Know your customer, with or without software
CRM might have been all about technology 10 years ago. Today, it's more about people and processes.
Software can efficiently automate many things. Is the relationship between a business and its customers one of them? Sales of CRM systems and the success of dedicated vendors like Siebel seemed to indicate it could.
Cynicism set in quickly after Y2K as shareholders and boards asked exactly what value was being delivered by all-singing, all-dancing systems that promised to manage every aspect of the customer - but didn't. That said, CRM is still around and delivering value in many markets.
IDC's European Vertical Markets group reported recently that manufacturing and financial services are driving ERP and CRM short-term investments in Western Europe. Technology adoption and investments by companies, however, will differ significantly across vertical markets.
Vendors need to continue monitoring the industries in which they have traditionally been strongest, adapting their offerings to their customers' changing needs and seizing any new opportunities for upgrades," says Serena Da Rold, program manager at IDC European Vertical Views.
"At the same time, it is vital for their longer-term growth to identify the sectors where penetration is still low, but companies' needs are evolving fast."
People used to use CRM systems as glorified address books. Now we're finding they are much more integrated.Sandy Pullinger, MD, nFold
"The study found financial services, transport, communications, utilities and business services have the highest CRM penetration and will continue to offer the best opportunities for CRM vendors, driven by a high rate of new implementations and upgrades.
"The figures in these IDC reports reflect what SAS has observed as a growing trend in customer intelligence for some time now, a significant shift away from operational CRM systems to a more strategic analytical approach," says Gerrit van Wyngaard, customer intelligence product manager at SAS South Africa.
"A key driver for customer intelligence over the next 12 months will be the changing role of chief marketing officers within the organisation, as they become more accountable to the CEO and are required to demonstrate alignment of day-to-day marketing operations with long-term strategic goals."
CRM, customers get closer
If you played in the CRM market four years ago, you would have known that many people were sold CRM systems that didn't work.Warren O'Reilly, director, Immix Solutions
To Vivek Thomas, MD of Maximizer EMEA, the trend is no surprise. "More and more I see a convergence of the contact centre and the CRM space. It makes sense in as much as you already have a relationship going. For instance, I'm a BT customer since I get my telephone and broadband through BT. Thanks to integration between its call centre and the CRM systems, it has an opportunity to validate my profile and also allow the marketing team to sell me services in which I might be interested."
Sandy Pullinger, MD of local consultancy nFold, says there have been some significant changes in the attitude towards CRM over the last 10 years.
"People used to use CRM systems as glorified address books," she says. "There was a list of customers and the system might have got as far as reminding me to phone them on the day I promised. Now we're finding CRM systems are much more integrated, sometimes seamlessly, sometimes not. We're also finding that customers are using CRM systems more widely, not just for sales but also marketing, building a brand or building a long-term relationship with their customers. It's still a long way from the panacea where CRM users have a unified view of their customers, though."
Warren O'Reilly, director of Immix Solutions, says previously, many of the system components we now take for granted were not yet in place.
"Ten years ago we didn't have an active directory, we didn't have a proper stable SQL server. If you wanted something done, it was vastly expensive and you had to go through a long development cycle. Y2K came along and people blew their budgets getting the back-end right. If you played in the CRM market four years ago, you would have known that many people were sold CRM systems that didn't work. Now there are CRM systems that work through Outlook and can be accessed through a mobile device."
Peter Mbelengwa, CRM application sales at Oracle South Africa, agrees there was CRM 10 years ago, but says it was seen as an IT tool and the perception was that businesses bought CRM, hoping to resolve all their problems.
"We never looked and said, 'What are the business requirements?'," he says. "Now we're beginning to see that it's not an IT tool but rather a business tool that addresses business requirements. Your business requirements can be solved by CRM but you need to know what the pains are. CRM is not just about a tool that enables sales force automation. There are people and cultural things that need to be changed, but we need to realise that those will be enabled by a tool. Do we wake up one day and say, 'We need to love our customers?' Of course not."
We get two or three e-mails per week congratulating us for delivering what we said we would. It's not about going the extra mile, but just delivering what we promised.Sue Morris, marketing director, NetFlorist
Sue Morris, marketing director of NetFlorist, is a user of CRM systems. Founded in 1999 at the height of the dot-com boom, NetFlorist is still around, delivering flowers countrywide using an e-commerce front-end. She has also seen a shift in IT versus business priorities. Customer service at NetFlorist is both self-service and agent-assisted. The company is revising its reporting to create a dashboard of key metrics, including dormancy and average time between purchases. However, ROI and cost-per-customer calculations across various campaigns and channels remain manual.
"To me, the idea that CRM can be implemented organisation-wide is old-fashioned," she says. "Today people are 'chunking' CRM in individual areas. Different pieces can be applied to different areas - customer services, call centres and employees - which is a change from how management used to think about it. Originally, we were trying to implement large systems in an IT-centric manner and we tried to work out how they could work and then how to get a return, without having thought through what it was we needed and what the real issue was.
"As NetFlorist is a relatively small business, we have to be quite careful about what we put in place to get some return. To date, our applications are implemented from tests: we build an application manually, try it out and see if it works for the consumer. If it does, we build it.
"When I joined, I told the board that I would spend a year cleaning our data. I don't want to call that CRM, but it was an essential part of making sure we could implement it. CRM is too big and means too many things to different departments to be able to implement it as some amorphous mass. We get two or three e-mails per week congratulating us for delivering what we said we would. It's not about going the extra mile, but just delivering what we promised."
To drop a tool into an organisation and expect it to magically change it into a customer-centric organisation is doomed to failure.Vicki Scourfield, founder, VS Consulting
Perry Velalis, MD of Navigor, says there is no doubt that CRM has improved across the board, but it is untrue to say there wasn't CRM 10 years ago.
