM maturing into customer-experience management (CEM), the final shift from art to science.
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CRM as a business strategy is maturing. But it has failed to deliver on many of its ROI promises, in large part, said Johnson, because many users based their ROI projections on budget savings, which means staff cuts. "But CRM is really about driving growth, not cutting costs."
CEM will become the key to customer retention, allowing organizations to mine their customer data to stratify clients according to their value. It will provide service appropriate to that value, identify sales opportunities and manage customer churn to retain the most valuable customers.
But, experts warn, the shift to CEM is not just a matter of plugging in a new technology. Only a few companies are ready for the transition at this point. Those companies have three factors in place to insure a successful transition. They have high-quality customer information. They have a clear business strategy for customer management that is expressed in a comprehensive set of business rules. And they have a single corporate standard CRM or enterprise-resource planning (ERP) strategy that can support CEM analytics.
Silo Mentality
The CEM vision sees consistent customer experience across all channels -- from advertising through sales to support. "If your brand's message is cheap and fast, then you need to be cheap and fast all the time, in every interaction with every customer," said Woody (Woodruff) Driggs, managing partner of Operational CRM at Accenture, a management consulting, technology and outsourcing firm. "If you are high-end, you need to always be high-end."
The problem is that the corporate silos have never disappeared. "CEM starts by getting everyone who is important to the customer experience in a room," said Driggs. "We are constantly amazed to discover how often this is the first time that the key people from marketing, advertising, sales and service have talked to one another about what the customer experience should be."
Without a unified vision, companies confuse customers with inconsistent messages. According to Driggs, the marketing department might be promising service, but the service department got a cost-cutting message two years ago and now puts everyone into what he described as "a call-waiting hell." And to make matters worse, many companies installed their ERP and CRM solutions along those silo walls. That produced a situation in which the corporate Web site is tracked by one technology, sales force effectiveness by another, customer relationships by a third and delivery by yet another.
Thus, what should be a closed loop -- from marketing through sales, fulfillment and service -- instead becomes fragmented. Much of the investment made in attracting and securing customers is wasted when the promised experience, whether fast and cheap or high quality at a higher price, is not fulfilled. Driggs said this causes customers to take their business elsewhere. Even worse from a CEM standpoint, many companies outsource major portions of the customer experience, particularly the support center. In the process, they lose control over how their customers are treated.
Technological Dependence
Another error of too many organizations is putting technology first. "People expect too much from these verticalized versions of CRM or ERP products," said Ian Jacobs, senior analyst at Current Analysis, a company that offers business consulting and analysis services. Customers expect these products to have sophisticated processes built in right out of the box. But all they provide is a template that adds terms that are commonly used in that industry. For instance, they redefine "customer" as "patient" and "tools" as "custom workflows."
Those workflows must be based on the organization's unique business strategy, not on a generic set of procedures supplied by the vendor, said Jacobs. For instance, all companies want to retain customers, but, to most companies, not all customers are of equal value.
Business analysts have to consider key questions in evaluating the best corporate reaction. But what makes a good customer? Is it what that customer is spending today or what that customer could spend in the future? How important is a customer's good will or word-of-mouth recommendation? What customer experience does the company want to provide?
Companies also must assess these questions. What does that mean in terms of marketing, sales and service? How should that experience differ for gold-, silver- and bronze-level customers?
No two companies will answer these questions in the same way. The corporate strategy for customer management must be defined clearly, and all involved parties must agree to the business rules designed to turn theory into practice. In addition, the organization must be ready to map ways to implement those rules consistently across all customer interactions, public statements, advertising and marketing campaigns.
This, in itself, is a major challenge, particularly for large corporations, and especially for companies that outsource major parts of the customer experience. It might appear to be an impossible task without the latest and greatest in technology. But consider the success achieved by McDonald's (NYSE: MCD - news), the past master at managing customer experience worldwide. McDonald's achieved a uniform customer experience, across thousands of franchises worldwide, long before the term CRM had been invented.
