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Six things to think about before you spend more on CRM

29th Mar 2012
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Forrester's Bill Band highlights the burning issues that businesses must consider before investing in CRM.

In spite of the challenging economic environment, CRM spending continues to grow. While other categories have suffered collateral damage from the global financial disaster, CRM has expanded into a $13bn industry with projected growth.
CRM’s increasing appeal is in part a response to the changing competitive landscape. It is becoming difficult for brands to differentiate on services and products, while customers are able to use the internet to research purchases and make informed decisions, and in the event that they are unhappy with a business they can communicate their displeasure with an audience of millions across social platforms. Welcome to the ‘age of the customer’.
“These trends have been evolving for many years but they've become even more acute and we can see that the only way that's acceptable is to be more customer obsessive,” says Bill Band, principal analyst and vice president at Forrester Research.
“On a more operational side, if you buy the thesis that the ‘age of the customer’ is upon us, then that reinforces that you really have to have the customer interaction processes and data and so forth that we all associate with CRM to be more effective.”
Forrester recently found that while 55% of the 500+ large organisations it surveyed had already implemented a CRM solution, many are already prepping further investment into upgrading their tool set, with another 23% planning to adopt a CRM solution in the next year or so. So if you’re one of those businesses about to pump funds into a CRM programme, what should you be keeping in mind to ensure that you get the maximum bang for your bucks?
In a new paper, Navigate the Future of CRM, Band has outlined some of the emerging trends that are characterising the CRM space. caught up with Bill to discuss some of the points raised by his paper – and some of the burning issues that businesses need to consider before they spend more on CRM.

Think about the bigger picture – not just technology but also strategy, people and processes

“In my experience, people still don't often think about the problem and the solution from the overall perspective. They still often gravitate to technology first. A lot of companies see it as a technology problem and so that's where they go first.
“To be successful in the 'age of the customer' you need a balanced approach and when people talk about the key trends in CRM it's not just about what's going on with technology - the other three legs of the stool have to be addressed.”

Think about the role that the customer experience plays in your strategy

“Particularly in B2C industries, there is recognition that if you can't differentiate instrumental or functional capabilities of your product and service then you're going to have to find some other way to do it. And the customer experience and all of the interactions that touch or impact the customer's perception with your company has become a more accepted and understood idea.
“You have to have a customer experience strategy. The experience that customers have is a consequence that needs to be designed and therefore when you think about business strategy at the highest level there's a level around your costs, and your distribution and your product development and there needs to be an experience strategy that informs all the rest of the decisions that you’re making.”

Think about how you can apply back-office disciplines to customer-facing operations

“Business process management (BPM) is usually focused on manufacturing or back office operational business processes. That philosophy really lends itself to operational activities and with the ability to analyse to cut out waste and improve quality and so forth. But if you think about customer experience and customer touch points and impacting customer experience we see that more and more companies are struggling with the business processes that cut across all kinds of different business functions that ultimately touch the customer.
“Therefore you need to have a different set of tools and a different mind-set to tackle those issues. There are now all these customer-facing process-centric interactions that companies have to manage and the disciplines of BPM and BPM solutions are now being applied to those situations.”

Think about big CRM vendors for complete solutions – but think about smaller players for innovation

“As the bigger vendors consolidate the industry they make it more possible for the client to get a more complete solution with all the parts integrated. Companies in the past who've tried to manage many different best-of-breed solutions and hook them all together have found it a challenge. So as the bigger guys subsume the smaller guys ultimately it makes it a little bit easier for a company to centre on a particular technology stack or an IBM or a Microsoft.
“But the downside is that it's often the smaller companies that do the innovating and that is the classic in every industry. It’s the smaller players often that are not bound by traditional business models or thinking that often do the innovation. But not a lot of companies need to do the most leading-edge things - the tried and true is suitable for most of the situations.”

Think about how you are going to manage Big Data as part of your CRM programme

“For CRM, Big Data at the highest level is all about the notion of managing the exploding volumes of information available in the world, and in a company making decisions faster and easier and managing extracted intelligence from this explosion. It really is important in the CRM world. It permeates everything these days. The ability to collect and analyse and take action on this exploding volume of information both in the traditional transaction plus all the new social stuff is a real challenge and a real opportunity for businesses these days.
“From a vendor point of view, at the moment they have to say something about the fact they are a customer experience, social, mobile, Big Data company! Somewhere they have to hit all four of those points. But aside from the buzz, the idea of managing customer data and insight is central to the whole CRM thesis so more than other categories this issue will have more impact.”

Think about how the voice of the customer can drive change within your organisation

“We do see a lot more acceptance of the idea that not only should we collect information about the customer and collect social sentiment or so forth, but you link it to some wider purpose of getting that information into the organisation as a way to promote change and to inform employees.
“I have been hired by a lot of clients to do customer satisfaction analysis and the big issue is what's important to customers and how to track it and keep on making sure they are satisfied. So you do research amongst customers to try to define from their point of view what is important in their interactions with companies and that will result in a list of things that that will be the basis of customer satisfaction survey.
“And then I do the survey amongst the employees to say 'From your perspective, what do you think is the most important things to customers?' And I have found out that ultimately few people in most companies actually interact with customers. The sales people and customer service people tend to have a pretty good handle on what's important to customers, but as you start going into the mid-office, back office, finance, law - they don't have a clue. They are completely wrong about what is important. And then the real kicker – when I do these surveys a lot of the senior management are out to lunch as far as knowing what is important.
"The point is that it's not only important to collect this information about the customer, but you need to get it deployed and moved into the organisation so that people who otherwise would have no contact with customers really start to become more aligned with what customers are thinking and feeling and what's important to them. So we see more people thinking that way and using voice of the customer programmes more than just as a mandatory thing but as something that is a tool for driving change.”

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By paulsmith
29th Mar 2012 12:32

 An interesting piece that is a great summary of all that is wrong with CRM - in essence CRM is organisation centric. All of these items are about how the corporation looks outwards and uses CRM to feed it. However, if you want good CRM you need to think of one thing and one thing only - the customer. Then adapt your business to their needs. Simple it is not. But instead of spending lots of money on tech and consultants try a simple test - stand in the shoes of your customer and try to build a relationship with them; not to see them as fodder.

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