CRM and SME’s in the current climate (FT.com)

CRM and SME’s in the current climate
By Chris Lindsay, general manager of business applications at BT Business

Published: October 29 2008 15:49 | Last updated: October 29 2008 15:49

One way to beat the economic gloom is to ensure you make the most of what you already have. Customers are your lifeblood, and in an uncertain economic climate it’s more important than ever to protect these most precious of assets.

The worries and fears created at a time like this perhaps serve to highlight the advantages of Customer Relationship Management and the growing need for such applications, particularly for smaller companies. In one recent study, it was suggested that 41 per cent of SMEs recorded customer losses in 2008. Now, more than ever, SMEs need to ensure their long-term survival by growing, creating and exploiting opportunities, and building strong relationships with customers.

As a small business, customer service is a crucial part of how you work and an important way to differentiate yourself from your competition. Good customer service means referrals, repeat business and ongoing success – and ultimately, makes great business sense.

Recent research by BT Business indictaes that client relationships is one area that UK SMEs believe is the critical factor (43 per cent) to their success. So, in order to serve ycustomers effectively, it’s essential to look at all the ways you interact with the outside world, as well as looking at internal procedures and systems.

The difficulty however, is how to know what your customers want in order to provide a tailored service to them.

Collaborating and communicating with customers today goes far beyond phone calls and e-mails. Technology allows smaller business to take advantage of software traditionally reserved for larger companies with bigger IT budgets.

Small businesses have often been deterred from investing in software such as CRM because of the cost and complexity, as they traditionally paid an upfront licence fee and maintenance or upgrade costs. However, CRM solutions are now available to help all businesses, irrespective of size.

There are many best of breed companies who deliver tried and tested innovative applications to meet the needs of customers, with some even producing free packages.

Business leaders need to run a tight ship, keeping a close eye on the business, understand their cash-flow and be able to react quickly to fast changing and unpredictable market conditions. As a result, they need the ability to understand what’s happening in their company and have all the information at their fingertips.

In order for SMEs to maintain the competitive edge in the current economic climate, it is important for them to think differently about customer service. When done right, it can lead to referrals and loyalty but getting to this stage is not easy. Employing CRM will enable small and medium sized businesses to develop, grow and provide what their customers want.
Copyright The Financial Times Limited 2008

How Social Networking Will Change CRM

Social networking is the newest online phenomenon, and it's going to change the way that companies use CRM. Sites like Facebook and MySpace are currently being used primarily for person-to-person social contact, but many of these sites also allow businesses and professionals to build pages to promote their wares and careers. This leads to a phenomenon that the market research firm Gartner calls the "connected enterprise," a new environment under which many B2B sales will inevitably take place.

Adding technology to the natural human desire to communicate enables individuals to participate in more, richer, faster, and denser social networks, according to Gartner's managing vice president, Scott Nelson. "In activities such as marketing it is valuable to find and spend effort on several key influencers that are trusted information sources used by other network participants. Enterprises should work the network and find out where their customers and potential employees are making decisions." This means that tomorrow's CRM systems will need to accommodate and understand the activity that's taking place in a wide variety of online environments.

This is no problem if social networking is taking place through the use of basic Internet infrastructure tools, such as email and instant messaging. Most CRM systems are already linked into email, and most plan to support IM tracking, if they do not already. The problem is when sales professionals start using somewhat more esoteric sites and tools, like FriendFeed, Twitter, Ryze, or Orkut. That's likely to be a trend, according to Nelson, because such networks form an increasing proportion of the trusted information sources that individuals use to make decisions.

CRM systems will need to integrate and accommodate these technologies in order to continue to monitor, track, and measure customer interactions. "As many of these networks are implemented using well understood technical standards, they can be probed and analyzed, opening up opportunities for a new generation of social network analysis and simulation tools," says Nelson.

The widespread use of social networking will force CRM to accommodate and measure the impact of broad issues that take place inside corporations and their cultures. Gartner believes that as IT-based devices and technologies become more personal in scope and application, social issues will become increasingly important to product success. In other words, sales professionals will need to actually participate in the customers' network – and build rapport with them on their own terms – in order to make sales in that environment.

