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CRM and Sugar

CRM and Sugar

Cable Accessories (Cabac) managing director Gordon Ketelbey knows that all his best efforts to get closer to his customers will be doomed to fail unless and until he can eliminate the "coffee round". On the coffee round, Ketelbey says, longstanding sales representatives routinely bypass prospective customers - however promising - in order to call on customers they know and love. It's an element of human nature and exceedingly difficult to counter.

"Once a rep has been flying a territory for three or four years, he's on the coffee round," Ketelbey says. "The coffee round means that he has got customers that he knows [and] he will drive straight past the biggest prospective customer that he could lay his hands on . . . because he doesn't get good coffee there."

For Ketelbey, overcoming the coffee-round culture starts with having a fully-integrated CRM system that keeps every customer-facing member of staff more customer-focused (see "A Premium Blend", page 86). It means embracing the use of captured sales information to run passive marketing campaigns designed to keep the information alive. It also includes innovative measures like the appointment of an opportunities manager to track and exploit business opportunities.

Meanwhile, market leaders like PepsiCo and American Skandia are appointing a chief customer officer (CCO) to the senior management team to act as customer advocate and to ensure delivering customer value gets at least as much priority as delivering shareholder value.

Know Thy Customer

True CRM covers all aspects of a company's business, aiming for complete integration, from its supply chain to its data warehousing strategy to its labour needs. Once a CRM implementation is in place, organisations can glean vital data about a customer's buying habits, desires and needs, which can then have a direct impact on the kinds of goods and services the company offers, its business and technology strategies and its staffing needs. The promise of CRM, which is an ongoing process, is that it can build customer loyalty and increase sales.

However, while the concept of customer relationship management (CRM) may be simple - you design your business around the wants and needs of your most desirable customers and they are likely to become better, more profitable customers - doing so can be easier said than done. It needs more than a keen focus on technology to get the equation right.

"In their quest to define a strategy to create and foster more profitable relationships with customers, enterprises should begin by first understanding the definition of the word ‘relationship'," writes GartnerGroup research director enterprise applications Neil McMurchy. "Relationship is a connection, association or involvement . . . between people. In many ways, therefore, the most important thing we could do as business people would be to employ cultural anthropologists and psychologists in our marketing department to build a more complete understanding of human behaviour."

Not that technology doesn't factor in the CRM equation, even if, as McMurchy puts it, that technology has often been described as cold, unforgiving and often frustrating to manage. Rather, the argument goes that enterprises that are succeeding in fostering more profitable relationships know how to meld the new "e-business" value they can derive from technology with a keen grasp of human behaviour to profitably unite buyers and sellers.

Or as Deloitte Growth Solutions CRM practice leader Greg Harbor puts it: when it comes to CRM, there's a growing recognition that technology is probably the easy bit. "Getting together all of your databases across the organisation to talk to one another and share the information and make sure you've got a CRM tool that allows you to create not only Web interactions but call centre interactions and direct interactions is relatively easy. To build in that cultural shift, that's the hard part," he says.

Changing Culture

CRM transformation cannot begin until the enterprise commits to becoming customer-centric, and initiates a change management process designed to transform people and processes. Without cultural change no CRM system can succeed in making the organisation more customer-centric. Cultural change, however, says Roche Prescription Medicines division marketing systems manager Graham Hutchison, can be a challenge. The division recently replaced an ageing DOS-based territory management system (TMS) with a new Visual Elk system for its 200 representatives who visit doctors, hospitals and pharmacies across Australia.

Roche's territory structure created one of the challenges. Since the company organises its representatives by product lines - meaning several Roche representatives may see a single doctor - the Visual Elk TMS had to accommodate this requirement. To provide a seamless "corporate face" to the doctor, the Visual Elk system automatically sends all call and related information to all representatives seeing that doctor. The system also maintains up to two years' worth of extensive call notes and profiling. Nevertheless, Hutchison knew technology alone would not be enough to meet the division's CRM objectives.

To address the associated cultural change issues, the marketing systems group devoted a year to a knowledge-sharing project. The aim was to move the organisation to a knowledge-sharing culture where all users would be as they would be to use the system. "The results of the project were quite interesting," Hutchison says. "We found the duplication of data was enormous. Data was often duplicated in other areas, and just the one piece of data could be in 10 different versions around the company."

That problem was comparatively easy to address compared to the cultural change issues associated with modifying the behaviour of people who routinely hoarded knowledge because doing so gave them power in their jobs. "We're trying to change those perceptions and have a very open environment," Hutchison says.

