Every time a McDonalds salesperson tells me I have to wait two minutes for my Junior Burger I throw a hissy-fit. In an inner fit of rage, I flirt with the possibility of suing them for false advertising. A ridiculous idea of course, because McDonalds never said they would deliver my snack in under two minutes. They do however imply it, I expect it and they aren't delivering on this expectation. And that, ladies and gentlemen, is the crux of customer resource management (CRM).
The most valuable asset to any organisation is the customer, pure and simple. It's not the bricks and mortar, it's not even the products they make. Without the customer, there is a great big nada, and in this day and age the power in the customer/vendor relationship has shifted very much to the customer. There's a lot of choice out there allowing them to dictate the terms on which they interact with a company, or not.
The two sides of CRM
Fundamentally what needs to be understood about today's CRM is that it's a comprehensive strategy, not a piece of software that will magically solve an organisation's customer-related problems. Because it's a strategy, if a company's system of dealing with its customers is inadequate, then no amount of technology will help it.
This phenomenon has hinged CRM between the two worlds of consulting and IT. On the one hand, integrating CRM is about flushing out an organisation's priorities and weaknesses, and developing a business strategy to make it work more efficiently in gaining and retaining customers. On the other hand, computerisation can increase the efficiencies and data-share capabilities of a company in ways never before experienced. Thus CRM solutions require the technical expertise of systems integrators and networkers to take care of the hardware/software side of things.
In many ways, what CRM tries to achieve is exactly like the Borg collective in StarTrek. Data filters into a company through a multitude of "touchpoints" - call centres, Web, e-mail, reports, research papers, product specifications. However, when data arrives at these touchpoints, it soon becomes holed up in silos and is very hard to regroup into useful data that can be distributed to the marketing and sales team, management, customer service centre and other departments. Businesses want closer relationships with their clients and they see an all-encompassing view of the customer as a way of achieving this. "It's really nice to be able to ring back in six months time and continue a conversation," adds Sandra Truscott, managing director of Brisbane-based integration firm Sonic Computer Accounting Services.
The reality, however, is that most companies have about eight or nine different views, says Murray Creighton, Siebel Systems vice president, Asia Pacific. He believes companies are accumulating more and more data, sometimes merging specifically to leverage off another organisation's knowledge base, yet none have achieved it so far. "Take, for example, a bank buying an insurance company. There are great opportunities here to cross-sell, but it never happens. One of the main reasons they merged in the first place never seems to eventuate," Creighton explains.
The significance of a seamless profile is about enhancing the customer experience. As a business, you want to make sure you get your story right before you go out and put your foot in it. Rob Edwards, CEO of the Australian Direct Marketing Association, says CRM can do enormous damage to the brand if it isn't used properly. His bank of 11 years called him at home to offer him contents insurance, which he already had. Within a week he'd swapped banks, and it was only because he was on the record' that he didn't indulge in "viral marketing" (when you tell 10 friends how worthless your bank made you feel by offering you a product you already have). Bearing in mind that some people don't want to be CRMed is also part of good customer relations, adds Edwards. "Businesses that overdo it will lose."
Wave still rising
Call centres represent one of the primary touchpoints for customers, making them a dominant focus of a CRM solution. There are over 4000 call centres in Australia, employing approximately 200,000 people. "Australia is very call centre-focused. We have the cultural diversity to host call centres for other parts of the world, so it has actually become an export for us," says Jane Caldwell, specialist for Pivotal Software.
Despite the economic slowdown, 40 per cent of call centres said they would upgrade their CRM software in the next 12 months, according to a recent survey by research house callcentres.net. This translates into a potential market of $540 million. In addition, they will spend $150 million on desktop PCs, $145 million on switches, PABX and automatic call distribution, and $150 million on speech recognition. Total expenditure was put at $1.5 billion over the next 12 months. Furthermore, the study showed $8.8 billion will be spent in ongoing costs, $1.5 billion of which will go directly towards technology.
By all accounts, CRM still has a mighty long way to go. Siebel, the market leader in the CRM space, posted revenues of $US1.795 billion for 2000, a massive increase on its 1999 figures of $30 million. The US-based firm will release its Q1 2001 figures this week. Creighton is not divulging whether or not the soggy market has made a dent, but says the tough times are positive in the sense that they force businesses to examine what their core is.
"They increase key metrics to drive the bottom line," he says. "This means attracting new customers, retaining current customers and cross and upselling, all of which can be achieved through CRM. In some ways, [CRM] isn't optional. There's a competitive threat here and that doesn't change just because the market is slowing."