Gartner predicts that by the end of 2010, 15 percent of U.S. and European businesses will have formalized societal trend watching as a corporate discipline, in order to identify and react to major societal shifts.

Nelson believes that companies using social networking to transact business will require anthropological and psychological input to help evaluate how changes in employees' and customers' lifestyles will affect business, according to Nelson. "A connected enterprise must understand the connected society in which it resides," he says. "Most firms wait until societal trends have overwhelmed them before they try to react [and] slowness to respond can cost firms incredibly large sums of money and may drive them out of business all together."

From marketing vision to enterprise mission (FT.com)

From marketing vision to enterprise mission
By Ronald S. Swift of Teradata

Published: October 20 2008 09:06 | Last updated: October 20 2008 09:06

I speak to many organisations that are striving to become more customer-centric. The challenges they face are all too familiar. Silos of customer information, a less than holistic view of the customer and individual departments that cannot or do not co-ordinate customer contact.

There is no silver bullet for customer centricity. It’s a long process that will likely involve changes to business processes, company culture and technology.

However, in my experience there is a common starting point that is shared by many of the organisations that have successfully embarked on this journey – the measurement of customer profitability and lifetime value as the foundation for a Customer Equity Optimisation strategy.

Years ago Gartner* reported that “Customer Relationship Management (CRM) refers to the concept of moving ownership of the customer up to the enterprise level and away from individual departments and channels. These departments are responsible for customer interactions, but the enterprise is responsible for the customer.”

Customer centricity has to be an enterprise level strategy. Frontline employees and departments have their own specific responsibilities and priorities. It is the enterprise’s responsibility to provide an environment – culture, technology and information – that enables employees to serve their customers in a way that acknowledges the customer as a whole.

Companies that are now practising enterprise-level customer management are enjoying dramatic success. Their executives understand, track and articulate the value of their customer equity and know how their business is optimising customer equity.

It all starts with an executive commitment to increasing the value of each customer relationship to the business with every interaction – while also increasing the value of the business to select customers. This commitment must be backed by accurate and timely information. Enterprise profitability analytics encompass every dimension of customer management, including behaviours and transactions as well as expenditures and business activities across the enterprise.

By integrating customer lifetime value calculation tools with analytical CRM, there are tremendous opportunities to understand and grow customer equity. However, only with an effective and comprehensive customer profitability model and analytics can a company understand which of its customers are contributing, how much and why.

Customer profitability should not be viewed as a gauge of the customer’s value; instead, it is a measurement of the value of a company’s customer-business interface – how well a company understands, informs, serves and profits from its CRM efforts.

To interact effectively with each customer at any given touchpoint you need to understand what customers actually value. From a humanistic standpoint, successful firms understand customer needs and desires and meet them with relevant and timely offers. Analytical CRM can provide an understanding of the economic drivers and variables in each relationship and, therefore, useful clues to customer needs.

It was not until recently that technology tools were developed to measure and optimise customer equity at a deeply detailed level on an enterprise scale. Working together in the late 1990s, the Royal Bank of Canada (RBC) and Teradata developed a data warehouse-driven value engine which accurately measures and tracks customer profitability. Since then RBC has used profitability analytics and event-driven customer relationship management to optimise customer equity and increase shareholder value.

RBC had already been experimenting with customer profitability measurement. The key lesson learned was that truly useful customer profitability models had to begin with detailed, accurate, account or customer level activity-based costing information. A substantial challenge as it required close co-operation between finance, marketing, and IT. However, all parties recognised the value of the effort.

The bank found that profitability rankings changed by at least two deciles for 75 per cent of customers, highlighting the improved accuracy. Further, RBC realised that customer profitability calculations were not enough. It came to understand that customers can be both profitable and have the potential to be profitable, and that the bank needs both kinds. Customer lifetime value tools, using historical profitability information, enabled RBC to determine which customers had high potential to be profitable in the longer term.