Corporate Strategy
Ideally, every interaction with every client should be driven by a corporate strategy and a view of each customer's value to the organization. Every time a sales or service representative answers a prospect call, e-mail or instant message, he or she should know what tier -- gold, silver or bronze -- that client fits, what recent interactions that client had with the enterprise and what that customer might be calling about.
If the customer recently bought a new product, then the sales or service agent should be primed to provide support for that product. If the caller has contacted support recently about a problem, the phone agent should know about that call and what solution was recommended.
If the caller had recently e-mailed sales or service, the company's agent should have that e-mail and any answer on the screen when he or she provides a response. If the customer's recent actions fit a known pattern of others who switched to a competitor, the representative should know that and have a plan of action on the screen based on that customer's value to the company.
While this is only part of the vision of CEM, these scenarios are within the capabilities of the present generation of CRM products from industry leaders such as Siebel (Nasdaq: SEBL - news), Oracle (Nasdaq: ORCL - news) and SAP (NYSE: SAP - news). But, said BearingPoint's Johnson, several widespread problems have prevented these practices from becoming industry standards:
A lack of defined, repeatable customer-experience scenarios based on customer lifetime value, leading to a one-size-fits-all service and experience.
Failure to listen to customer preferences on cost versus service and what form that service should take.
Loss of control of the customer experience through outsourcing major points of interaction.
Industry consolidation that leaves survivors with multiple, incompatible CRM systems and databases.
In addition to these, companies can fail to manage customer expectations. For instance, if the support center is not equipped to handle e-mails or instant messages in a timely manner and integrate them with phone conversations, then the organization should warn customers or not provide e-mail links to service on its Web site.
Branded Customer Experience
On the technical level, high-performance organizations are moving toward what Accenture's Driggs calls the "branded customer experience." They are doing this in several ways: focusing on the basics of data quality to avoid the garbage-in, garbage-out syndrome; standardizing on one, corporate-wide CRM application; and building an enterprise-wide vision of customer service aligned with corporate strategy and branding into a specific set of rules for data mining and response to customer interactions in that CRM suite.
The first might seem obvious but is a major challenge in CRM, which literally depends on every customer-facing individual in the organization for data. This cannot be solved by expanding the pool of data-entry clerks. Sales people will not provide consistent, quality data at the request of the CIO. It requires enforcement from the top of the organization. Thorough, quality data must be a basic requirement for all customer-facing positions.
Companies should expect resistance and be prepared to demote -- and in extreme cases fire -- those who fail the data-quality test, even if they are among the company's top producers. That is the only way to communicate the overriding importance of quality customer data to the organization.
Application unification is equally important. "Companies have tried putting all their [customer] data [from multiple CRM applications] into a data warehouse," said Driggs. "But we don't get a true 360-degree view."
Maintaining multiple applications becomes impossibly complex when the corporation tries to extend a unified customer view across the organization. Users have to master multiple interfaces -- one to enter data and a second to see results while interacting with customers -- while the complexities of managing and translating multiple data structures guarantees some data loss and prevents anything approaching real-time analysis and response. Without that, improved customer retention is impossible.
With those basics done, leading organizations can start to realize the competitive advantages promised by CRM. However, the next step, CEM, still will elude them. While the leading CRM vendors are moving toward CEM and the experts have hopes for the next versions of their products, the technology still is chasing the vision.
However, said Jacobs of Current Analysis, technology is just the tool, not the solution. "Organizations without strong corporate policies based on an enterprise-wide vision and unified strategy will be in trouble."
With those strategic tools, companies can leverage today's technology to competitive advantage and position themselves to take best advantage of the full CEM technology tomorrow.
Business executives must start to view customer-relationship management (CRM) technology as a way to drive corporate growth, not cut costs. That is the key adjustment business leaders must make in finding success with CRM products, according to Tom Johnson, a managing director with business-consulting firm BearingPoint. He sees CRM maturing into customer-experience management (CEM), the final shift from art to science.
