Torque

CRM. Whats stopping you?

19 August 2008

 

CRM has been around for years and the technology now available for capturing and managing data is the best it’s ever been, so why then does it appear that CRM remains elusive for many organisations?

 

Corporate mindsets, not technology, has always presented the major barrier to successful implementation of a customer management strategy. Customer management is one of those business disciplines that is very easy to talk about – because it is for the most part undeniably intuitive – yet generally tricky to do.

Ten or fifteen years ago it was fashionable to blame the demise of CRM initiatives on IT systems that failed to deliver, either because they were too sophisticated, or not sophisticated enough, or a combination of the two depending on which disgruntled executive you spoke to in the organisation. While it is undeniable that truly clunky systems help no-one, in many instances the desire to blame the system was a convenient excuse to avoid the real barrier – the completely natural desire to protect turf and resist change.

In the final analysis, for most businesses, the introduction of a comprehensive CRM approach can represent one of the biggest change programs the organisation will ever face. This is because to truly capitalise on the potential offered, the business has to operate as a single whole in delivering the customer experience, and not as the sum of the constituent parts. Technology can of course help in joining the dots, but this is really about the willingness of business disciplines to work together.

The best way to illustrate the fact that we have not yet arrived in CRM Nirvana is to analyse where most CRM initiatives continue to be ‘headquartered’ within businesses. Generally this is the Marketing Department, because ‘they look after customers’ or because ‘that is where the loyalty budget is located’. The issue here is that, as a result of where it is domiciled, CRM is perceived by the rest of the business as the sole preserve of marketers, in roughly the same way that Accounts Receivable belongs to the finance department. The key difference here of course is that the latter is a tool that helps business function, while the former, arguably, is business.

Studies from organisations such as OgilvyOne-owned QCi have shown over the years that the CRM initiatives that have succeeded are led from the very top – the Chief Executive or the Managing Director heads the steering committee, allowing the resulting initiatives to cut across fiefdoms and create genuine and lasting changes which customers notice.

Are organisations fully utilising the customer knowledge at their disposal? Why/why not?

The interesting thing is that a ‘joined-up’ organisation tends to be in much better shape to make the most of what it knows about customers. For example, successfully communicated CRM means that the front-line staff really do understand the importance of their contribution, even if their job title does not include the word ‘customer’. A few years ago, I worked with a large car dealership who couldn’t understand how they continued to receive large amounts of returned mail, even though the marketing department regularly arranged for the database to be cleansed. They eventually realised that the service department had no understanding that any errors they made when updating customer records – and they had more contact with customers than anyone else in the business – were carried straight through to the database.

Equally, many organisations do not undertake a systematic review of all their customer ‘touchpoints’ – no matter how mundane they might appear. This is sometimes because, like the car dealer’s service department, they are not part of a ‘campaign’ but rather just workaday contact. This generally means that many opportunities can be missed – for example, when was the last time the service department of the dealership you go to asked you if you were happy with your car, or asked if you had recommended the marquee to anyone else? Collecting these vital pieces of information tends to be seen as ‘marketing’s job’ and there, sadly, is where many businesses seem happy to leave it.

An alternative approach might be to attach a relative value to different pieces of information and then select the best touchpoints at which to attempt gathering this information from customers. Web technology now makes it very straightforward to do this virtually anywhere in the globe, in real time, when and where it is most convenient for the customer.

Equally, when high potential data has been successfully collected and stored, businesses can be at a loss at what to do with it. ‘Data rich but information poor’ describes this type of situation, and normally comes down to the tools and capabilities the client or their key suppliers have at their disposal.

What can organisations do to best leverage their customer data and analytics? How can they go about this?

The key thing is to ensure that customers see a benefit from the information they supply. Consumers are undoubtedly increasingly aware of the power they wield – the power of choice – and recognise that knowledge is the key to that power. Therefore, it is a value exchange – they will provide information in return for a benefit. This might, in some cases, be preferential treatment or an enhanced service or it might simply be a genuinely relevant offer that meets the customer’s needs at that point in time.

What sort of results can organisations expect to see when they are effective at CRM? Any examples?

CRM can, quite simply, change a business beyond recognition. This is because, as the name implies, it can change the relationship between the customer and the organisation. For example, more organisations are starting to employ the type of data manipulation that on-line store Amazon has successfully used for years, piecing together what is known about customers and their past purchase behaviour, in order to recommend future purchases they might like to consider. A simple recommendation can be highly valued by the customer.

Reward and loyalty programs are also increasingly tied into a wider relationship management approach where customers are differentially rewarded for certain key behaviours. For example, many US retailers now offer additional reward points to encourage new cross-category purchase behaviours. This is a good example of how far we have come, as its not that long ago that different categories were often separate profit centres under different buyers with limited interest in supporting the other’s growth.

AW