"We implemented sales force automation and CRM systems in 1997 and 1998. Yes, there have been huge leaps and bounds and the systems are certainly more sophisticated than they were, but products like Siebel had full CRM offerings back then. The one thing CRM needs to be successful is unrelenting energy from the top executives to make sure it filters its way through an organisation.
"As an example, we implemented an outbound call centre for a large bank for which we received awards and accolades. When the management team moved on, that call centre faded to the point where it's now on a very old version of the software. If CRM is to succeed, top management must be committed. I don't believe corporates have yet wound their heads around how to implement corporate-wide CRM and that's why the silo mentality is so common. People expect CRM to be implemented just as any other application and that it will just run mechanically until the end of time, which is untrue. It's not the technology aspect that has made CRM fail - it's the organisational aspect."
Management involvement is key. Vicki Scourfield, founder of VS Consulting, says a CRM solution is just a tool.
"To drop a tool into an organisation and expect it to magically change it into a customer-centric organisation is doomed to failure. You do need top management commitment, but over and above that, you need a plan for the whole organisation. Even if you keep it in one section of the company, it will fail if it remains there."
nFold's Pullinger adds that, five years ago, CRM systems were being bought "just because" rather than for any real need.
"CRM systems represent a possibility to gain competitive advantage through the use of software. It's not what software you use. If you compare systems today, they are very similar feature for feature."
SAS's Van Wyngaard points out that selling CRM can be two-fold: the vision to be customer-centric as well as the software to do the job.
"In the past, selling enterprise CRM very often meant going into an organisation and selling a vision. Yes, there was a box of software, but you needed the five- to 10-year vision that goes with it. At that point, two things happened. Firstly, integration technologies were not mature so companies had to decide which ones to pick. So the CRM vendors had to deliver quick wins to show the value of the software. Now organisations are still in the mindset of a couple of years ago, but in many cases, the management team has moved on and so the original vision needs to be resold. The second aspect is that organisations are catching on that CRM is not just operational, but analytical as well, which is a more mature attitude."
Deon Cilliers, industry solutions manager for CRM at SAP South Africa, says a lot of CRM can be achieved without any software at all.
"Companies can do a lot to be customer-centric without installing a single piece of code. Policies, procedures and internal aspects can be addressed first and only then should a software component be brought in to automate and facilitate them. Often they start with a software purchase and try to work the other way around."
He agrees functionality was not the problem. "The early CRM products had more functionality that you could master in a lifetime, but many companies bought tools based on relationships - either with the vendor company or a subsidiary or a golf course deal - and then those companies were stuck with what they had. The shareholders then asked what the value of the system was and CRM got a bad reputation as a result," he adds.
Are comparisons odious?
Companies can do a lot to be customer-centric without installing a single piece of code. Policies, procedures and internal aspects can be addressed first.Deon Cilliers, CRM industry solutions manager, SAP SA
South Africa's reputation as a nation of early-adopting technophiles is well deserved. But on the CRM front, we have some catching up to do.
"I think technologically we compare well and we have a CRM culture that is on a par with anywhere in the rest of the world," says VS Consulting's Scourfield. "As a country, that culture of customer focus is lacking. There are other countries where customers are more satisfied. In the US, it's either very good or very bad. There seems to be no in-between."
NetFlorist's Morris points out the US is a much more competitive market and, as such, organisations are pushed to find creative ways to be competitive.
"If you go onto a recruiting Web site, you will see job vacancies for specialised jobs within CRM. That indicates the extent to which customer service has matured there."
Nevertheless, there are local success stories; they just need to be communicated properly and measured properly in the first place.
Explains Oracle's Mbelengwa: "We are working with a customer now where the vision is an overall transformation of the customer. We have a five-year budget but within that budget we're not saying we will reach our goal in 2015, but rather by March next year, we will have this particular goal achieved so that everybody will know we're on track.
"The success of any CRM implementation will always be determined both internally or externally. Internally, you can ask, 'Did this system improve our business? Did we acquire more customers or retain existing ones? Has productivity improved?'. Externally, it's always by the customer experience. What do customers say about the company? Even though we're a small country, we've had success stories where people from around the world have called and asked to use our customers as a case study. So we're on the right track."
Navigor's Velalis says successes are there but too often they're siloed - confined to a single division or business unit.
"In one particular success story I know about, a bank got a payback of 300% on its investment within three months. Certain clients in this bank have benefited from CRM and that's a reason to celebrate. But CRM doesn't stop. The minute it's in place, you should look at how to improve it and how to extend it."
Maximizer's Thomas says, almost without noticing, CRM has infiltrated organisations in ways that would have been unthinkable 10 years ago.
"I had nothing but Outlook as my contact manager 10 years ago. Today, CRM has moved to the front-end of the sales cycle and there's a lot more methodology that can be discussed upfront with clients. Contacts used to be standalone and customer service used to be treated as standalone. Now we're taking it into mainstream business and making account managers aware of the customer needs, so they can sell a basket of offerings instead of individual products.
"Selling business intelligence is all about mining your data for value. In the past, you knew who your customers were and perhaps how much those relationships cost. But there was no method to communicate how valuable those relationships were. CRM has changed that. A manager or representative can now ask, 'Who are my most valuable relationships?' before engaging with prospects."
CRM's failures may be unfairly highlighted for some. Although the ultimate goals of a single view of the customer and a single point of contact are still to be reached today, CRM systems and methodologies have suffused many operational areas to the point where we take them for granted.
Ultimately, software does not turn an organisation into a customer-centric one. Management and staff do. That will remain the most challenging aspect of any CRM implementation: changing and motivating the people that will use it.