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Australian Print Group (APG) has a blueprint to become a future power in the global media market, not to mention a significant provider of services for content management through its e-commerce environment.

If it succeeds, APG knows it will be down to just one group of people - its customers.

Now there's nothing unique about that recognition in Australia's CRM (customer relationship management) landscape. However, where APG distinguishes itself from other companies travelling this route is that with a CRM solution already in place, the company is moving on to a second CRM incarnation well before many Australian organisations have even started to take their first steps. One of Australia's leading media technology organisations, with revenues of $42 million and 360 staff, APG's industry is changing almost daily. In response, the company tries to constantly anticipate its clients' business strategies and develop its own systems in sync with these. Part of that effort involves expanding and further customising its CRM system. APG wants to end up with a much more flexible system that links directly into a number of its larger clients' own internal systems. It's that second-stage development work that would seem to put APG comfortably ahead of many organisations in the Australasian region in regard to CRM planning and implementation.

According to a new research report, Customer Relationship Management - Strategy & Implementation in Australia & New Zealand from callcentres.net, corporate Australasia now considers CRM one of the most important business initiatives.

Yet while adoption of the CRM business maxim is rated a priority by top organisations in the region, less than half (46 per cent) of Australasia's top 1050 organisations have some form of CRM strategy and implementation under way. While "a considerable number of organisations not currently planning for CRM" intend taking a CRM strategy on board in the future, at this stage they deem it too early for them to consider.

While senior executives consider CRM important, they rate it as no more significant than other initiatives under focus including business re-engineering, Internet/e-commerce implementation and GST. The report concludes adoption of the CRM business maxim is fairly strong among the top organisations in the region. However, it finds most (73 per cent) don't yet have sign-off by the board or CEO, and CRM planning and implementation is still largely at the embryonic stage in this market.

Still, more than 40 per cent of organisations have already undertaken the initial step of conducting a thorough review of current business processes and systems, and 30 per cent are currently in the process of undertaking this step. Some 30 per cent have already developed a formal business plan for their CRM strategy, another 20 per cent are in the process and 21 per cent intend to do so in the next 12 months. By that time, 70 per cent of respondents will have completed these two critical steps in the planning process.

Callcentres.net estimates that only about 5 per cent of respondents currently have a fully implemented strategy in place. Respondents typically need three to 12 months for the planning process and about a year for implementation. So for an "average", the CRM process will take about two years - not an excessive period given the size of these projects in most organisations.

Martin Conboy, CEO of callcentres.net and also a director of market researcher ACA Research, says 90 per cent of organisations operating call centres are experiencing or anticipate an impact or change to their call centres as a result of implementing their CRM strategy. Around 35 per cent expect an increase in size and 68 per cent are upgrading technology.

The Big Spend

Survey respondents spent $2.14 million on average on CRM strategies in the last financial year, with a 36 per cent increase expected for 2000-2001. However, 41 per cent didn't specify their level of investment, either because there was no set budget allocation or because they considered the information commercially sensitive.

Conboy says it's clear some companies are spending hundreds of millions of dollars on an ongoing basis to implement effective CRM across their organisations. Most of that money is being allocated to three key investment areas: IT hardware and application software, business stra-tegy consulting services and systems integration. "As can be seen by budget allocation, CRM is not just about buying the latest technology, it's about a refocus of business goals to become an outward-looking customer-centric organisation rather than a traditional inward-looking sales company," he says.

That's certainly the goal of the Institute of Chartered Accountants in Australia (ICAA), which is spending $3 million over three years on a CRM implementation that will also provide the foundation for its push into e-commerce. Deputy CEO Allen Blewitt says the organisation is keen to review a number of its core businesses and core processes and CRM will be part of that. "We're also trying to enhance the loyalty of our members to the Institute and trying to re-engineer a whole customer-service strategy and I think this is going to provide us the vehicle for doing so," he says.

