"The stairway to heaven" - that's what Cap Gemini Ernst & Young vice-president Andrew Keene calls it.
Many organisations are developing a notion of what they want to achieve with Customer Relationship Management (CRM), Keene says. They know who their customers are and how they want to relate to them. You might call that ideal "CRM Nirvana", and they're striving to finding ways to build a stairway to that particular heaven.
It sounds simple enough. But now - before most organisations have even faced that concept head on, and well before many have taken their first tentative steps onto the CRM treadmill -"eCRM" has arrived to turn the stairway into a slippery slope.eCRM - CRM for the connected economy - holds out the next great promise of improved productivity and enhanced profits. It serves up more information than was ever available before on customers and suppliers by smashing through the walls that traditionally stand between a company's various departments. In giving companies a single, enterprise-wide view of each customer, it's designed to bind customers closer.
Aberdeen Group says eCRM derives from CRM techniques, which leverage call centre and direct marketing technology to market mass-produced goods and services to small market sub-segments. But it expands on this technology by using next-generation segmentation and analysis technologies, comprehensive customer interaction data, multi-channel communications and one-to-one interactions.
But definitions are loose and tend to lie very much in the eye of the beholder.
For instance, SAS (a provider of analytical CRM) views eCRM as just CRM using the Internet as a customer touchpoint. SAS promotions team leader Deirdre Brannick says that from an SAS perspective, eCRM is another valuable channel of communication to customers. "As customers interact with the organisation's Web site, information is generated about the customer's behaviour on the site," she says. "Organisations should combine and analyse this information with other internal customer information. Then they must feed it back to marketing strategy to improve the experience for customers," says Brannick.
In one sense the logical sequel to ERP, eCRM is a formidable blend of data mining; sales force automation; customer profiling software; Computer Telephony Integration; Web interaction, personalisation and self-help software; a customer data repository; databased workflow/CRM packages; "clickstream" analysis; marketing process automation and other new-age software tools.
Ovum Research defines eCRM as comprising two major elements:
- the use of direct-to-customer channels, principally e-mail and Web, but also emerging channels such as chat, WAP, ATMs and kiosks; and- using technology to select relevant material to be presented to the customer, in terms of content, offers and support information.eCRM, Ovum maintains, is essential for companies wanting to manage relationships with their customers and excel in an online environment.
Billions on the line
While eCRM is bigger than ERP by far, some pundits argue it's also the biggest threat to corporate viability since Y2K.
In theory, with eCRM every interaction should augment the history of previous interactions, simplifying the process of anticipating customer desires in order to generate loyalty. In theory too, eCRM promotes greater effectiveness in sales and marketing, not to mention higher customer retention and substantially reduced customer churn or wastage.
In reality, enterprise-wide eCRM architectures are so complex organisations are forced to apply exceptional expertise in multiple technologies and system integration to obtain that single view of the customer. But despite complexity, many organisations may be forced to forge ahead or risk losing substantial market share.
Phillip Campbell, managing director and founder of eCRM business consultancy WorkForce Transformations, says: "Already around the world, companies are likely to commit more than $US10 billion to eCRM-based strategies over the next two years while Australian companies are still trying to come to grips with eCRM," Campbell says.
Facing staggering complexities
"Processes, interfaces, data, networking, software - the scale and complexity are vast," wrote Keen Education chairman Peter Keen in US Computerworld recently. (Keen's new book, The eProcess Edge, written with Mark McDonald, is co-published by ChannelX's sister publication Computerworld.) "For example, eCRM demands that companies provide consistent and up-to-date customer, catalogue, order and inventory data across all their sales channels - Web, call centre and physical points of presence. How do you even conceptualise the infrastructure, processes and IT bases for achieving this?"
To achieve eCRM, IT organisations have to have customer information architectures that assemble diverse customer sources into a complete view of customers and their relationships to the organisation, then deliver this data for a wide array of application purposes. But they must also allow closed-loop integration between customer analytical systems and customer interaction systems.
Keen claims today's eCRM architectures require a broad approach, and a vision that encompasses strategy, process, operations and technical architecture.
He says several companies have been successful with a phased approach to implementing cross-channel architectures that support the entire enterprise, with the most successful strategies grounded in vision, architecture, integration and business benefits.
"Arranging your customer interaction engine around a functional, flexible core allows you to leverage your investment into the future and become an early adopter of service techniques that give you a world-class reputation with your customers," he says.
But the situation may be significantly worse for Australian companies than it is for the US. As Campbell points out, many Australian organisations are still trying to come to grips with "traditional" CRM and with linking together all of the front office communication channels with customers.
Campbell says with too many CRM projects focused on the technology implementation, and often using a "back office" implementation methodology inappropriate when dealing with softer, more intangible relationships, CRM projects are still failing at a rate of 60 to 70 per cent.
So in Australia, it's not the best time for the goal posts to be moved - from CRM to eCRM to eRM (electronic relationship management).
Pushing through the pain threshold
Research by Cap Gemini Ernst & Young, particularly in the banking and finance sector where the challenge is bigger than most, shows data and organisation pose the biggest impediments to CRM.
