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marketing director at modem media
17 October 2001 14:54pm
This article by our Director of CRM at Modem Media, what do you think?
Everyone is talking about the importance of CRM, but pitifully few have taken action to implement it.
Aren't you sick of people telling you that "the important thing is to focus on your customers"? And that "increasing retention by five per cent increases profitability by 25 to 95 per cent"? And even: "The secret is to understand and respond to their needs to increase your share of their wallet"?
No! Really? You mean, if I look after my customers, they'll buy more? Radical!
As someone who has been in customer relationship management (CRM) for a decade, I'm fed up with being told the blindingly obvious. While the CRM and e-CRM industry, in all its facets, measures in the billions of dollars and, according to the Forresters of this world, is set to grow enormously over the next five years, there seems to be an awful lot of bland talk and not a lot of action.
So - back to this wallet. How much money are companies making from CRM or e-CRM? Where are the good case studies?
In the online world, Dell and Amazon are still quoted as good examples, but they were the ones cited by panellists at e-CRM forums back in 1997! I was recently talking to a personalisation software sales consultant who, when asked for a good example of his/her product in action, said "There aren't any. Clients don't really do much with the product in terms of customer communication."
According to a YOUCentric survey, over 65 per cent of managers expect CRM to increase sales revenue by more than ten per cent. Given the current economic climate, if I were the chief executive of a company that has recently spent millions on customer database development, campaign management tools, loyalty programmes, personalisation software or related systems integration, I think I'd be bellowing: "Show me the money!"
Why the delay? The most common misconception is that CRM and e-CRM are about technology. Somehow, if I spend a fortune on software licences and development, my customers will buy more and become more loyal. This is compounded by the development companies seeing dollar signs the moment CRM is uttered.
Customer relationship management is about managing your relationships with customers. It is about communication and the quality of communication. Many clients budget for the cost of a database development or, in the online world, a personalisation platform, but there is nothing in the budget for using the technology thereafter to communicate with customers.
One major blue-chip company invested over £10m online but then refused to take e-mails from customers on the grounds that "the call centre could not cope with the influx". Another said that being the foremost in CRM in its industry was its second of three main objectives this year. Yet somehow it still felt able to reveal: "We're not doing any customer communications in 2001."
It's like buying a car and then refusing to put petrol in it on the grounds that you can't afford it.
How do they get away with it? In my lifelong quest to persuade clients to deliver value to their customers through relevant, targeted communication programmes, I have heard a number of reasons. My favourite, and a frequent one, is: "Without proper integration, we might send out conflicting messages. What if a customer gets an e-mail and direct mail piece on the same day, due to lack of a common database?"
God forbid! If I received a mailing piece and an e-mail from a company on the same day, I'd sue! Come on. What is the overlap? If there is one, it can often be solved by a quick phone call internally to get a copy of the communication schedule, rather than by massive database integration. Data integrity and synchronisation is a worthy cause, but given the lead times, it shouldn't put an embargo on all customer communications. As John Lennon said: "Life is what happens when you're busy making other plans."
Furthermore, given the potential infrastructural investment, companies need to get moving to deliver business cases for e-CRM.
The assumption is that the right communication will increase profits, but where is the evidence? Loyalty is not always rational - look at Mary Archer.
Perhaps this is where the inertia comes from. Those who are responsible might fear a hard evaluation of the return. What if there isn't one? Their fears may be justified in that the true effects take a long time to evaluate; CRM is for life, not just for Christmas. But too much caution means that by the time all this CRM investment finally kicks into gear, the customers may have gone.
Until they feel a personal responsibility to deliver on customer value and show a return, marketers will not be "customer-centric", no matter how much lip service is paid. The reasons given for delay are often just excuses. Companies could be delivering compelling customer programmes right now, but there are still pitifully few doing so.
Camilla Ballesteros is director of e-CRM Europe at Modem Media
CEO at Econsultancy
22 October 2001 14:24pm
I agree that there is too much talk about (e)CRM and not enough action. I also agree that some of the excuses that are given are inexcusable. However, I can understand why there is so much fuss, and therefore talk, about CRM at the moment, despite it not even being a new concept. A few thoughts:
1. Reality harder than theory
As is often the case, walking the talk is not as easy as people think. Actually delivering a “single customer view to enable seamless, multi-channel, real-time, personalised customer experiences etc. etc.” is not easy. You’ve got the data and systems integration work, all of the business processes that sit around back and front office customer interactions, not to mention the people aspects (training, cultural, incentives etc.). To really deliver CRM is a mammoth undertaking that requires high levels of vision, financial commitment, senior sponsorship etc. I think people want to get comfortable talking about it a lot before doing too much – particularly in the current climate where large investments without short term gains will be hard to push through.
