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