A distinguished Gartner analyst offers some tips for success and a CRM maturity model at Gartner's CRM Summit.
Posted Nov 2, 2005
Anyone who has attended more than one industry trade show is quite familiar with the courtesy clap--an audience's way of saying, "Thanks for a B-minus performance." However, after Scott Nelson on Monday kicked off the Gartner CRM Summit in San Diego with his keynote, the applause thundered, as if to say, "Finally, we're going to get what we paid for."
There's still a lot of negativity toward CRM, which is what the Gartner vice president and distinguished analyst addressed in his presentation "The Current and Future State of CRM." "Customers are saying, 'We are viewing CRM as a win/lose. If we do what customers want, we lose. If we do what we want, we win and the customers lose,'" Nelson said. The underlying negative sentiment toward CRM has customers losing faith in successful customer relationship efforts, so much so that Nelson jested that CRM, according to some, has taken on a new meaning: Consultants Raking in Millions.
But for those still disillusioned by failed CRM efforts, well, they need to get over it. "CRM is going to become more important than you can imagine," Nelson said. Customers are driving the need for improved CRM strategies because they are expecting more from companies, thanks largely to well-known, innovative CRM practices. Take Amazon.com, for example: Consumers value its customization capabilities and are expecting that level of personalization with other vendors they deal with. "Our customers use Amazon.com and compare us," Nelson said. "They know someone else can do it, so why can't we?"
However, as many who have tried CRM and failed realize, there are some caveats. "You can't just automate the front office without thinking about how it may bog down the back office," Nelson warned, adding that if more information comes in from different segments throughout an organization, "you can bring the back office to a grinding halt."
To help organizations avoid this and other pitfalls, Nelson offered four principles for a successful customer-centric strategy:
1. Extend the breadth and depth of relationships.
2. Reduce delivery channel costs.
3. Reinforce the brand.
4. Focus on customer value and satisfaction.
Regarding delivery channel cost reduction, he also warned that some efforts, while seemingly cost conscious are really cost prohibitive, depending on the organization, of course. For example, if an organization automates its call center phone support, it will need specialists for tier 2 and tier 3 support; and because they're specialists, they'll command a higher salary. Additionally, as these specialists handle more complex customer queries, they'll spend more time on the phone, necessitating the need for more specialists. Regarding the fourth tip on customer value and satisfaction, don't be fooled into thinking that the longer a company has a customer the more profitable the customer will be--not all customers are profitable.
Nelson also revealed Gartner's "Eight Building Blocks of Customer-Centricity." He maintained that organizations need capabilities in each of the following areas for successful customer strategies:
Valued Customer Experience
Organizational Collaboration (among staff, partners, and suppliers)
Managing Customer Lifecycle Processes
Collecting and Distributing the Right Customer Information
Defining Internal and External Metrics for Success and Failure
The adoption of these eight building blocks helps determine where a company sits in the CRM maturity model, of which Nelson said there are five stages. The first stage of what Gartner calls its "Customer-Centric Generational Framework" includes companies that have no vision, no customer-centric strategies, don't know the customer experience, are hindered by departmental silos and have little to no organizational collaboration and processes, collect basic and fragmented information, have very fragmented technology with weak functionality, and only have a few metrics in place.
Most companies are between stages two and three, and at the very least are starting with initial productivity and visibility into their customer bases, have isolated customer-centric strategies initiated from the bottom up, not working on customer experience strategies. Also, noticing first signs of organizational collaboration, starting to optimize processes for efficiency, launching team-based and fragmented customer information campaigns, implementing fragmented technology with limited functionality, and creating fragmented and limited metrics.
The fifth and most advanced stage of customer-centricity includes companies that have a value network enabled, a value-based collaboration strategy for mutual benefit, an understanding of a wider scope of the customer experience, shared customer centricity with goal alignment, end-to-end process optimization, shared information and insight beyond the company, strong technology functionality implemented beyond the company, and shared objectives and balanced metrics.
And if these tips don't work, Nelson offered insight that some executives may wish to use as a last resort: "Banging your head against the wall will burn about 150 calories per hour."
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Eight Building Blocks for CRM Success