Once the bank had the tools and processes in place to determine customer profitability and lifetime value, it included those measures when making customer decisions. This encompassed customised marketing campaigns, alignment of pricing discretion and service levels based on relationship depth (products held) and potential (lifetime value).

The insights gained from RBC’s deep access to detailed customer information are used to guide organisational strategy and structure as well as daily decisions made by thousands of customer-facing employees. RBC is uniquely successful among customer equity-optimising companies because it incorporates a deep understanding of customers into all of its day-to-day operations. Employees are given the freedom and latitude to use the value of customer focus in nearly all their actions.

This “scientific” marketing focus is increasingly going to become the rule rather than the exception, as the value of customer relationships is understood as the key driver of a firm’s market value. The practice of customer equity optimisation is important for more reasons than its impact on shareholder value – but that in itself seems reason enough to take it seriously.


Ronald S. Swift is vice president for cross-industry solutions at Teradata and the author of “Accelerating Customer Relationships”

* Gartner Research Note, Ferrara and Nelson, June 4, 2001
Copyright The Financial Times Limited 2008

Whither CRM? (FT.com)

Whither CRM?
By Peter Matthews of Ernst and Young

Published: October 21 2008 09:08 | Last updated: October 21 2008 09:08

Customer Relationship Management. A very well intended concept; but perhaps one that needs a slight rethink in today’s turbulent world

Numerous studies give us empirical proof that broadening relationships with existing customers is both easier and more profitable than trying to add new ones, and CRM as both a concept and a process is a key enabler of that. It remains important that businesses know their customers, their likes, their dislikes, their partners’ names, their football team, their ”hot buttons” (I exaggerate, but you get the point).

It is also key that an organisation can track and record all the interactions they have with a customer, both so that these can be tailored to what the customer wants and expects, and also so that those touch points are ”joined up”. I recently heard of a supplier bidding for a contract whose chief competitor was a different part of their own organisation.

Both of these outputs are enabled by effective CRM and most organisations are trying to develop and build CRM. Yet customers are still dissatisfied with their suppliers. Why is this?

For most of us, a relationship is a living entity, not something that can be created by processes, or by any amount of interaction promising me special offers as a valued client. Intimacy cannot be forged on the basis of one transaction; relationships develop and CRM needs to be reined in while this happens to allow an element of judgment and flexibility.

I am sure many organisations would say they do this, and do it well – although statistics would say otherwise (customer satisfaction rates generally are going down). There must be a reason, and there must be another way.

For me, this is about individual customer service, as opposed to traditional CRM. One could argue this is but a branch of CRM: after all good relationship management is about a focus on a customer as an individual. But I am not so sure.

The word that matters is service, as opposed to relationship management. ”Service” implies a focus on someone else, subsuming your own needs to look after somebody else; the words ”relationship management” are more about a focus on the supplier – making sure that the processes and records are in place to manage a relationship. The very act of ”managing” a relationship is then seen as being as much about the supplier’s needs as the customer’s.

Individual customer service is different. It is a focus on the action not the words. More than that, it is ”individual” – a recognition that we are all different, and that putting people into groups (a key tenet of some aspects of CRM), can have unintended consequences and lead people to feel ”processed”.

The act of individual customer service therefore focuses on delivery and the action, rather than the words, and the individual rather than the group. It is the essence of good ”account management” – a mixture of outstanding delivery or product, and a real tailored service, where each individual feels special.

Where will it work? In business, anywhere there is an exceptional individual leading a client team. That leader will have a working knowledge of ”account management” (which may well involve some CRM tools and techniques), but they will focus on making the customer feel valued as an individual and will ensure that there is a real focus on delivery of what has been promised – both a pre and post sale area of activity.

Good account managers are worth their weight in gold: everybody wants them. They have a wide range of business knowledge and interests that enable them to converse across a customer organisation, coupled with a desire to ”serve” and look after a client that goes beyond a sale.