ADVERTISEMENT
CRM as a business strategy is maturing. But it has failed to deliver on many of its ROI promises, in large part, said Johnson, because many users based their ROI projections on budget savings, which means staff cuts. "But CRM is really about driving growth, not cutting costs."
CEM will become the key to customer retention, allowing organizations to mine their customer data to stratify clients according to their value. It will provide service appropriate to that value, identify sales opportunities and manage customer churn to retain the most valuable customers.
But, experts warn, the shift to CEM is not just a matter of plugging in a new technology. Only a few companies are ready for the transition at this point. Those companies have three factors in place to insure a successful transition. They have high-quality customer information. They have a clear business strategy for customer management that is expressed in a comprehensive set of business rules. And they have a single corporate standard CRM or enterprise-resource planning (ERP) strategy that can support CEM analytics.
Silo Mentality
The CEM vision sees consistent customer experience across all channels -- from advertising through sales to support. "If your brand's message is cheap and fast, then you need to be cheap and fast all the time, in every interaction with every customer," said Woody (Woodruff) Driggs, managing partner of Operational CRM at Accenture, a management consulting, technology and outsourcing firm. "If you are high-end, you need to always be high-end."
The problem is that the corporate silos have never disappeared. "CEM starts by getting everyone who is important to the customer experience in a room," said Driggs. "We are constantly amazed to discover how often this is the first time that the key people from marketing, advertising, sales and service have talked to one another about what the customer experience should be."
Without a unified vision, companies confuse customers with inconsistent messages. According to Driggs, the marketing department might be promising service, but the service department got a cost-cutting message two years ago and now puts everyone into what he described as "a call-waiting hell." And to make matters worse, many companies installed their ERP and CRM solutions along those silo walls. That produced a situation in which the corporate Web site is tracked by one technology, sales force effectiveness by another, customer relationships by a third and delivery by yet another.
Thus, what should be a closed loop -- from marketing through sales, fulfillment and service -- instead becomes fragmented. Much of the investment made in attracting and securing customers is wasted when the promised experience, whether fast and cheap or high quality at a higher price, is not fulfilled. Driggs said this causes customers to take their business elsewhere. Even worse from a CEM standpoint, many companies outsource major portions of the customer experience, particularly the support center. In the process, they lose control over how their customers are treated.
Technological Dependence
Another error of too many organizations is putting technology first. "People expect too much from these verticalized versions of CRM or ERP products," said Ian Jacobs, senior analyst at Current Analysis, a company that offers business consulting and analysis services. Customers expect these products to have sophisticated processes built in right out of the box. But all they provide is a template that adds terms that are commonly used in that industry. For instance, they redefine "customer" as "patient" and "tools" as "custom workflows."
Those workflows must be based on the organization's unique business strategy, not on a generic set of procedures supplied by the vendor, said Jacobs. For instance, all companies want to retain customers, but, to most companies, not all customers are of equal value.
Business analysts have to consider key questions in evaluating the best corporate reaction. But what makes a good customer? Is it what that customer is spending today or what that customer could spend in the future? How important is a customer's good will or word-of-mouth recommendation? What customer experience does the company want to provide?
Companies also must assess these questions. What does that mean in terms of marketing, sales and service? How should that experience differ for gold-, silver- and bronze-level customers?
No two companies will answer these questions in the same way. The corporate strategy for customer management must be defined clearly, and all involved parties must agree to the business rules designed to turn theory into practice. In addition, the organization must be ready to map ways to implement those rules consistently across all customer interactions, public statements, advertising and marketing campaigns.