"How do I actually get a common view of my customer when they've got banking, insurance and funds products, and I don't actually know who the person is who has all those products? That's the data problem," says CGE&Y's Keene. "And the organisational problem - and this is across all industries - is how do I actually organise and manage my CRM initiatives? Is it going to be run by sales? by marketing? by distribution? or from operations?"
Deloitte Consulting Australian and New Zealand, ICS Baan Practice Manager, Tony Lucas says different industry sectors are moving at very different rates into CRM and eCRM. He says all the major players in the retail banking sector are moving into eCRM and at least have initial capability with self-service on the Internet and selling of products and services, while financial institutions and investment institutions are also moving down that path. The telecommunications industry is also moving aggressively into the area.
But he warns many organisations in the manufacturing sector are still very much in learning mode, despite the fact that there can be huge payoffs for manufacturers.
A recent global study by Deloitte Consulting shows manufacturers can be up to 70 per cent more profitable by connecting with all trading partners through the Internet. The study, entitled "Digital Loyalty Networks: e-Differentiated Supply Chain and Customer Management," focuses on how companies can optimise their entire value chain to reap the real benefits of the new digital economy.
According to the study of 850 manufacturing executives in 35 countries -including Australia - manufacturers typically focus on optimising how they deal with customers' orders only when they are received, and thus concentrate primarily on internal processes and their interactions with suppliers. This results in an enormous amount of "value" being locked in the front end of the supply chain.
"By deeply understanding their customers' lifetime potential, requirements and costs to serve, companies can design and manage their manufacturing and distribution networks to ensure that each customer is paired with the right capabilities from suppliers, manufacturers, distributors, retailers and logistics providers to maximise customer loyalty and profitability," says Deloitte Consulting's Rod Gallagher.
Kicking the tyres
JD Edwards introduced Siebel's CRM software to this part of the world. Director Glenn Wright says the company has so far sold only two eCRM solutions, but that many of its small or more nimble or innovative customers are very keen to look at both CRM and eCRM.
"But we also find that the mainstream of our customer base, and they are very much the bricks-and-mortar companies, are looking to put their toe in the water with CRM rather than go to a full-on implementation," he says. "They're talking about trialing, about looking at what ROI they can get, and about not putting their whole traditional business at risk."
Martin Hannah, founder and MD of Coresoft, believes it will be at least two years before there is a huge uptake of eCRM in Australia. "One very interesting characteristic of the eCRM marketplace is that business operators are largely unaware what they are seeking is called eCRM," he says. "Few, if any, have the entire eCRM discipline in mind when they seek a new application. Even fewer really appreciate why having their eCRM integrated to the rest of the organisation is important, until you explain it to them in terms of the way they do business."
Hannah says the fight for market share of the SME space for eCRM systems won't be won with fat marketing budgets and promises of technical wizardry. Rather, it will be by the ability of businesses to communicate business propositions on an industry-by-industry basis.
Glass at the cutting edge
By Natalie Hambly
In the competitive world of glass manufacturing, providing comprehensive support to sales staff is as critical to business success as customer support. For one of the market leaders, Pilkington Australia, the ability to provide support to 115 staff plus thousands of customers equals the ability to retain their leading status in a fast-moving and challenging marketplace.
Having identified both its employees and customer relationships as core strengths, Pilkington sought to improve what they call "the Pilkington edge" by looking for a contact management application (CMA) to implement across 28 offices in Australia. However, when it was unable to find a suitably flexible and scalable CMA solution, it opted for a eCRM application instead.
With help from CRM specialist Microsell, Pilkington chose Interact Commerce Corporation's SalesLogix application, based on three selection criteria. "We looked at the size of the company, the amount of users and their future plans," says Microsell analyst David Rowswell. "Pilkington has a lot of products and the system needed to be able to cope with a lot of data and a lot of users."
For Rowswell, who analysed Pilkington's requirements for the rollout and customisation of SaleLogix, the scalability and reliability of the system were critical.
"The installation of SalesLogix was over two stages," he says. "The first stage was rolling out the system and basic customisation. The second stage was to integrate the existing [SAP] database into the SalesLogix system, which was a matter of every night just transferring data across, which took about two weeks." The whole process, including coming up with the initial idea, took six months.
So, was it all worth it?
According to Sarah Cox, Pilkington's commercial sales representative, implementing the solution has improved communication both with sales representatives and customers. "Since implementing SalesLogix, we have recognised the organisation-wide benefits an eCRM application can provide," says Cox. "On a day-to-day basis, the sales teams are more efficient and effective when dealing with customers, and they have greater accessibility to customer records."
However, the implementation process has been challenging.
"We had a few hurdles getting access to do the customisation ourselves, and we didn't realise we would need to dedicate a whole person to the administration of the system - which we hadn't allowed for in our budget," says Cox. "We had also hoped that we could quantify the benefits at this stage - such as an increase in sales and a reduction in overheads - but that is more long-term, I guess. But we are definitely seeing benefits now."