"We're moving to a content management system on the intranet where people are responsible for their own content but don't have to go through any programming channels to get that done. In the past, a lot of people would have had programmers who would do all the Web programming to put up the information that they want. With the system we've put in place, if they have access to it or authority, they can just edit its content right on the Web page," he says. The aim is to help give those people ownership of the system.

The division also plans to link content management to performance bonuses for head office staff. Roche Prescription Medicines has had a CRM system for its field force since 1987. Hutchison says field staff have long accepted that reporting according to the needs of the CRM system is a part of the job. Not so for head office.

Part of the rollout of knowledge sharing and access to the CRM systems has been to incorporate CRM reporting and responsiveness as part of the key performance indicators (KPI) for a position. "We're intending to write those [indicators] into job descriptions so that people will, as part of their jobs, be expected to record certain information in CRM systems that are on the intranet," he says. Meanwhile, the marketing systems group acts like a divisional IT group dedicated to offering CRM support and helping the division and its individual members to get the most of its CRM initiatives.

Tell Me What You Want

It's a direction many more companies are likely to head towards in the future. Catherine Rezak, president of US-based Paradigm Learning, says the main stumbling block for CRM is part of a larger e-business issue: companies simply aren't telling their employees what's expected of them when it comes to doing business online. Employees who don't understand the big picture of e-commerce cannot be expected to master the nuances of CRM, she says.

"When employees aren't able to wrap their arms around the whole issue of e-business, that's when companies should know they're in for some rough times," Rezak says."Companies may have a lot of different people thinking ‘e', but they're not thinking the same things. CRM might really be a company's key issue, for example; but if everyone is spending time and energy on making the Web page pretty instead, that's a bad sign."

Rezak argues many leading companies - even those with 50,000-plus employees - just don't get what's happening in the global marketplace today. "Even employees who do know what's happening walk around saying: ‘What are we doing about e-business? What is our strategy? Is there a strategy?'," she says. "One of the biggest barriers to changes in business is the company's culture and employee attitudes. A company owes it to itself and its customers to show employees what needs to be done to survive in the new marketplace. The reason companies have to change is not for the company's benefit but for the clients."

Bang for Bucks

Successful CRM initiatives - those getting the "biggest bang for their buck" - focus on achieving a complete cultural shift towards sales and service across the organisation, Deloitte's Harbor says. Organisations that succeed are those that recognise that not only their customer-facing workers need to become more customer-centric, but also all those on the fulfilment side. Projects focused on achieving such cultural change achieve fantastic results, he says.

Successful organisations have equally shifted towards a focus on ways to motivate and reward customer service, sales and other customer-facing staff across the organisation. "And I think what we're seeing in the market as a focus area for organisations is drawing on customer knowledge and intelligence," Harbor says.

"Early on in the piece, we saw a lot of organisations putting a lot of systems together to make sure they were capturing all of the information from the wonderful number of multi-channels with which customers could interact, but not really doing a lot with the information. They're now starting to focus very much more on analysing what that information means, looking at how it can allow them to be more effective and more profitable at the end of the day," he says.

Kevin Schlumpf, a partner with CSC's Consulting Group and solutions manager for the National Financial Services Practice, draws two conclusions from his extensive work with clients and the results of a recently conducted survey. One: everybody is pursuing some form of CRM solution. Two: most CRM efforts fail to live up to expectations.

"In our experience, we see several reasons for the limited success," Schlumpf says. "[One is that] many businesses treat CRM as a market basket of tools and technologies; however, this is short-sighted and ultimately doomed to achieve mediocre results. Only when companies understand who their customers are, what the needs of different customer segments are, the relative importance of each segment and the best, most economical means to meet the needs of each segment, will companies meet their goals of achieving long-term profitable relationships."

Companies must consider CRM a business problem, not a technology problem, Schlumpf says. Start by confirming the business issue to be addressed - be that retention, lack of growth in profitable customer segment, or anything else; build a business case and then ensure the implementation involves an integrated program of business process, organisational change and technology initiatives. "Inconsis-tent, non-integrated customer interactions typically lead to poor retention and acquisition," he says.

"There's an old saying: ‘A bad workman always blames his tools'," notes Kevin Rosen, director of the CRM Practice at Silverline Technologies. Sometimes failing to realise projected benefits from implementing CRM software packages may be due to functional or technical capabilities within the package itself. However, according to Rosen, the most likely reason that these projects may fail to deliver is due to the way the technology is implemented into the business.