Meanwhile, Blewitt sees a significant cultural change as one of the spin-offs from embracing CRM. "In the long term, we're going to have to be much more customer-obsessed, and the changes that will flow from the introduction of the CRM will force that cultural change," he saysYou Know It Don't Come EasyOrganisations may be embracing the CRM philosophy, but that doesn't mean they expect it to be easy. Many report they're facing several key impediments to effective implementation, including resource availability, poorly integrated IT systems, interdepartmental conflicts, skill shortages and cost.

Blewitt knows just what they mean, describing the process of introducing a CRM as painful and complex, particularly where companies are moving from traditional database structure. "The more work you can do before you sit down with your supplier, the better you'll be," he says.

The survey suggests 97 per cent of organisations have either encountered or anticipate barriers to the implementation of CRM, including: the battle to change the culture from traditional sales to a customer focus; poorly integrated IT systems; internal conflicts between various departments; and a shortage of skilled resources.

Those at the battlefront of CRM implementation concur with the findings.

Link Communications Corporation provides contact management, messaging and call-answering solutions. It also provides CRM solutions to a wide range of clients. National marketing manager Paul Shepard confirms that apart from the high cost, integration is the number-one barrier to adopting CRM.

"At the moment, most people have sales-tracking systems, they have billing systems, they have a data warehouse, they have stock dispatch systems. What they don't have is all of that in one spot that everyone can access and all of it communicating with each other," he says. "But for our clients the biggest barrier is the cost. You're looking at $.5 million to $3 million. What business can really justify that when they're looking at it in terms of actual benefits?"

Canon Australia also recognises very real barriers to implementing CRM. Canon's strategy is heavily focused around its call centres but will also tie in its technical field workforce. Implementation will commence around December this year and roll out over December and January.

According to call centre team leader Paul Savage, Canon's strong focus on building relationships with customers means it views having a CRM strategy as a critical part of its business. "With all of our divisions, especially within our customer service, it's important for us to know what our customers' needs are and what their wants are and how we can best help them achieve those," he says.

However, Savage agrees that even with Canon's own work in the area going well, it will inevitably face some barriers to successful adoption. Not least of those must be the twin fears of the new and of failure. "When you've done something a certain way for a long time, there's always a fear of whether any new technology is truly going to be able to live up to expectations or whether you're better off staying with what you know is working at that moment," he says. "As with anything, it's important to try things and give them the opportunity to be successful, and it's a process of continual improvement."

For Savage, the best way to minimise the impact of barriers is to accept their inevitability. "What we do is not going to be perfect, and that much we're aware of. I think it comes down to being realistic about what can happen and what will happen and getting as close to the mark as we can and then refining it from there."

Measured Success

According to the callcentres.net survey, taken together, almost one-third of respondents are already seeing a quantifiable return on investment (ROI) from their CRM strategy, although New Zealand (at 44 per cent) is well ahead of Australia (24 per cent). ROI was measured predominantly by customer retention tracking, customer satisfaction surveys and feedback, and by revenue tracking. The report's authors see no surprise in that difference between the New Zealand and Australian experience, arguing the size of the smaller New Zealand market goes part way to explain why a larger proportion of respondents can implement "quick wins" sooner.

The survey also shows respondents whose boards or CEO have signed off on a formalised CRM strategy expect to see a return on investment within the next 12 months, with 54 per cent having already achieved ROI. That kind of thinking makes perfect sense to Orange marketing director Michael Johnson. Orange One is a service of Hutchison Telecommunications (Australia) Limited specifically designed to meet the accelerating demand for additional phone lines and to provide competition in local call services.

Orange is relying on SAS Institute to provide data mining software and consulting services to help it meet its customer growth targets. The company hopes the ability to analyse large amounts of data will help it target its marketing efforts more effectively as it endeavours to build its customer base to more than 400,000 by the end of 2002. Johnson says Orange believes CRM is worth the investment, both in terms of building reputation and growing the business.

"The main point is that our CRM strategy has a high return on investment because the cost of retention is less than the cost of acquisition. Orange has found that effective CRM strategies can extend customer life by 20 months and increase customer profit by 50 per cent," he says. "Also, the involvement of many areas of the business gives every person an understanding of the importance of customer interactions to relationship building. Staff become more involved in customer issues, both outside and within their own areas of influence."