Some of the big IT and consulting organisations have these people; they have both intellectual and emotional breadth, and are ultimately defined by their values, for it is values that shape behaviours, particularly in tough times. At such a moment, customers will be looking to see who are just fair-weather friends.

A good example: an account manager for a big IT firm personally undertook to fix a problem on a project by acting as the intermediary between his own organisation and his customer. It involved a great deal of personal risk as he had to challenge his own organisation on the way in which the project was being run (profit was all) and by representing his customer in front of his own senior people. He won the changes he needed; the customer saw the behaviours and was able to see that, in a crisis, this account manager’s actions backed up the claims.

In our personal lives we want someone to care and to do what they say they are going to do. We are realistic enough to know that our suppliers need to make a decent return, but are arrogant enough to believe that we are special and should be treated as if we matter. We also want to feel that we are getting what we are paying for. This makes one of the key points of individual customer service the ability of the supplier to follow instinct and relationships, rather than rules.

CRM is still important as a basis on which customer relationships can be evaluated, and processes controlled and ”managed”. It is not a redundant concept, quite the reverse. But it does need to include flair and judgment rather than be just a dry process.
Copyright The Financial Times Limited 2008

Look to strategic CRM for success in a downturn (FT.com)

Look to strategic CRM for success in a downturn
By Kris McKenzie, head of CRM for SAP (UK and Ireland)

Published: October 21 2008 16:15 | Last updated: October 21 2008 16:15

With consumer spending falling, effective customer relationship management presents an attractive value proposition.

But businesses need to do more than just invest in a CRM solution to expect an increase in customer retention and see an uptake in new customers. A strategic approach must be undertaken in order to harvest the installed base and use services as a springboard for sales growth.

Businesses must also remember, customers are more demanding than ever and a notable customer experience, whether good or bad, will be quickly propagated (more than likely via the internet) for all to see. Therefore, service excellence is key to success. It does more than purely allow your company to be known as having good customer service, but is an important source of profits.

Growing complexity of offerings and service delivery means now is the time to take CRM to the next level and support future ambitions instead of solely focusing on current capabilities.

Some of the platforms likely to shape the future include integrated virtual call centres, proactive aftersales service and customer touch-point management. According to Deloitte Development LLC, profitability of service operations can be 75 per cent higher than overall profitability in a business unit. Quite simply, you need to heed the long-term value of service infrastructure investments.

Many companies have already begun the journey to improve their service operations, though the focus has been primarily on cost reduction. For example, companies have started to lower call centre costs through outsourcing, enhanced automation and self-service. Since the focus has been mostly on cost, benefits to customers and thus opportunities for top-line revenue growth have been minimal.

Also, customer segmentation and other information used so far has been relatively static, so rapidly evolving customer needs have not been well considered.

However, customer service agendas are changing. Companies are shifting the centre of gravity from cost reduction toward enhancing the customer experience. Customer service channels secure and retain customers’ attention on a regular basis, and customers will directly and indirectly provide deep insights to companies in the process of receiving service. Leveraging these customer insights and integrating them into the entire breadth of the business is a key foundation to success.

Call centres are one of the changes on the customer service agenda. Businesses are now looking to create virtual call centres, which enable distributed talent to respond quickly and knowledgeably to customer needs. Call centre reps, home-based agents, field service engineers and many others can be contacted directly by customers or receive notice of incidents that are electronically routed to them.

By providing staff with the right tools companies can leverage information, respond in a personalised fashion to customers and deliver an enhanced, cost-effective service. It also provides an opportunity for cross-selling. By having a CRM solution in place that is integrated with the business, call centre agents are able to make real-time offers to customers while helping with the original inquiry, which is more likely to result in sales in comparison to the more traditional “cold calling”.

In addition to solid alignment among service, sales and marketing, touch point management increasingly depends on real-time transfer of data. By leveraging the data available through technology, businesses are able to understand the lifetime value of customers, and deliver the right customer experience.

