Why CRM? The Business case for CRM

In virtually every industry and every global region, forward-looking organizations are investing in customer relationship management (CRM) technology to support the adoption of more customer-centric strategies. Examples of leading, global companies with major CRM initiatives underway are shown below:

Tourism Marriott
Organizations are adopting CRM and related technologies because they understand that having the technology to execute a customer-centric strategy is a business imperative. Just as back-office automation became critical for competitive success in the last half of the twentieth century, the application of technology to front-office processes—sales, marketing, customer service, and partner and employee relationship management—is now an imperative for success in the new century. Organizations that understand the strategic value of CRM technology to achieve dramatic increases in revenue, productivity, and customer satisfaction will have a significant lead on their competitors who lag in the adoption of this technology.

The Core Components Of CRM

Although CRM software can deliver a wealth of benefits, many companies fail to appreciate that technology is just one component of a successful CRM initiative. With the addition of Siebel CRM, Oracle’s experience with more than 5,000 CRM initiatives has shown that the most successful companies approach CRM as a complete business strategy, focused on improving the way a company markets to, sells to, and provides service to customers. When implemented effectively, a CRM strategy results in greater employee, partner, and customer satisfaction and an improvement in an organization’s financial performance.

	The following components are vital to any CRM initiative: Effective customer segmentation Integrated multi-channel strategy Well-defined business processes The right skill sets and mindsets The right technology

Effective Customer Segmentation
Customer segmentation—the process of dividing a market into discrete customer groups that share similar characteristics—is a critical component of a CRM strategy. Customer segmentation allows an organization to understand which customers are most profitable and how to most effectively market to, sell to, and provide service to these customers. With this knowledge, a company can determine which investments will drive the greatest returns.

Segmentation begins with the development of the customer profile.The customer profile encodes, for example, observations about which offers appeal most to the customer, which channel(s) the customer prefers, which product attributes the customer values most, how much the customer has spent in the past and is likely to spend in the future, and other issues of strategic relevance.

Integrated Multi-channel Strategy
Companies today can no longer compete effectively with only one channel. Not so long ago, most organizations had one primary distribution channel. Today, however, market forces and new technologies are dramatically changing traditional channel structures. Whether through the click of a mouse, a toll-free call, or a visit to a store down the street, today’s customers can deflect to a competitor with unprecedented ease. In this climate, a single channel simply cannot serve customers effectively. Complicating the marketplace even further, customers traverse channels in varied patterns—from the Web to the call center, back to the Web, and so on—while expecting to be recognized every step of the way in an ongoing dialogue with the organization. As a result, organizations need a clearly stated, integrated, multichannel strategy that satisfies the following requirements:

• Aligns the right products to the right channels
• Balances customer needs and channel costs
• Enhances the customer experience

Well-Defined Business Processes

Automating an inefficient business process will only accelerate the pace at which an organization achieves poor results. A CRM strategy, therefore, must focus on redesigning customer-facing processes based on the perspectives and needs of the customer. Table lists several processes that should be examined when developing CRM strategy:

Each of these processes needs to be examined—not in isolation, but in terms of the way they are linked to other processes.

The Right Skill and Mindset
Because a CRM strategy requires a company’s various departments to work more closely together, it changes the dynamics of how people interact and how a company makes decisions. While CRM technology facilitates collaborative decision-making, this very virtue can create tension in fragmented organizations whose members take proprietary attitudes toward data ownership. Managing change is thus critical when implementing a CRM strategy.

The change management required by CRM entails the realigning of skill sets and mindsets. Teaching technical skills without changing attitudes will lead to poor user adoption—one of the recurrent hallmarks of failed implementations. To support the culture change that CRM requires, many companies have found it necessary to realign their reward systems. At Cisco Systems, for example, salespeople receive commissions for repeat orders that come in over the Web or through the call center, because Cisco Systems wants its sales force to drive as much business as possible through these lower-cost channels.

The Right Technology
The right technology is the final linchpin in a CRM strategy because it enables an organization to track every customer interaction, regardless of where, when, or how the interaction occurs. The right technology will satisfy the criteria listed below.

     ◊ Multichannel Support
       A CRM solution must provide an integrated family of sales, marketing, and        customer service software applications across all channels, including field        sales and service, call centers, resellers, and the internet.

     ◊ Industry-Specific Functionality
       Regardless of the amount of pre-built functionality a CRM application        offers, enterprises typically develop supplemental functionality so that        their CRM solution fits their unique business processes and needs.

     ◊ Global Support
       CRM applications must also provide multilingual, multicurrency support as        well as support for multiple time zones. With this support, global        organizations can implement the applications in multiple languages while        maintaining a single, unified repository of customer data across the        different languages. This allows organizations, for example, to consolidate        sales forecasting information across different global regions and to analyze        data regardless of the language of the underlying customer interactions.

     ◊ Flexible Deployment Options
       Companies of all sizes utilize CRM technology to better meet the needs of        their customers. As CRM initiatives expand across regions, functions,        channels and markets, CRM vendors have introduced a variety of        deployment options including web hosted, private hosted, on premise and        combinations thereof. The selection of the correct deployment option is        critical to the success of CRM within an organization.