This, in itself, is a major challenge, particularly for large corporations, and especially for companies that outsource major parts of the customer experience. It might appear to be an impossible task without the latest and greatest in technology. But consider the success achieved by McDonald's (NYSE: MCD - news), the past master at managing customer experience worldwide. McDonald's achieved a uniform customer experience, across thousands of franchises worldwide, long before the term CRM had been invented.
Corporate Strategy
Ideally, every interaction with every client should be driven by a corporate strategy and a view of each customer's value to the organization. Every time a sales or service representative answers a prospect call, e-mail or instant message, he or she should know what tier -- gold, silver or bronze -- that client fits, what recent interactions that client had with the enterprise and what that customer might be calling about.
If the customer recently bought a new product, then the sales or service agent should be primed to provide support for that product. If the caller has contacted support recently about a problem, the phone agent should know about that call and what solution was recommended.
If the caller had recently e-mailed sales or service, the company's agent should have that e-mail and any answer on the screen when he or she provides a response. If the customer's recent actions fit a known pattern of others who switched to a competitor, the representative should know that and have a plan of action on the screen based on that customer's value to the company.
While this is only part of the vision of CEM, these scenarios are within the capabilities of the present generation of CRM products from industry leaders such as Siebel (Nasdaq: SEBL - news), Oracle (Nasdaq: ORCL - news) and SAP (NYSE: SAP - news). But, said BearingPoint's Johnson, several widespread problems have prevented these practices from becoming industry standards:
A lack of defined, repeatable customer-experience scenarios based on customer lifetime value, leading to a one-size-fits-all service and experience.
Failure to listen to customer preferences on cost versus service and what form that service should take.
Loss of control of the customer experience through outsourcing major points of interaction.
Industry consolidation that leaves survivors with multiple, incompatible CRM systems and databases.
In addition to these, companies can fail to manage customer expectations. For instance, if the support center is not equipped to handle e-mails or instant messages in a timely manner and integrate them with phone conversations, then the organization should warn customers or not provide e-mail links to service on its Web site.
Branded Customer Experience
On the technical level, high-performance organizations are moving toward what Accenture's Driggs calls the "branded customer experience." They are doing this in several ways: focusing on the basics of data quality to avoid the garbage-in, garbage-out syndrome; standardizing on one, corporate-wide CRM application; and building an enterprise-wide vision of customer service aligned with corporate strategy and branding into a specific set of rules for data mining and response to customer interactions in that CRM suite.
The first might seem obvious but is a major challenge in CRM, which literally depends on every customer-facing individual in the organization for data. This cannot be solved by expanding the pool of data-entry clerks. Sales people will not provide consistent, quality data at the request of the CIO. It requires enforcement from the top of the organization. Thorough, quality data must be a basic requirement for all customer-facing positions.
Companies should expect resistance and be prepared to demote -- and in extreme cases fire -- those who fail the data-quality test, even if they are among the company's top producers. That is the only way to communicate the overriding importance of quality customer data to the organization.
Application unification is equally important. "Companies have tried putting all their [customer] data [from multiple CRM applications] into a data warehouse," said Driggs. "But we don't get a true 360-degree view."
Maintaining multiple applications becomes impossibly complex when the corporation tries to extend a unified customer view across the organization. Users have to master multiple interfaces -- one to enter data and a second to see results while interacting with customers -- while the complexities of managing and translating multiple data structures guarantees some data loss and prevents anything approaching real-time analysis and response. Without that, improved customer retention is impossible.
With those basics done, leading organizations can start to realize the competitive advantages promised by CRM. However, the next step, CEM, still will elude them. While the leading CRM vendors are moving toward CEM and the experts have hopes for the next versions of their products, the technology still is chasing the vision.
However, said Jacobs of Current Analysis, technology is just the tool, not the solution. "Organizations without strong corporate policies based on an enterprise-wide vision and unified strategy will be in trouble."
With those strategic tools, companies can leverage today's technology to competitive advantage and position themselves to take best advantage of the full CEM technology tomorrow.
posted by Iven Frangi at 3:54 PM
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