It seems that IT industry analysts and IT vendors are constantly searching for the next Holy Grail, the "killer application" that will reinvigorate the industry and revolutionize IT users' lives. CRM is the most recent of these quests. The CRM vision is, IT systems would record every customer detail, including their transaction histories, purchasing preferences, and even birthdays. Companies would then use the data to personalize every contact with that customer.
CRM seemed, at least initially, great news for marketers aiming to achieve better customer satisfaction. But something has gone wrong with the CRM vision. The costs of implementing CRM systems have spiraled into the tens of millions of dollars and sometimes hundreds of millions. Surveys have shown that more than 50 percent of CRM projects do not produce results and, even worse, in 20 percent of cases users say that CRM has damaged customer relationships. In the cold light of day, the truth is that the real added value of any IT system is to go back to basics -- doing things faster and cheaper. These simple improvements should ensure better perceptions of service.
The Real-Time Enterprise
The rediscovered, revamped concept of faster and cheaper has been labeled the real-time enterprise (RTE). The principle of RTE is to automate processes, spanning different internal and external systems and streamlining the whole value chain. Transactions should be handled immediately, and up-to-date information should be constantly available. RTE is a direct descendant of online transaction processing, and has business process antecedents in just-in-time and total quality management. Previously, organizations from insurance call centers to the National Health Service focused on prioritizing customers and managing queues. Real-time enterprises recognize that queuing systems can create queues and that the best solution for customers is a low-cost, real-time response.
Why are Real-Time Enterprises good news for marketers?
Being faster and cheaper is not just a matter of internal efficiency. It is rooted in customer demand. At the end of every value chain is a consumer who wants something to fulfill a perceived need well. They want it now. They also want choices. They want all this at a good price. They expect all the information they need to buy the product at the touch of a button, and they expect all administration associated with this exchange of value to be handled accurately and speedily. To a customer, it is simple enough. To the supplier it is a nightmare of process complexity. But to the supplier's marketing department, the real-time enterprise is a way to create real value for customers.
Even small steps towards real-time information flow can improve customer satisfaction as well as profitability:
- Cisco and Dell both encourage customer self-service on the Internet, which has virtually eliminated order entry errors.
- FedEx has reduced overhead and improved customer loyalty by enabling its customers to track their packages over the Internet.
- West Coast stores of retailer The Limited can react to early analysis of East Coast sales figures and reconfigure floor sets to make popular items easier to access.
Is the real-time enterprise here already?
As the examples above suggest, best practice organizations are already aspiring to become real-time enterprises. Analysts suggest that most organizations should be planning their migration to real time now. This means identifying and targeting those remaining islands of incomplete automation, incompatible systems/architectures, manual rekeying or batch processing. CRM specialist Barton Goldberg expects to see ambitious companies building the foundations for RTE in 2003, and pulling away from competitors by delivering customer benefits in 2004-2005 that will result in improved market share.
Migrating to RTE
The migration to real-time is likely to start with low-risk projects to improve internal transactions and information delivery. Assuming results are positive and successful, and repeatable methods identified, RTE can be extended to key suppliers and business partners. The depth of integration with any particular organization will depend on the volume of business transacted, and how mission-critical it is.
When key suppliers have been integrated, then customer touch points can be incrementally absorbed. Customers will see most advantage when the transactions they drive from their interface with the company are seamlessly linked through the value chain to deliver their individual requirements. RTEs will have up-to-date information to enable them to identify and leverage market trends so that more customers get precisely what they want, quickly.
Real-Time Is Real
IT investment has stagnated, and recovery is likely to be slow. The IT industry's focus is now shifting from major application projects to RTE as a program of small steps towards sleek, smart transaction processing and information delivery.
Cost savings will be the primary justification for the investment needed, but marketers should be involved in judging how each project can enhance the customer experience, so that faster and cheaper can also mean better, i.e. customer-managed service and interaction. Assuming that vital input is taken into account, RTE could be an even greater opportunity to drive customer satisfaction than CRM alone ever was.
Lynette Ryals is a lecturer in marketing at Cranfield School of Management and coauthor of The Business Case for CRM (Financial Times / Prentice Hall research report, 2000) and CRM: Perspectives from the Marketplace, (Butterworth Heinemann, 2002).
Beth Rogers is group business development manager with Logical and a fellow of the Chartered Institute of Marketing. She is coauthor of Key Account Management (Butterworth Heinemann, 1998) and Key Customers: How to Manage them Profitably (Butterworth Heinemann, 2000).