CRM Is at a Crossroads
"CRM is on the cusp of a transition in the market," Scott Nelson, vice president and distinguished analyst, CRM, said during his keynote at the Gartner CRM Summit, held this week in Baltimore. "If we handle it correctly, it can become even more important in your organizations."
Nelson explained to a packed house of nearly 600 CRM project leaders that there are two views of CRM in the market right now: CRM as a software application, and CRM as a business strategy. To be truly successful with CRM, he said, companies must think of CRM as a business strategy built around both improving customer satisfaction and growing profitability. "CRM is about knowing now
what you need to better serve your customers," he said.
According to Nelson, CRM has four guiding principles. First, extend the breadth and depth of customer relationships (i.e., sell more); second, minimize transaction barriers and lower costs; third, leverage and enhance brand equity (Nelson said a brand is a promise, and CRM helps ensure companies deliver on that promise); and last, focus on customer satisfaction and value. Based on their specific needs, organizations tend to focus on one of the four principles, which will set the direction they take with their CRM initiatives.
The direction that many companies plan to take in 2004 is to focus on customer service, according to Gartner research findings. Nelson revealed the results of a survey of prior CRM Summit attendees that cited respondents' CRM priorities for 2004. The top five are:
1. call center consolidation
2. call center outsourcing
3. integration, both multichannel and front- to back-office
4. Web self-service
5. order management
These priorities align with what respondents felt were 2004's hot CRM topics. The top-10 issues respondents are concerned about are:
managing and improving the customer experience
organizational and cultural changes for CRM success
CRM business value and ROI
business executive decisions for successful CRM
business process management and CRM
customer service metrics and reporting
improving customer data quality
Many of these issues relate to how CRM integrates with the rest of the organization, not just as a technology, but also as a series of business processes. Nelson told a story of how one insurance company doubled the productivity of its claims adjusters by using field sales tools, but never considered how the change would affect its back office. As a result, the back office suffered a huge backlog, and the company had to scramble to fix the problem. "Companies must realize that systems don't exist in a vacuum," Nelson said. "CRM process changes effect ERP and supply chain management."
Companies that think of CRM as a business process and realize how it interrelates with other processes within their organizations will be better prepared to move through what Nelson calls the three broad shifts in CRM maturity. Most companies start with CRM ownership within IT, but move that ownership to marketing. The next phase is to move CRM from marketing to a full-blow organizational function. This is where many companies hire chief customer officers, Nelson said. The third phase it when CRM is recognized enterprisewide and is a part of overall strategic planning and operations.
CRM is becoming more mature and recognized in the market as an important strategic initiative. Moving CRM through its maturity phases within your organization will solidify CRM's place in your company and your company's place ahead of the competition.