"CRM is primarily about three things: people, process and technology," Rosen says. "The first two are paramount. They are key to the profitability equation and should not give way to technology. It is extremely important to focus CRM initiatives on the business issues, the customer relationship model, and the specific customer interactions within that model, before choosing any technology for implementation.

"Furthermore, once the technology is selected, it must be deployed within those predefined parameters to ensure success. Otherwise we'll find ourselves paving a gravel path instead of building an expressway."

In short, CRM should never been seen as a technology problem and should probably not even be implemented by a technologist. In fact, far too many organisations fall into the trap of deciding on a technology, embarking on the implementation of that technology and calling it CRM, says Price-waterhouseCoopers CRM practice leader Rod Bryan. "At the end of the day, because it is a business strategy, you need to start with a clear identification of goal and purpose; you need to map the processes that will support those objectives and then choose the technology that will enable it," he says.

Bryan says that aligning CRM with the business structure is one of the really difficult things now arising. "If you are going to implement CRM, you need to think about the business structure that you operate in. Are you really aligned around products? Or do you manage your business through the customer perspective." Without agreement on the right business strategy across all the lines of business that the organisation is embarking, the efforts are doomed to fail, Bryan says.

"For instance, call centres are typically driven by a desire to minimise costs. That's why they close down at six o'clock and why you can't ring your bank at 9pm for anything other than a report of a lost credit card. People in call centres are getting rewarded for minimising the service to the client. Other parts of the organisation may be calling for CRM to enhance customer value. Where the two goals are in conflict, efforts are likely to be undermined."

A related issue is that the functional scope included in a CRM program is often too narrowly focused, CSC's Schlumpf says. Often, deploying a new IVR (interactive voice response) unit in a call centre environment, or a new field force automation package, can represent a company's entire CRM solution. In reality, such point solutions should be seen as only pieces of the broader CRM puzzle.

"The power of CRM comes when companies are successful at cross-selling products and services across lines of business and customer touch points (channels)," Schlumpf says. "Operating at this high level requires looking at CRM holistically. CSC's definition of the scope of CRM includes not only customer-facing functions such as sales and service, but also marketing and information management. To be successful, companies need to understand the role each function plays and how they interrelate. For example, a good customer segmentation strategy only works when it is aligned with the actual customer experience."

System Failure

One of the simplest ways of achieving cultural change may be to introduce significant organisational change. A recent Gartner survey showed 75 per cent of enterprises are in the midst of a CRM system implementation, yet less than 25 per cent have actually organised around the customer. Instead, they were organised by product, departmental-functional area or by geography. McMurchy says that organisational model, combined with the fact that executives tend to be compensated by revenue and/or profit by product or geography (versus customer) can be potentially crippling to CRM initiatives.

Most companies' CRM initiatives to date have been departmental at best - that is, designed to solve a single department's functional problems, according to McMurchy. In the future, he says, true value will come from understanding that CRM is an enterprise-level initiative that presents a unified organisation to the customer.

"The trends of globalisation and increased clout of large enterprise customers, as well as the increasingly larger communities of customers within e-marketplaces, are bringing industrial-age organisational structures to their knees," he says. "In a world driven by the faster pace by which customers will switch suppliers, more nimble customer-centric organisational structures are needed. However, few organisations realise the problem and continue to technologically pave the industrial-age paths.

"Enterprises need to organise around customers and customer segments by structuring teams of multi-disciplined members by customer type and by offering incentives to deliver customer satisfaction," McMurchy says.

On the other hand, Cutter Consortium senior consultant Ram Reddy warns against the temptation to go for too radical an overhaul. "Most companies are organised along functional lines - sales, marketing, finance, accounting and the like. The cultural change issues and organisational dynamics involved in shifting the entire company's functional departments to focus on the customer are enormous to say the least."

Reddy argues a much easier approach might be to focus on group functions across the organisation "that touch the customer". There are few companies that are focused exclusively on sensing and responding to a customer's needs on an ongoing basis, he says. Most have to work in rigid corporate environments that are organised to achieve economies of scale and functional efficiency.

"As organisations have grown in size over time, different functional groups have acquired IT solutions at various growth stages of the organisational lifecycle. These disparate systems are typically best of breed in that period of time and could not integrate well enough to present a ‘single face' to the customer," Reddy says.

He notes that, in the past few years, the advent of Internet technologies that allow disparate systems to communicate with each other have made this "single face" technologically feasible.