It’s easy to say “if you look after your customers they’ll buy more” but, from a business point of view, yes I’d love to look after my customers more but I’ve still got to do this profitably. It would be nice to dedicate a customer service rep to every customer but you just cannot give everyone super-premium service and value all the time as you will erode margins to the point where you will be losing money per customer. eCRM as an approach is trying to use technology to create a hybrid of the best of the village and industrial economy – cheap products and services but personalised service. It will never be ideal but fierce competition and rising customer expectations mean the battle is being fought around ever smaller margins of optimisation.
CRM is about value to the customer but also value to the business. So you have to ask yourself tough questions like “How do I treat customers who I know are losing me money?”. Most financial services organisations have plenty of customers like this. Do you send them elsewhere? Try and service them more cost effectively? Work out how not to acquire them in the first place? Move them up the value scale so they are profitable? Probably a combination of all these things and more.
So I think there is plenty to debate on *how best* to go about your CRM. That said, as you say, there is plenty to be doing on a smaller scale to get things going whilst the bigger debates and business cases are thrashed out.
2. A customer focus is very new for some
You might think it obvious that a focus on customers is the best way to win and retain customers (and, by implication, make more money). But is it? I’m not so sure it has yet been conclusively proved to be the only right approach. How about total commitment to product quality? How about creating shareholder value simply by playing the markets well? Dotcom may now be Dotgone but plenty of savvy people made a lot of money for their shareholders without ever having thought or cared much about customers (let alone business models).
Assuming customer focus is the right way forwards for a particular business, there are plenty out there for whom customer interactions, really knowing and dealing with their customers, is a totally new and difficult thing. Whereas some industries may be well attuned to the nuances of customer behaviour and have developed highly sophisticated customer value models based on numerous segments (e.g. financial services), others hardly know their customers at all. For everyone from broadcasters though FMCG companies to manufacturers, the implications of CRM’s customer focus are huge and daunting. Interestingly, it’s the digital channels which tend to be forcing the issue as companies have more direct contact with end users.
I guess my point is that you may well be frustrated and sick of hearing of hearing about the blindingly obvious “customer focus” but for many this is a big new thing to have to grapple with. And, again, what does it actually *mean*? How exactly do I ‘focus on my customers’? When, why, who, how much, what’s best for me….?
3. Market context
What do we think are going to be the key areas of focus in business, and the web, over the coming quarters and years? Among them, I would argue, will be: return on investment, profitability, integration, content management, outsourcing, customer service, personalisation, marketing, cost efficiencies, multi-channel delivery, b2b, performance measurement and analytics.
Seeing as CRM is so loosely defined and interpreted, and seeing as it is a nice TLA (three letter acronym) upon which to base a conversation, job title, meeting, conference or similar, I think it is safe to say that a lot of what will be going on will be in the name of CRM.
So, although I fear that you will continue to have to hear and repeat the same old stuff for a while to come, and have to listen to plenty of bland and obvious customer focus talk, at least you will see some ‘CRM’ action.
My brief take on the current situation is that there is a lot that can be done short term to improve the customer experience but that real leaps of improvement will not become apparent until companies have sorted out their back end and integrated necessary systems and processes. CRM is not a technology thing, and should not be driven by technology - it is largely about people and processes. That said, without the technology engine and platform, you can’t actually do much.
Project Manager at Invisible Site
02 November 2001 15:31pm
I agree with the vision put forth in this article., Before rushing headlong into a CRM project, people have to realize the CRM is not about software or technology.
Yes, CRM stands for customer relationship management, but it you take apart any of the commercially available CRM software, you would see that the technology is fundamentally about automating and supporting customer service and sales. You've still got to get the processes in place first and that step begins with making sure that your company is organized around the customer, like what Seybold preaches in Customer.com.
To put it in overly simplistic terms, I believe that your CRM projects will have a better chance of success if you already have a offline process for dealing with all your customers by phone, fax, email, sales rep, front-offices, etc.. Then CRM would ideally be a matter of automating that offline process into a digital one.
cheers, geoff
project manager,
Invisible Site
On 14:54:36 17 October 2001 blairbw6 wrote:
>This article by our Director of CRM at Modem Media, what
>do you think?
