CSC sounds wake-up call for customer care

Customer Relationship Management (CRM) is not a passing fad, but a multimillion-rand industry that`s already turning traditional business and customer service upside down, confirms a cutting-edge report issued by Computer Sciences Corporation (CSC) and the prestigious UK-based Cranfield University School of Management.

CRM is a management approach that allows organisations to identify, attract and increase retention of profitable customers by managing relationships with them.

The report shows that managers who believe CRM will reap substantial profits are allocating greater portions of their IT budgets to data warehousing that will enable an effective CRM capability.

"All the signs are that CRM is not just the latest management buzzword," says CSC Computer Sciences (SA) CRM expert Tonia Bruyns. "Organisations are already investing millions of rands in CRM systems, and companies that lack a clear business plan for long-term CRM investments may never catch up with customer service innovations."

Some of the report`s findings include:

CRM is a strategic investment. It changes the way organisations think and work, as managing customer relationships is a process that runs across departmental boundaries. Cross-functional working is a key feature of successful CRM.

CRM is a significant management issue. A database search showed the number of articles about CRM increased from five in 1991 to 2388 seven years later.

The financial services industry is a leader in adopting CRM.

Supplying CRM systems is now a hugely competitive industry. There have been several CRM-based mergers and a consolidation trend in the CRM software industry - over 500 vendors a few years ago have been trimmed to some 50 vendors. The trend is towards software suites as opposed to integrating many best of breed front-office applications. (Oracle and SAP recently entered the CRM market focusing on the suite solution.) The consolidation trend is being driven by the demand for integrated, Web-enabled, organisation-wide systems and the elimination of any division of the front and back offices.

Technology plays a central role in successful CRM projects. Technology supports the delivery of CRM capabilities as it allows companies to gather information from customers at every point of contact, deliver a consistent customer experience across touch points, and turn customer information into knowledge for better decision making about how to treat customers differently. This knowledge drives decisions about segmentation, marketing campaigns and further customer interactions.

CRM raises significant organisational issues. Company culture and employee attitudes towards customers are critical to deliver value to, and extract value from customers during customer interactions The objective is to achieve greater flexibility and responsiveness to customers, and to recognise opportunities to add and extract value.

CRM will be seen as a company-wide initiative that demands integration between departments and systems. Many organisations are still at war over who has responsibility for information. These turf wars between IT, marketing and finance must be resolved or they will damage an organisation`s ability to compete.

Organisations are likely to invest in more complex, integrated CRM systems as they become more confident in their use of CRM technology. These large CRM systems are expensive and their payback is more difficult to determine than smaller, specific applications.

"It`s complicated measuring the payback on a massive investment in data warehousing aimed at increasing overall customer service levels," says Bruyns. "At present many of these very large investments take place without a proper business case in place. This will need to change as more and more companies move to integrated CRM."

New ways of measuring return on investment will be developed. CRM requires a long-term focus, and hence the requirement for longer-term value measurements, not short-term profit or return on investment. The impact that CRM investments have on the value of the individual customer over the lifetime of the relationship will be measured.

Pressure to adopt CRM will come from customers who experience the benefits of dealing with organisations that have used technology to boost service, says Bruyns. Changes in customer expectations should drive up service levels and increase pressure for CRM capability. One example of this is developments in inbound call centres.

Customers may also use fewer suppliers to fulfil a higher proportion of their needs. Customer loyalty and patience with non-performing suppliers will reduce, increasing competition from outside a supplier`s industry sector and overseas. Companies without CRM capability will be at a serious competitive disadvantage.