Siebel boasts that the benefits of implementing a CRM solution include a 21 per cent increase in customer sales and employee productivity, a 16 per cent revenue increase and a return-on-investment period of 10 months.
Trevor Westlake, managing director of location-based mapping firm MapInfo Australia, says businesses are waking up to the fact that it is cheaper to keep an existing customer happy than it is to attract a new one. "To find a new customer - a conquest sale - is six to 20 times more expensive than to retain a customer and keep them happy. Thus, there is a greater need to identify who the customer is and what they want," he says. "More decisions made in the corporate world are being based around location-centric statistics, as companies try to dispel myths about who their customers are and who they should be. Once you visualise data it becomes much clearer. It brings the data together and consolidates the contributing factors."
Opportunities and warnings
CRM is a highly integrated solution that bodes well for SI's and VARs, however, Pivotal Software's Caldwell warns it requires a highly skilled subset and is not an opportunity for everyone. "Integration is more complicated than imagined and often costs far more than the price of the actual software," agrees Bill Lyons, COO of callcentres.net. He feels smaller companies are the real domain of the independent resellers, as they can start from scratch without the complications of large legacy systems. Piecemeal environments present the biggest headaches for SIs and VARs, although solutions are quickly becoming more "open". Interestingly though, poorly integrated IT systems are number two on the callcentres.net list of primary factors in failed CRM solutions. The number one reason is a company's inability to change its culture from a sales focus to a customer focus, accounting for 40 per cent of failures. Cost accounts for 22 per cent and internal conflict a further 12 per cent.
SIs and VARs are becoming increasingly aware that they have to involve all levels of an organisation if they want to get the solution right, from call centre staff, CIOs and marketing, right up to the management heavyweights. At the end of the day it's the CEO who will give the final nod, so you'd want to make darn sure the project has her/his support, says Caldwell. She says nine times out of 10, people who are too low in an organisation will pitch CRM solutions. "A lot of the opportunities come through the systems integrators, but they simply don't have the ability to drive it all the way," she explains. Besides, cultural change has to filter from the top down.
Cracking the SME sector
The rise in Web-based solutions has opened the door for ASPs to lease high-end CRM solutions to small and medium companies that typically can't afford the outlay. Melbourne-based ASP Premier Technologies leases half a dozen varieties of CRM templates to customers as a ready-to-go solution, using E.piphany software at the backend. Premier directs the customer to an IP address and gives them a log in, and they are operational as soon as their carrier lines are installed. The system does, however, come with a bag full of security and bandwidth issues normally associated with ASPs, but it has the advantage of a low up-front investment and flexibility.
Outsourcing of CRM solutions is also on the rise, particularly at the SME level.
David Blumentals, CEO of Next Results software house, says he is selling an increasing amount of CRM solutions though vertical channels, such as accountants. The smaller of these niche resellers are struggling with the value-add business services when coupled with their existing workload, and are turning to Next Results to act as their outsourced services arm.
At this level, Next Results is being asked to perform as both integrator and consultant because of the customer's lack of understanding about what they want to achieve. "We'll go in to consult on accounting and come out having sold them a CRM system because the problem is actually in sales and marketing," says Blumentals. "These kind of projects usually require a lengthy consulting process to grasp the full extent of the problem, and that's not always billable."
Dressing it up
Web, e-mail and ebusiness is becoming a bigger focus as organisations struggle to manage the customer relationship past the first click. CRM has fully recognised the need for multi channel management.
Speech recognition is also
slipping into this category, as
voice-control systems replace the traditional touch-tone options. This has made automation possible for complex transactions such as buying and selling shares, and booking flights to and from infinite destinations. Accuracy is rated against transaction completion and stands at around 90 to 95 per cent, according to Peter Chidiac, ANZ country manager for Speechworks International. Nevertheless, some environments are more successful than others, with directory assistance applications proving one of the most difficult problems.
Chidiac feels overcoming a customer's psychological rejection of an automated voice is as significant as the accuracy of the technology. "It's not about recognising a word, it's about how you handle the call. The user interface design has to give the caller the comfort level to continue, it has to guide and help without treating them like an idiot," he says. "At the end of the day, it's about what the customer wants to achieve when they pick up the phone and whether they get it."
Vendors are also writing more industry-specific functionality into the products, which is bringing more verticals on-stream. "Customers are asking for tailored solutions in order to do things better than their opposition," says Blumentals.
He feels the market is heading towards a more sophisticated level that will see higher integration between the Net, faxes, copiers, mobile phones and other office gizmos. This will bring with it a whole new challenge in integration skills and provide tremendous opportunities in the channel. "It means there'll be more work than we can poke a stick at," he says.