e-CRM: knowing who your profitable customers are

It’s said so often by us all, but it really is true: ‘Customers are the heart and lifeblood of the business.’ And so meeting and exceeding those customers’ expectations are fundamental to the success of any business. Fact is though, most manufacturing firms would sooner invest in a piece of automated machinery for the shopfloor, than buy new marketing software or CRM (customer relationship management) to support some kind of airy fairy customer-focused strategy. That’s without even venturing into the world of e-CRM and the web. But the point is, that automated machine you buy is useless without customers to feed it. CRM is growing rapidly. There’s now a vast market, worth £1.8 billion per year in the UK alone (according to analyst Gartner), spreading across the business world. And the software has now become ‘e-CRM’, signifying the increasing importance of the Internet. But what is e-CRM exactly? Neil Robertson, author of a book (released last month), entitled ‘eCRM: the 29 most common mistakes,’ is co-founder of a consultancy firm called 30/30 Vision. It focuses on small to medium sized UK enterprises (SMEs), offering e-CRM advice and implementation services. Robertson defines CRM very simply as, “a process of finding, winning, keeping and growing the customers for any business.” He goes on to say that to provide e-CRM, “One must find, win, keep and grow more customers, with greater efficiency and effectiveness through the automation and integration of the sales, marketing and customer service processes using the latest Internet technology associated with your website, corporate intranets and extranets.” Not trivial. And he states there’s a general lack of integration of these activities at present within most UK businesses, but that CRM can help by, “delivering access to all your relevant business information through a single screen. CRM gives you ‘structure’ and ‘workflow’, the idea being to give your sales and marketing staff instant access to customer data at all times of the day or night. The theoretical argument for e-CRM is pretty clear, although how to get there in practice is perhaps less obvious. It extends the way you are able to market your company, products and services, delivering highly personalised content that is relevant to each company and individual. Robertson explains further: “All enquiries can be tracked, from first contact, subsequent on-going marketing activities, through the sales process to final outcome, enabling sophisticated analysis of each marketing activity.” And Kevin Lucas, CRM researcher for industry analyst AMR Research, says manufacturers face three important challenges when adopting CRM: “First, they have to integrate customer information received by post, telephone, personal visits and the web, into one central hub so that it holds details of all transactions and contacts with each customer. And second, they need to update that information constantly, and give staff access to it at all times. Third, you need to gain the ability to anticipate customers’ individual preferences on the strength of their trading history so that they can be offered the products and services most likely to appeal to them.” Put like that it sounds quite easy really. But Lucas advises caution here: “The costs of e-CRM range from a few thousand pounds for a simple web-based system to several million for the most sophisticated. But the holy grail here is always the issue of integration.” And by ‘integration’ he means ‘linking’ your front-office web site to your back-office sales, marketing and other business and manufacturing management software, ensuring that all the relevant information from your disparate databases is maintained in one central ‘hub’. Confusing marketplace In a survey report this year by AMR, ‘Is CRM really working?’ Lucas says there are many elements to a CRM system. “It can range from simple e-mail engines to sales force automation, call centres and data mining, sophisticated sales product configurators and personalisation software. The problem for users is knowing which vendor can do what. It’s confusing out there!” He goes on to say that, “Of the 100 users surveyed, it was clear that processes and people, not software, achieve benefits. Don’t base your strategy on the vision or reputation of a vendor – base it on your own vision.” Andrew Munday, head of solutions marketing at SAP UK, agrees that technology on its own is not the answer: “CRM to me is not a system, it’s a culture. We’re certainly finding in our discussions with users that we’re having to help them understand that they need to look at their customers’ needs and see how they can focus their organisation before looking at how they deliver through IT solutions and business systems.” Exactly. And companies have to start viewing the customer not in terms of the value of one small transaction, but over the longer term. Professor Adrian Payne, Cranfield Business School, explains: “The whole point of CRM is how do we build relationships with select customers to increase shareholder value? Too many firms these days introduce CRM as a cost-cutting tool.” Just to put some perspective on what’s actually happening out there in the CRM sphere, a report earlier this year by Gartner, warned us of, “increasing numbers of project failures within CRM.” And it stated that, “32% of projects failed [ie due to poor adoption rates, lack of measurable benefits and improvements] because little or no use was made of the technology 12 months after deployment!” So getting employee buy-in is crucial here. Convincing your staff that their investment in getting information from customers is totally justified by the benefits and results achieved from having it is the key. But statistics should not discourage companies from adopting an e-CRM strategy. Although the current CRM market is a frantic, confusing one – about 500 vendors claim they actually sell CRM software – Gartner predicts that only 50 vendors will survive until 2004. At the high-end of the vendor tree are companies like Oracle, Siebel, Clarify (Nortel Networks), and Vantive. In fact, Oracle claims to have solved the whole integration issue for us all. Last month it launched its “global CRM in 90 days” campaign, with Jeremy Burton, Oracle’s vp products and services, saying that “Many CRM implementations have failed due to companies spending too much time integrating different CRM software systems from four or five ‘niche’ CRM vendors. We don’t believe in implementing best of breed multi-vendor kits – it will cost too much and take longer to deploy. We can host your CRM for you, and have it up and running in less than 90 days. And it will cost you typically between $150k and $395k.” But three specific mid-market vendors appear to rank very highly with market analysts: Pivotal, Onyx and Epicor Software. And none of these vendors is talking huge costs for their CRM products. A typical project with these vendors will cost around £100k for a 100 to 300-user system, with another £100k to £200k for service costs to implement the software and customise it to meet specific business needs. There’s other reasons to adopt CRM though – analytics. Fisher Scientific, a manufacturer of inorganic chemicals and solvents, based in Loughborough, invested £100k in February this year on some analytical CRM from RCMS. The software captures marketing, sales and product data, and will be rolled out to other European sites in Germany and Holland later in the year. The implementation is for 70 users with remote access for regional field sales staff. Ray Richardson, information resources manager at Fisher, explains: “We’ve got over 35,000 customers and 75,000 product lines. For us, the main driver to building a data warehouse CRM application was to harness our powerful customer and product data to enable ‘gap analysis’ of our customer base, and to increase complimentary product selling opportunities for our field sales team. “The sales potential of just two successful gap analysis campaigns would enable us to see ROI for this project within 18 months,” he adds. And a final word from AMR’s Lucas: “We’ll see a trend towards the use of ‘proactive’ software. Analytical CRM told you what customers had bought. Proactive CRM will do much more. Imagine you are in a call centre taking telephone calls. The software will now tell you exactly what to say to the customer. It looks at analytics, informs you when the caller last telephoned or e-mailed the company. It will inform you that the company has graded this client as ‘likely to defect’ and tailors your response accordingly.”