CRM in the extended enterprise

The rationale behind the extended enterprise lies in the fact that tailored, unique and dedicated information and services create tighter relationships in the value chain. This brings added value to the company in terms of customer loyalty and retention, reduced procurement and inventory costs, improved component quality, fewer shortages, improved order management and fulfilment as well as faster time to market with more accurate offerings.

That is quite a list. But if there is one lesson to learn from last year`s dot-bomb fallout, it is that no one should be thinking in terms of a quantum `big bang` step. The vision of an Internet-enabled collaborative community or extended enterprise is well suited to a step-by-step approach.

If there is one lesson to learn from last year`s dot-bomb fallout, it is that no one should be thinking in terms of a quantum `big bang` step.

Paul Whalley, MD, Industrial & Financial Systems South Africa

One of the biggest impacts the extended enterprise is likely to have on the business is the enablement of a customer relationship management (CRM) strategy. This is because CRM is the extension of selling from an individual act performed by a sales person to a continuous process involving every step from marketing, lead generation, opportunity handling, and sales management to ordering and after sales.

The CRM process is made up of several important elements like analysing customer and channel structure, attracting customers, presenting the company`s products and services, selling, order management, fulfilment, customer support and after market service. These form the coherent whole necessary to achieve a complete CRM strategy, but can be implemented in relatively easy steps.

It is critical to understand how customers are using products and services and which customers are the most valuable, but it is equally important to analyse the effectiveness of the company`s current channel structure.

Companies need to determine if, in the new model, distributors and resellers really add value and are committed to prioritising the company`s products. From an extended enterprise perspective, this information becomes the foundation for decisions on how best to align the organisation and potentially, the capabilities of the entire supply chain.

While CRM places great emphasis on retaining customers and increasing their sales, attracting new customers is no less important. This should be seen as a multi-channel effort. It must be convenient to visit the company Web site, and should be possible, for example, to get individualised information through Web access and newsletters.

A company must communicate with its customers, invite dialogue and ask questions. Based on the information obtained, customers can be categorised according to interests, responsibilities, work areas, etc, making it possible to qualify interests, prioritise and allocate resources before the start of the sales process.

When it comes to product and service presentation, an Internet-based process is much more efficient and effective than traditional paper-based catalogues. By leveraging the Internet, the extended enterprise involves all relevant personnel, agencies, customers, partners, retailers and suppliers in the process. It also enables individual customers to be provided with unique specialised services, and ensures important information can be updated in real-time.

This overcomes the problem of vital customer information remaining in the minds of the sales representative, the distributor or retailer. The extended enterprise uses the power and technology of the Internet to deal with this situation. The Internet gives transparency to the whole chain of value-added services to and from the customer. This includes everything from marketing, sales activities, RFQ/RFPs, order, fulfilment, transport and logistics, service and support to after sales.

The order is a turning point in the CRM process and must be well integrated with the other steps in the process. Workflow support and integration are essential for making life easier for both buyer and supplier in a business deal.

From the supplier side, a sales representative should be given support all the way from a qualified lead to opportunity management and the subsequent order registration. At the sales process, information is added and finally, the actual order generation should require no extra work and no specialised order-taker.

Existing customers can be given self-service ordering facilities via a personalised Web portal or a marketplace. Easy-to-use advanced search functionality, product catalogues and customer-specific pricing provides competitive advantages as well as strengthens customer relationships and satisfaction.

Of course, much depends on satisfactory order fulfilment. For a supplier it is important to be able to promise delivery dates during the selling process and then keep these promises during the fulfilment process.

By having access to relevant information through selling, manufacturing and delivery, the supplier can take responsibility for time of delivery. He can inform the customer and react timeously if goods are delayed. Customers can also be offered continuous updates of the status of their orders.

Customer support is a crucial component of CRM and one where customer expectations are high. Increasingly, one-to-one individual relationship recognition is essential for success. If this is not provided, the competition is just a click away.

But the Internet is not only a threat. It also offers several new opportunities for really getting closer to customers, partners, distributors and retailers. The extended enterprise delivers a transparency touchpoint for employees, partners, distributors and customers. This enables easy access to information, support for service/support workflow, and Web interaction.

This ensures the best possible value for the customer and paves the way to the final step in the chain - after market sales. By offering service, upgrades or exchange at the right time based upon product-specific lifecycles and individual customer needs and preferences, both revenue and customer satisfaction will increase.

The challenge is to keep track of all the information and make it available to the right person at the right time, making after market sales an easy process providing the customer relationship is there.

In the next Industry Insight, based on IFS`s Guide to the Extended Enterprise, I will look at the issues of e-procurement and vendor-managed inventory.

(Please note that Industry Insight pieces reflect the view of the author only. For further stories and opinions on this subject, please visit ITWeb`s related sections.)