With the emergence of Web 2.0, agility is a must. The time lag between formal feedback and information from informal web channels is growing. Companies can draw rapid insights from information on the web and can adapt their customer approaches appropriately and quickly. However businesses choose to interact, it is essential that there is a consistent customer experience through all touch points, which reinforces the brand and shows a depth of understanding.

Ultimately, now is the time to refocus on the customer, put them at the centre of the business and at the centre of any strategic CRM implementation rather than just an end point, as once customer centricity is lost it is hard to regain. The best implementations will position businesses for achieving differentiated offerings during these tough times and will create superior shareholder value for the long term.
Copyright The Financial Times Limited 2008

Look to strategic CRM for success in a downturn (FT.com)

Look to strategic CRM for success in a downturn
By Kris McKenzie, head of CRM for SAP (UK and Ireland)

Published: October 21 2008 16:15 | Last updated: October 21 2008 16:15

With consumer spending falling, effective customer relationship management presents an attractive value proposition.

But businesses need to do more than just invest in a CRM solution to expect an increase in customer retention and see an uptake in new customers. A strategic approach must be undertaken in order to harvest the installed base and use services as a springboard for sales growth.

Businesses must also remember, customers are more demanding than ever and a notable customer experience, whether good or bad, will be quickly propagated (more than likely via the internet) for all to see. Therefore, service excellence is key to success. It does more than purely allow your company to be known as having good customer service, but is an important source of profits.

Growing complexity of offerings and service delivery means now is the time to take CRM to the next level and support future ambitions instead of solely focusing on current capabilities.

Some of the platforms likely to shape the future include integrated virtual call centres, proactive aftersales service and customer touch-point management. According to Deloitte Development LLC, profitability of service operations can be 75 per cent higher than overall profitability in a business unit. Quite simply, you need to heed the long-term value of service infrastructure investments.

Many companies have already begun the journey to improve their service operations, though the focus has been primarily on cost reduction. For example, companies have started to lower call centre costs through outsourcing, enhanced automation and self-service. Since the focus has been mostly on cost, benefits to customers and thus opportunities for top-line revenue growth have been minimal.

Also, customer segmentation and other information used so far has been relatively static, so rapidly evolving customer needs have not been well considered.

However, customer service agendas are changing. Companies are shifting the centre of gravity from cost reduction toward enhancing the customer experience. Customer service channels secure and retain customers’ attention on a regular basis, and customers will directly and indirectly provide deep insights to companies in the process of receiving service. Leveraging these customer insights and integrating them into the entire breadth of the business is a key foundation to success.

Call centres are one of the changes on the customer service agenda. Businesses are now looking to create virtual call centres, which enable distributed talent to respond quickly and knowledgeably to customer needs. Call centre reps, home-based agents, field service engineers and many others can be contacted directly by customers or receive notice of incidents that are electronically routed to them.

By providing staff with the right tools companies can leverage information, respond in a personalised fashion to customers and deliver an enhanced, cost-effective service. It also provides an opportunity for cross-selling. By having a CRM solution in place that is integrated with the business, call centre agents are able to make real-time offers to customers while helping with the original inquiry, which is more likely to result in sales in comparison to the more traditional “cold calling”.

In addition to solid alignment among service, sales and marketing, touch point management increasingly depends on real-time transfer of data. By leveraging the data available through technology, businesses are able to understand the lifetime value of customers, and deliver the right customer experience.

With the emergence of Web 2.0, agility is a must. The time lag between formal feedback and information from informal web channels is growing. Companies can draw rapid insights from information on the web and can adapt their customer approaches appropriately and quickly. However businesses choose to interact, it is essential that there is a consistent customer experience through all touch points, which reinforces the brand and shows a depth of understanding.

Ultimately, now is the time to refocus on the customer, put them at the centre of the business and at the centre of any strategic CRM implementation rather than just an end point, as once customer centricity is lost it is hard to regain. The best implementations will position businesses for achieving differentiated offerings during these tough times and will create superior shareholder value for the long term.

Copyright The Financial Times Limited 2008