Change Happens: Manage the Customer Lifecycle

Meta Group's Liz Shahnam underscores that all three categories of applications are necessary to create a real CRM ecosystem and to ensure its balance. Given that such a mix represents a lot of underlying technologies, where should a company begin? As always, she says, with areas focused on the customer. These areas frequently represent the company's greatest pain points.

"Often companies have aging call centers or sales teams that have no way to track leads. In those cases, they should begin by deploying operational applications and then implement the analytics and collaborational pieces that go along with just that slice," she says. Such a piece-by-piece approach is far easier to digest--both strategically and financially--than is taking on everything at once.

stage 1 Challenges: Beyond hassles typically associated with software selection and implementation, companies must decide whether to purchase best-of-breed point solutions or to buy software suites. Analysts tend to prefer point solutions but acknowledge that cost can be prohibitive for mid-tier and small companies. Companies purchasing suites should still look to point solutions to address mission-critical areas.

stage 2: Link the Technologies

If deploying operational, analytical and collaborative applications gives a company the backbone for its CRM ecosystem, linking those systems is what makes the ecosystem hang together. This connecting of technology dots represents the second stage in progressing towards a CLM model, and to date, only a small percentage of firms have done so.

Some of the major cataloguers--like BMG and Lands End--are among the handful. They're using call center systems on the operational end, various Web technologies that are collaborative, and analytics that do marketing segmentation and create a personalized experience. "With these technologies integrated," explains Shahnam, "call center agents can see that you cruised the Web site and aborted your shopping cart. They can also see that you've been targeted for a campaign and so can ask if you'd like to buy the right sweater today."

Because it's so early in the game, most companies that have accomplished a degree of integration are hard-pressed to quantify benefits. "For many, the incentive for integrating in the first place wasn't so much to get ahead as it was for damage control," asserts Diorio. "So the benefits they're citing are soft--things like improved customer service, fewer e-mails falling through the cracks and those kinds of things."

stage 2 Challenges: As companies begin tying together applications within each category and then linking different technology categories together, cultural issues that separate departments and divisions within the organization will become apparent. Beyond these issues, companies will have to determine the extent to which various types of data should be integrated--a task that can be far more difficult than it sounds.

stage 3: Introduce Hybrid Selling

Once the technologies are integrated and a CRM infrastructure is in place, companies will be ready to advance to stage 3. This is where they pull their channels together to develop what Meta and IMT call "hybrid selling systems"--a highly coordinated mix of multiple channels that are managed dynamically to deliver both top- and bottom-line value.

"Down the road," asserts Diorio, "a hybrid approach will become inevitable for any business that expects to grow profitably and to effectively cover today's rapidly changing markets." IMT and Meta found that while most organizations currently have an average of three sales channels, they haven't figured out how to make these channels work together. The structures, policies and measurements they have in place aren't designed to support integration of the independent channels, nor can they adequately address the dynamic nature that channels exhibit.

"Sales channels are in a constant state of flux," explains Diorio. "They grow and contract at different rates, yet they are managed very statically." When channels are integrated and the integration is supported by a technology infrastructure, managing on the fly becomes much more feasible. The channels can truly work together towards a coordinated effort, and that's when companies begin to reap the real quantifiable benefits they've been seeking.

stage 3 Challenges: No pain, no gain--and companies are likely to experience pain as they begin pulling together their channel efforts. To minimize issues stemming from cultural differences and channel conflict, IMT recommends that managers do the following: define roles for specific channels within the selling process; create incentives for channels to work together; define specific boundaries for managing conflict; and create measurements and organizational approaches that reflect the new selling model.

Yet another big question mark for companies is the e-channel, which in most cases isn't ready to integrate with other channels yet. "E-channels need to stay in an incubator until companies better understand what they are and how to manage them," asserts Diorio. If companies jump the guns and put the Web on equal status with other channels too early, they stand to kill it.

stage 4: Execute CLM

As hybrid selling becomes reality, companies will begin progressing toward true CLM. Utilizing a combination of data pulled from their unified channel efforts and a host of analytical applications, they'll be able to identify specific behavior patterns throughout the client lifecycle. Then they can develop strategies for interacting with and responding to customers in real time, in accordance with those patterns.

"At this stage," explains Diorio, "we're no longer identifying clients in terms of vertical market, size or geography, but in terms of how they want to be serviced. We know how each will likely behave as we engage, transact with, service and support them, so we build a strategy of people, processes and technology using these behaviors as the design point.".

The CLM model represents the culmination of a lot of efforts and planning, meaning it won't be an overnight phenomenon. It's going to take time, and obviously, it's going to take money. "still," adds Diorio, "it is going to happen, and companies that want to maintain their competitive edge for the long-term should be planning for it now."

stage 4 Challenges: As Gartner Group's Michael Maoz points out, this new model implies reaching the right person in the right place at the right time with the right offer. "That represents a huge leap from where we are today. Boundary issues such as personalization, opt-in and data security have yet to be tackled. At the most basic level, companies must migrate from the tactical perspective they have today to actually seeking ways to build more effective customer relationships. While there's lots of lip service now, we see only select companies truly moving in that direction."

Chief Customer Officer

Given the numerous challenges inherent in moving from where we are now to the CLM model of the future, Meta's Liz Shahnam offers a final suggestion: Consider creating a new role--the Chief Customer Officer--to keep everything on track. "As the name implies, this role, be it an individual or a team, should be responsible for the customer," she says. "I'm not talking about customer satisfaction--that falls under the realm of the VP of Customer Service. I'm talking about everything that has to do with the customer being a design point for all efforts." Shahnam says that a handful of companies have already created such a position, and she expects more to do so in the future.

From a CLM perspective, "Last year was a planning year," concludes Shahnam. "This year is a doing and a spending year. We won't see full-scale integration yet, but it will be in the starting stages. Companies are beginning to realize that the only true competitive advantage is having a customer. Over time, that realization stands to overhaul the entire way they do business."