CRM's Critical Components

From supply chain and logistics to high finance and telecommunications, CRM (customer relationship management) is pivotal to the success of every enterprise.

Integrated Solutions, January 2002
Written by: Ed Hess

A large pharmaceutical company is elated to learn that its new arthritis-fighting drug has just received FDA (Food and Drug Administration) approval. Now, the company must market the product. Surveys will be sent out to doctors to determine their levels of interest and areas of practice. Current company databases will be combed, looking for doctors who might have an interest in prescribing the new drug. Conferences and seminars will be arranged, as pharmaceutical reps need a suitable environment to make their pitches.

A telecommunications giant is putting the finishing touches on a new phone that leverages some of the benefits of 3G (third-generation) wireless technology. So, who wants to buy this "revolutionary" product? It could be aimed at consumers in certain regions, but a national marketing campaign might be more effective. If the consumer's age is a factor, then this demographic data will greatly influence the telco's next step.

A hardware manufacturer just received an online order for a PC, but that's the easy part of the transaction. The customer must be identified and the order and payment method verified. The folks on the manufacturing floor are charged with building this PC to spec and then handing it off to be shipped on time. There's also the task of tracking warranty information and answering the inevitable service calls.

Regardless of vertical market, CRM (customer relationship management) is the enabling application that will let each of the aforementioned companies accomplish their objectives. As ERP (enterprise resource planning) dominated the last few years leading up to the turn of the century, CRM has become the enterprise application in the post-Y2K world. Granted, analyst groups report that some CRM implementations have yielded less than enthusiastic ROIs to date, but that hasn't eliminated the need for them. There is little doubt your company needs CRM, but knowing how much and where to implement will save you from some serious pain.

CRM Drives Marketing And Sales
The business axiom that it is less expensive to retain customers than to acquire new ones still holds true. And, while CRM may allow companies to lower acquisition costs, the real power of these solutions lies in effectively marketing and selling to current customers. Not only do targeted marketing campaigns produce better results, they are cheaper than mass marketing efforts. Using a CRM solution can open up new marketing possibilities to departments - mainly through better handling of customer data.

New products and services are not created in a vacuum. In fact, it's an orchestrated dance between company executives, research and development, sales, marketing, accounting, and manufacturing. Salespeople will close the deals, but the marketing staff will do a great bit of the selling. And, measuring the effectiveness of a marketing campaign is a bottom-line proposition. If a marketing campaign is aimed at reducing customer churn, then the company looks at the numbers previous and subsequent to the marketing effort. This before-and-after approach, however, takes time. "A company conducts a month-long marketing campaign, and then it takes another month to compile a report that gauges the campaign's effectiveness. CRM allows all this to happen in real time," observes Manmeet Virdi, president and CEO of Aequor Technologies (Woodbridge, NJ). His company implements CRM and call center solutions and is also a user of these technologies. With 1,500 employees, Aequor's mission is to improve the capabilities of CRM for its customers and bring those experiences to use in-house. Virdi suggests marketing departments use call centers as the launch point of new marketing campaigns. Information from the call centers is gathered in real time and reports can be generated instantly. After a few days, a marketing director may see the campaign is more effective with some areas or age groups. If needed, the campaign can be updated or changed on the fly.

Companies can also use CRM to take their e-mail marketing campaigns to the next level, says Virdi. Using business intelligence tools to refine the CRM data, customer preferences can be identified and specific marketing collateral created based on these reports. Also, e-mails from customers can be categorized according to topic and addressed in total and not individually. "If the CRM system is integrated, companies can build entire marketing campaigns around e-mail contacts. It all comes down to treating e-mail as vital data and tracking customer responses," adds Virdi.

Call Centers That Focus On Personal Relationships
CRM systems are based on managing volumes of customer data, but it is call center technology that generates most of it. With responsibilities ranging from complaint handling to marketing, call centers represent frequent interaction points between companies and their customers. Standard call centers measure such thing as call volume, holding time, and call duration. But, call centers can be further leveraged to enhance overall CRM. This strategic leap requires CSRs to have access to databases that might normally seem irrelevant.

Armed only with an account number, for instance, a CSR knows the caller is based in Miami and also has a history of their transactions. From there, the CSR's screen can be embellished to include weather in the Miami area, the latest Dolphins score, and other regional news. Obviously, the CSR doesn't know the customer, but this shouldn't prevent a more personal dialogue - "So, did you survive that rain storm last night? It looked really bad. By the way, are you calling to check your account total?" It's hardly the one-to-one relationship that some companies envision, but it is a vast improvement over the name, rank, and serial number approach employed by most enterprises. "The ultimate goal is to have a personal relationship with every customer, but that's a practical impossibility," states Virdi. "It is very possible, however, to give the appearance of personal relationships with customers. That is where we are heading."

Aequor is also working with the latest IVR (interactive voice response) technology to further enhance the efficiency of call centers. Pushed to its limits, IVR would replace the Touch-Tone menus and possibly CSRs altogether. "Customers can ask questions, and automated responses are generated by tapping into a knowledge base that contains the answer. Customers should feel as though they are talking to a rep and not a computer," comments Virdi. "Of course, you don't want to frustrate or annoy customers with incorrect answers. Marrying this technology with quality customer service is one of the biggest issues facing the industry right now. It can be done, but it is a big, big challenge."

CRM, The Final Piece Of The Supply Chain
It might not be accurate to say that manufacturing and its ERP systems begat CRM solutions, but the two are clearly related. On the manufacturing floor, the benefits of an ERP system are evident - less inventory, scheduled jobs, automated supply planning. As a result of this enterprise integration, companies are able to bring products to market in a faster and less expensive manner. Once customers have the products, however, the ERP system stops being so effective. It's at this point that companies realized the need for CRM solutions. "Dell has one of the most effective manufacturing processes in the world. Its ERP system is superb," comments Virdi. "But, if you're not satisfied with Dell after the sale, will you go back to the company? Or, if you're happy with the purchase, what other products will you buy from Dell? This is where CRM moves beyond ERP to complement it."

At Aequor, the goal is to integrate CRM with an existing ERP solution. Both applications have massive databases that contain customer histories. By joining the two databases under one application, companies will have a much more complete view of customers. This critical data - such as products purchased, date of purchases, customer location, recent complaints, and purchase channel - is used to formulate marketing strategies that keep customers returning and keep them buying more. It also drives other internal processes at companies, which include research and development and invoicing and billing.

There are several facts that an enterprise must reconcile as it approaches the decision to implement a CRM solution. Recent surveys reveal that about 60% of initial CRM implementations fail to meet stated objectives. Also, ROI continues to dog CRM implementations as benefits seem to be less tangible than the metrics that were promised. However, the cost of acquiring a new customer is exponentially more expensive than retaining a current customer. And, convincing current customers to explore additional sales channels is three times more profitable than marketing to new customers.

In the end, all enterprises will likely need CRM solutions. Even the perceived value of such systems is far greater than the cost of the initial investment. After all, what is the cost of a good customer relationship or, worse yet, a formerly good customer relationship?