CRM Best Practice

CRM is a quite complex strategy to realise, GartnerGroup says. Without a solid vision, strategy and focus on best practices in key strategic areas, most CRM initiatives will fail to produce measurable returns.

- Recognise customers as stakeholders, balance the scorecard, promote them to senior management, institute the position of CCO.

- Develop and continually maintain insights on customers; survey and involve as well as analyse customer data.

- Organise around the customer and not products or geographies.

- Develop and provide incentives for a collaborative culture internally and extend it to customers.

- Implement processes based on customer benefits; start with customers then work back - remove organisational barriers to customer satisfaction.

- Integrate channels with the rest of the enterprise and with suppliers.

- Behave well with customers and deliver value during each interaction.

- Prioritise technology investments based on delivering better customer insight, access and interactions.

- S Bushell

A Premium Blend

Integration is key to Cable Accessories' (Cabac) CRM efforts, says Gordon Ketelbey, the company's managing director. Most computer marketing systems tend to be isolated from the core company systems. When systems do bolt, Ketelbey says, the result tends to be messy, clunky and support-intensive, and leads to numerous data mismatches. Of course, if the systems don't work they way they want, people simply won't use them.

"What I am doing with the SAP CRM systems is to go with a fully integrated structure," he says. "That way I can have somebody who starts life as an absolute wild prospect, who then moves on in life to become a very solid customer. That moving period could be quite a significant [time] period with a huge amount of sales activity where I am phoning the guy, sending him letters, running promotions, having reps call on him, noting the result of that call, and so on. All of that is, in fact, lodged and attached with the prospect.

"When he then becomes a customer, I can then run marketing programs and all of that interlinks with the tele-selling side of things."

Meanwhile, the opportunities manager is charged with gathering market information from a variety of sources, including wholesale stores, sales representatives and newspaper cuttings - anything that will help track possible business opportunities. All opportunities are logged into Cabac's SAP CRM system and then "fed" to the sales force via the SAP Mobile Sales module.

"The opportunity comes from the opportunities area; that opportunity would then create an activity so something has got to happen - you've got to call, you've got to do this, you've got to do that," Ketelbey says. "It becomes a holistically integrated structure whereby a person in the back office entering something into the computer absolutely automatically presents all of this information right out in the field with the sales guy. Then, if something happens, it goes back up to the person in the back office. You end up with this total interaction.

"In an industry such as mine, sales people move on and companies move on and things chop and change around the place," Ketelbey says. "What traditionally happens is that sales prospecting is done in a reasonably haphazard manner by the sales representative on bits of paper in the back of his diary and all history of those relationships is lost when you lose the rep.

Ketelbey believes his company's CRM system can deliver massive benefits, including massive sales efficiencies.

"I will be Johnny-on-the-spot and know about things before they happen. I'm not going to lose the contact history of customers; and the database management I'm going to have of general customer data, leads, prospects and people to which I may just passively market is just going to grow and grow," he says. "We will hopefully maintain a much higher level of accuracy than is possible under normal systems because we are working with active data that is used in all areas of the company at all times." - S BushellThe Keys to Success Do . . .

Look for ways to measure how customer behaviour should change once CRM systems are deployed. "What CRM systems are potentially quite good at is keeping track of behaviour," says Robert Shaw, a marketing professor at Britain's Cranfield School of Management. When you know what customers are doing differently, it's easy to calculate how your company is gaining financially.

Take the long view. If you're using CRM to support activities you've never measured before, you may not be able to promise first-year returns from your investments, suggests Doug Holden, managing director for customer management solutions with KPMG Consulting (US). Do the project in phases and use initial results as a benchmark to justify the next installation. "Just acknowledge the fact that you don't have good historical data," he says, and decide what measures will reveal whether your project succeeds.

Focus on which of the problems CRM is supposed to fix. If you know what's not working, says Shaw, it's easy to come up with metrics that show whether your technology investments are improving your financial picture.

Don't . . .

Rely on cost savings to deliver value. They're not irrelevant, says Jonathan Copulsky, a partner with Deloitte Consulting (US), but they're not the point. Focusing on efficiency doesn't help you get your customers to buy more, and cost-cutting measures might even turn customers off.

Equate past customer satisfaction with future customer value. "You can be delivering horrible value and recording 100 per cent customer satisfaction," says Stephen Diorio, president of IMT Strategies, a marketing and technology research company affiliated with Meta Group. Emphasise measures that tell you whether the margin of revenue or profit of a customer increases because you used CRM technology. - Elana Varon

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