Much has been written about the first steps towards effective customer management, some of it by me in these pages over the last four years.

I can report, with relief, that I am seeing more and more evidence that we truly do understand that CRM is a business strategy like any other and that the direction and vision need to be driven by senior management, if not from the boardroom itself.

But once you decide to get serious, how do you negotiate the minefield of CRM technologies?

Some organisations move from strategy to a selection programme for a new CRM system as the second step. In a simple organisation this is a viable option but for those enterprises operating on a larger scale with multiple customer contact points, careful thinking is needed to achieve meaningful returns on investment.

Two options
Wanting to do it better does not always mean diving headfirst into CRM. There are two distinct levels of capability that you need to consider.

Operational excellence is an entry level strategy and is all about getting the basics right first. Here, an ability to sell and service the products you take to market at a sustainable price point is what keeps you in business.

Customer relationships, on the other hand, represent the goodwill element of your business. Relationships develop when you move your customers beyond transactional behaviours. It is the loyalty that your customers feel for you, their repeat business with you, their willingness to refer your services to friends and family, and in some cases, a willingness to pay a premium for your products and services in order to continue that relationship. Clearly a benefit any way you look at it.

Some CRM projects are tasked with delivery of outcomes that quite clearly sit in the camp of operational excellence; in some cases, the building of customer relationships does not even rate a mention.

But why does it matter anyway? It matters because what you do, the tools needed and the levels of investment can, and should be, different for each strategy.

Spoilt for choice
When it comes to CRM tools, we are truly spoilt for choice. The plethora of tools and technologies available to a CRM practitioner in today’s market is broad and deep. However, the relationships between the technologies and delivery of CRM strategies are not always given the level of consideration needed to make sound choices.

So what to do? The current approach to CRM planning and strategising is to focus on the “experience” you would like to offer different types of past, current and future customers.

By defining the type of experience you think your customers want and need, it becomes relatively easy to drill down into the systems functionality and enabling technologies needed to deliver the target experience. Here are some examples:

• In order to pick the type of experience most appropriate for the customer in any given situation you will need segmentation and customer profiling capabilities. Both require database technologies and a level of integration across all customer data so that you can categorise the customer based on everything you know about that customer. In short, a single view of the customer, the holy grail of CRM.
• In a call centre situation, where a customer has asked a question that needs specialist advice, you may need to refer the customer to a specialist but you are clear that you do not wish the customer to have to repeat the information he/she has already passed on in the conversation so far. In this case you will need call routing capability with the ability to conference in an available specialist and hold a three party conference while you hand over the call.
• Think about enabling your sales and service teams to perform well in operational terms. Following up on promises made and fulfilling customer requests is a prime driver of customer satisfaction. You might consider task management functionality backed by workflow to monitor and escalate overdue actions for a customer. Perhaps even survey management tools to check that the customer is happy with the responses provided.

And on it goes. Within a short space of time, you have an impressive shopping list of the technologies needed to fulfil your CRM dream, but what, exactly, should you go shopping for?

The portfolio approach
As with any investment decision, match the technology with your business needs and look for the areas that will deliver a range of benefits to your business. Technology discussions should not be limited to the IS teams – the senior management team must understand enough about the enabling technologies to debate the merits in business terms. Only then will we get the level of understanding needed to make wise choices.

My top choices for consideration in a balanced portfolio would be:

1. The technologies needed to provide a single view of the customer across all points of contact.
This does not always require the replacement of old transactional systems which may still have years of life left but were built with a product focus, not a customer focus. Consider practical solutions based on quick outcomes rather than technology-based projects with long life cycles. An immediate win for your organisation may be a simple “data scrape” from all databases that hold customer information into a single view that provides your front office staff with essential information.

2. A user-friendly way to capture and manage customer information.
Low adoption of CRM systems by front line staff is the number one cause of CRM project failures. Make it easy for staff to record details of interactions with customers across all contact points. Reward your staff for doing so and for maintaining the currency of the information.

3. A marketing automation tool.
I believe these tools to be under-utilised in the CRM arsenal. Originally developed as campaign management toolsets, these tools can be used to deliver highly targeted communications to your customers, for survey management, data cleaning exercises, data collection, profiling, and granular sales campaigns developed for much smaller segment sizes that would normally be cost effective.

4. Analytics.
Measuring your outcomes and the effect of changes you are making on the drivers of revenue, cost and profitability is something that needs to be considered in all aspects of decision making. The analytics will drive your ability to learn what works and what does not work in the CRM space. Such a capability is a source of ongoing competitive advantage.

With the above portfolio you will be armed with a range of capabilities: internal integration of customer data to provide a single view, investment in a core strategy to ensure that all staff begin to treat customer data as the valuable corporate asset that it can become, and a tool to reduce the cost of increasing the frequency and the relevance of communication with your customer base, plus an ability to measure your success.

Further Reading

• CRM Buyers Guide

For more information visit the CRM Research Pavilion for exhibits, case studies, white papers and downloads from a range of New Zealand’s leading CRM vendors.

June 2007