Johnson says becoming more CRM-aware as a business is also good for Orange in areas outside the traditional "it's-a-new-buzz-word-for-a-call-centre" mindset.

For a start, CRM is good for Orange as a tool for developing organisation skills because of the way Orange defines CRM: it becomes both a process that requires learning to succeed and learning has other benefits for the organisation; and it is a process that requires logical thinking, analytical discipline, good communication, high involvement and teamwork.

Johnson says effective CRM activity will also leave Orange better positioned as it will enable the organisation to attract the right customers and allow it to develop strong and lasting relationships whilst also providing tangible benefits to the business.

Walk the Talk Time

The survey reinforces the notion that getting ownership and support from senior management and the CEO for implementing CRM is critical to its success. Respondents indicated the CEO or managing director is typically the key person involved in making the strategic decision to implement CRM. As one CRM executive put it "The most critical factor - the only one that matters - is CEO (high-level) sponsorship".

To date, 26 per cent of respondents have created a new executive position to manage CRM strategy and implementation. Responsibility for the day-to-day running, performance and success of CRM strategies typically rests with either the marketing function or customer/client service /relationship function, or is given to the divisional general managers of each key department involved.

On the other hand, overseas influence is not partiularly strong in the region, with only one in five organisations being influenced by their head office or parent company.

Callcentre.net says the strategic goals of increasing customer satisfaction and increasing customer retention and loyalty are the long-term goals against which most respondents are measuring their CRM strategies.

However, resources remain a problem, with more than two-fifths of respondents indicating they haven't got adequate staffing resources to develop or implement their CRM strategy, and the biggest shortage is in IT systems integration experience. Other constraints on resources relate to Internet and e-commerce project development and CRM strategy development. The lack of appropriate skill sets could potentially hinder implementing CRM initiatives in many organisations.

It's hardly surprising there's a concomitant high demand for external consultants (currently used by 49 per cent of respondents).

Nice Profile

Using data more intelligently through database mining and profiling techniques for targeted marketing campaigns is a key component of a successful CRM project. Profiling and loyalty programs regarding customer needs and wants are currently the most popular database mining techniques. Two other techniques stand out as being key practices for the future: customer lifecycle, and purchasing characteristics (value).

Another key aspect of CRM is product bundling - widely practised in the marketplace - with 61 per cent already doing so and a further 20 per cent intending to.

However, assessment and selection of appropriate CRM tools appears to still be in its infancy, with only 31 per cent of respondents having selected and/or implemented their CRM tools. A further 37 per cent of respondents indicated they are either in the process of selecting tools and suppliers or will do so in the next six months.

Although more than half of all respondents prefer to use a fully integrated CRM technology solution, there is also a considerable proportion (40 per cent) who are not looking for a holistic solution from one company but prefer to use various companies to provide their CRM technology.

The main types of CRM architecture software that suppliers will be expected to provide are:

Internet/e-commerce tools

Call-centre management software

Database warehousing

Sales force automation

Are We Web Yet?

E-commerce/Web servicing is viewed as an integral component of CRM, with an estimated 95 per cent of respondents intending to establish or upgrade their Web presence within the next 12 months to more effectively service customers online. Most of these (73 per cent) have a formal Internet and e-commerce strategy, and for two-thirds this is linked to their CRM strategy rather than being a stand-alone initiative.

That's certainly the case at Australian Print Group, which sought a Web-enabled CRM system to support its aggressive plans for a total customer-focused production and service environment. Sales and marketing manager Gillian Blackman says the company wanted a solution that represented world's "best in class" and would improve access to customer information while delivering process efficiencies and self-service capabilities.

"We were running nine different client databases and a lot of information was either held in people's heads or simply falling between the cracks. We needed to consolidate our customer data into one system to make it available to everyone who needed it," she says. "At the same time, being able to link directly into a number of larger clients' internal systems should give APG the ability to be able to access information from our clients electronically and allow clients to readily assess APG information.

