Tuesday, September 22, 2009

Five Pressing Issues in CRM

The Web site http://www.crmguru.com/ has published a series of blog postings that analyze customer relationship management. Here is a synopsis of five of those CRM postings.

Customer Relationships Need a Personal, Not Robotic Touch.
The foundation of customer relationship management, indeed all of marketing is how we communicate with customers or publics. Engwall (2009, p1) speculates that the feedback method chosen by companies is often inappropriate for the customer relationship they are trying to build. For example, an email requesting a customer to take an anonymous Web survey is not a method for building closer customer relationships. He suggests that customers who are making "big decisions" want a more personal dialogue. Therefore, vendors need to spend the time to learn the operations of their customers. What distinguishes successful B-to-B companies is a structured approach that is personal at the same time. It "sends a strong signal about the commitment to listen and respond to customer needs." There is the old saying that a system, like CRM, is only as good as what we feed into it.

CRM is Too Associated With CRM Technology’s Front-End Focus.
Lee (2009, p1) reports that an enterprise-encompassing viewpoint is now outflanking the old viewpoint driven by CRM software, with its emphasis on the front office. Customer-centric behavior needs integration of the entire enterprise, front and back offices. This is "clearly beyond the capabilities of CRM software," according to Lee. He asserts that customer-centric planning is "the tail [wagging] the CRM dog," and notes that more and more companies are initiating comprehensive customer-centric efforts that don’t include the perceived limitations of CRM. His prediction: "[CRM] is not coming back."

Can CRM Systems Prevent Sales?
Apollo (2009, p 1) says that CRM is "no magic wand" to improve sales. Conversely, the immense resources invested in CRM are "often wasted." Apollo’s firm found that CRM systems do not reflect how the most promising prospects buy. He identifies five warning signs that a CRM system is a sales prevention machine:

  1. Your CRM sales process stages are based on sales person activity rather than prospect commitment.
  2. Your CRM has a Give/Get imbalance: it demands more of your sales force than it returns to them.
  3. Your CRM has poor sales forecast accuracy: CSO Insights estimates that such accuracy is now less than 50%.
  4. Your CRM is based on a static sales model, which hasn’t been verified and validated "for ages and has failed to take account of changing market conditions, buyer behavior and sales best practice."
  5. Your CRM fails to reflect the prospect decision-making process; today decision makers are more risk averse and filled with growing uncertainty.

Taking Your Eye Off the Ball.
Band (2009, pp 1-2) describes Forrester research conducted on CRM technology. He expresses a concern that businesses are concentrating their attention on trendy CRM technology such as Social CRM rather than CRM technology that provides the best value. Forrester found that "Selling, Ordering, and Servicing" technology returns the most CRM value to a business. There are other categories of CRM technology offerings, each having its unique drawbacks.

Examples of CRM technology with risk/reward drawbacks are "Enterprise Marketing Management" and "Partner Relationship Management." They are not considered "critical for business success" but both are hard to implement. In another category, "Customer Insight" and "Data Management" solutions are critical but are risky and extremely challenging to implement. "Contract Life-cycle Management" and "Configure-price-quote" systems offer moderate benefits but again are very difficult to deploy. Finally, the contemporary Social CRM has yet to prove itself. Band’s conclusion (p. 2): "’Selling, Order-taking, and Customer Service’ remain the solutions that deliver the most certain business value-add."

Confused Meaning of CRM
Thompson (2007, pp 1-2) says it’s time to say goodbye to the term "CRM." Its confused meaning encumbers true customer-centric business operations. Consultants say "CRM" is an approach to business process improvement and their "CRM" is a package of consulting services. On the other hand, software vendors say "CRM" is a practice implemented around their technology. Industry analysts define "CRM" as a set of front office applications. So, "CRM" can mean many different things to different people. CustomThink research suggests that the IT-focused "CRM" projects have enjoyed modest success, which is to say they have positive ROI, but "have not [generated] strategic benefits." Thompson advises us to erase the term "CRM" from our lexicon, and instead embrace "the development and implementation of a customer-centric business strategy."

Overall Conclusion
The first thesis of the Cluetrain Manifesto is that markets are conversations among many players (see Levine, et al, 2001, pp1-3). The Internet has unleashed powerful changes in customer relations, and Levine, et al summarize that "smart markets will find suppliers who speak their own language." Customer-centric thinking has become even more imperative for companies. The CustomerThink Web site agrees. On it, Thompson (2007, p 2) says we need to become customer-centric by understanding customers and giving them "what they want." The five issues discussed in this report have a theme of customer focus, and customer centered business organization and operations. The 19th thesis of the Manifesto says "Companies can now communicate with their customers directly. If they blow it, it could be their last chance."

Apollo, B. (Sep. 03, 2009). Is your CRM System a Sales Prevention System? Inflexion-Point. Retrieved on September 7, 2009 from http://www.customerthink.com/.

Band, W. (Aug. 14, 2009). The Extended CRM Application Ecosystem: Value, Risk and the Future of Social CRM. Forrester Research. Retrieved on September 8, 2009 from http://www.customerthink.com/.

Engwall, E (Aug. 31, 2009). Customer Feedback: The Method is the Message. E.G. Insight, Inc. Retrieved on September 7, 2009 from http://www.customerthink.com/.

Lee, D. (Jun. 15, 2009). Has the CRM Industry Become Redundant? High-Yield Methods. Retrieved on September 7, 2009 from http://www.customerthink.com/

Levine, Locke, Searls & Weinberger (2001). The Cluetrain Manifesto: The End of Business as Usual. Retrieved on September 8, 2009 from http://www.cluetrain.com/book/95-theses.html

Thompson , B. (Jan. 22, 2007). Why "CRM" Must Die for Customer-Centric Business To Thrive. CustomerThink Corp. Retrieved on September 8, 2009 from http://www.customerthink.com/.

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