>
>
>Everyone is talking about the importance of CRM, but
>pitifully few have taken action to implement it.
>
>Aren't you sick of people telling you that "the
>important thing is to focus on your customers"? And
>that "increasing retention by five per cent increases
>profitability by 25 to 95 per cent"? And even:
>"The secret is to understand and respond to their
>needs to increase your share of their wallet"?
>
>No! Really? You mean, if I look after my customers,
>they'll buy more? Radical!
>
>As someone who has been in customer relationship
>management (CRM) for a decade, I'm fed up with being told
>the blindingly obvious. While the CRM and e-CRM industry,
>in all its facets, measures in the billions of dollars
>and, according to the Forresters of this world, is set to
>grow enormously over the next five years, there seems to
>be an awful lot of bland talk and not a lot of action.
>
>So - back to this wallet. How much money are companies
>making from CRM or e-CRM? Where are the good case studies?
>
>In the online world, Dell and Amazon are still quoted as
>good examples, but they were the ones cited by panellists
>at e-CRM forums back in 1997! I was recently talking to a
>personalisation software sales consultant who, when asked
>for a good example of his/her product in action, said
>"There aren't any. Clients don't really do much with
>the product in terms of customer communication."
>
>According to a YOUCentric survey, over 65 per cent of
>managers expect CRM to increase sales revenue by more than
>ten per cent. Given the current economic climate, if I
>were the chief executive of a company that has recently
>spent millions on customer database development, campaign
>management tools, loyalty programmes, personalisation
>software or related systems integration, I think I'd be
>bellowing: "Show me the money!"
>
>Why the delay? The most common misconception is that CRM
>and e-CRM are about technology. Somehow, if I spend a
>fortune on software licences and development, my customers
>will buy more and become more loyal. This is compounded by
>the development companies seeing dollar signs the moment
>CRM is uttered.
>
>Customer relationship management is about managing your
>relationships with customers. It is about communication
>and the quality of communication. Many clients budget for
>the cost of a database development or, in the online
>world, a personalisation platform, but there is nothing in
>the budget for using the technology thereafter to
>communicate with customers.
>
>One major blue-chip company invested over £10m online
>but then refused to take e-mails from customers on the
>grounds that "the call centre could not cope with the
>influx". Another said that being the foremost in CRM
>in its industry was its second of three main objectives
>this year. Yet somehow it still felt able to reveal:
>"We're not doing any customer communications in
>2001."
>
>It's like buying a car and then refusing to put petrol in
>it on the grounds that you can't afford it.
>
>How do they get away with it? In my lifelong quest to
>persuade clients to deliver value to their customers
>through relevant, targeted communication programmes, I
>have heard a number of reasons. My favourite, and a
>frequent one, is: "Without proper integration, we
>might send out conflicting messages. What if a customer
>gets an e-mail and direct mail piece on the same day, due
>to lack of a common database?"
>
>God forbid! If I received a mailing piece and an e-mail
>from a company on the same day, I'd sue! Come on. What is
>the overlap? If there is one, it can often be solved by a
>quick phone call internally to get a copy of the
>communication schedule, rather than by massive database
>integration. Data integrity and synchronisation is a
>worthy cause, but given the lead times, it shouldn't put
>an embargo on all customer communications. As John Lennon
>said: "Life is what happens when you're busy making
>other plans."
>
>Furthermore, given the potential infrastructural
>investment, companies need to get moving to deliver
>business cases for e-CRM.
>
>The assumption is that the right communication will
>increase profits, but where is the evidence? Loyalty is
>not always rational - look at Mary Archer.
>
>Perhaps this is where the inertia comes from. Those who
>are responsible might fear a hard evaluation of the
>return. What if there isn't one? Their fears may be
>justified in that the true effects take a long time to
>evaluate; CRM is for life, not just for Christmas. But too
>much caution means that by the time all this CRM
>investment finally kicks into gear, the customers may have
>gone.
>
>Until they feel a personal responsibility to deliver on
>customer value and show a return, marketers will not be
>"customer-centric", no matter how much lip
>service is paid. The reasons given for delay are often
>just excuses. Companies could be delivering compelling
>customer programmes right now, but there are still
>pitifully few doing so.
>
>Camilla Ballesteros is director of e-CRM Europe at Modem
>Media