"It was imperative that we implement a solution that not only gave us access to information about our clients and their projects, but which also allowed customers to log into the system via the Web to track the status of different jobs, change priorities or to download literature.

"At APG we feel that it is extremely important for this integration to occur. Clients need to be able to access any information required at a single click of a button. They do not want to have to change from system to system; through this, integration this will be possible," she says.

Meanwhile, APG is further developing the system to be able to handle the transferring of clients' very large files through the Internet. "We are 100 per cent focused to be able to provide a state-of-the-art functionality in B2B communications," Blackman says.

Many businesses just embarking on CRM would envy such clarity of purpose.

Doing the Hard Yard

Yes, CRM implementations are difficult, but therein lies the allure: the few companies that get it right will have a distinct advantage over the many that try and fail. In fact, Amazon.com considers its customer relationship strategies too proprietary to talk about. If your company aspires to be among the Amazons and Dells of the world, tick off the following checklist for a CRM reality check.

1. Your business model must be customer-centricLike many recent trends, CRM is inextricably linked to technology. But it'll fizzle faster than a damp firecracker unless you're willing to rethink how you run your company. If your business model is not built around the customer, make it so. If you can't, don't bother with CRM. Creating a customer-focused business model is not something to undertake lightly, since it will involve massive upheaval and internal resistance; change at the cultural level is always the most threatening2. Don't forget the customer in your customer-service relationshipAny relationship involves give and take; why should customer relationships differ? Martha Rogers, partner and cofounder of Peppers and Rogers Group (US), says CRM represents a shift from company as order taker for its products and services to company as agent for the customer. "Instead of thinking about products and finding customers for those products, companies are going to start thinking about the customers they have and finding products for them," she says. If companies want a two-way conversation, customers must benefit from the relationship somehow as well.

3. Beware an immature CRM software marketMany software companies profess to sell CRM software. However, there is little agreement about what, precisely, CRM software is. Anything that touches the customer in any way can claim a CRM sticker; it's up to each buyer to divine what's what in this chaotic market. Some, such as Broadvison's, are Web-centric products and life started as customer support vehicles for e-commerce ventures. Other companies, like Siebel and Clarify, have traditionally offered sales-force automation (SFA) software and have added modules such as service and content management onto their products. Finally, enterprise resource planning (ERP) companies such as SAP and Oracle aim to extend their back-office fiefdoms by creating modules for front-office functions like sales and customer service.

4. Match deeds to rewards

Make sure all your employee incentives are tied to customer-oriented indicators, such as customer retention and satisfaction, rather than more traditional measurements. "It makes no sense whatsoever for marketing to be rewarded for getting a bunch of new customers, sales to be rewarded for selling as much as possible, and research and development for producing products as cheaply as possible," says Rogers. "That just reinforces the silo mentality."

5. Your information needs freshness datingCollecting data is like mowing a lawn; you can't just do it once. People move, marry, change clothing size, and companies must stay abreast of those changes. Much like a Web site, the data must be dated for freshness. Otherwise, companies will end up using outdated information to try to retain customers, a prospect that certainly hinders the chance of long-term success.

6. Technical integration issues are a bearFor many CRM initiatives, technical integration ends up being the monster under the bed.

Some companies opt for an IS infrastructure revamp. While an enormous investment and usually hugely difficult, this effort is designed to give the company one view - both organisationally and technically - of the customer. The company moves from dozens of discrete customer databases to one central repository, which should provide operational efficiencies as well as an integrated bonanza of customer information.

Other organisations wrestle with the knotty problem of making sure all of the company's customer information is configured such that segments from different databases and systems can be combined coherently. To do that, the data needs to use a common set of rules - in essence, similar business grammar.

- Carol Hildebrand

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More about ACAACA ResearchAmazon.comCallcentres.NetCanonCanonHutchisonHutchison Telecommunications (Aust)Link CommunicationsLogicalMedia TechnologyOracleRogers GroupSAP AustraliaSASSAS Institute Australia

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