• September 27, 2010
  • By Lori Steele, leader, North America Consulting Services, IBM Global Business Services

The Brave New Business Model for CRM

"More of the same" is the wrong approach for customer leadership.

Consumers are fundamentally changed, the world is increasingly digital, and yesterday's business models are getting whipped up and wiped out. CRM leaders need to develop new paths forward, but only about one out of 12 companies is really prepared to get it done, according to a global CRM research study gathering the perspectives of more than 500 CRM executives in more than 66 countries.

(The full report, "The Path Forward: New models for customer-focused leadership — The 2009 Global CRM Leaders Study," November 2009, by the IBM Institute for Business Value, can be accessed here: http://sn.im/ibm-wp1110)

The results were pretty stunning. The most important (and frightening) challenge for CRM leaders is that businesses can't continue to compete, reduce costs, or grow by just doing what they've done in past. They often must change their fundamental business models.

Through our analysis, we identified the organizations getting it done and the ones falling short. We found that leaders — the ones who represent the "one in 12" subset — generally fall into three types:

  • Customer Insight Leaders optimize data, transform it into something useful, and create measurable value.
  • Digital Channel Leaders harness new methods of creating value in an always-on digital world.
  • The most impressive are the New Era Leaders. They are the rarest of the new generation of innovators, adeptly employing both customer insight and digital channels at the highest levels. New Era Leaders are four times more likely than average to have the right analytic tools in place and have an effective e-commerce strategy.

To me, it seems like a simple way to succeed: Have the information you need to make the right business decisions and then optimize your performance on the channel your customer prefers.

However, most companies aren't there yet. Only 20 percent of sales executives report having updated tools and techniques to achieve their goals — but the executives in that 20 percent deliver two-and-a-half times the customer value delivered by their peers. And marketing is even less well equipped — less than 20 percent of respondents said they regularly receive the analytics they need. (Even among the leaders in our study, only 63 percent of marketers were getting what they needed.)

Imagine trying to drive a car at high speed and with great precision — with only one hand, and no instrumentation. Sounds like suicide to me, and yet for too many companies it's the status quo.

Empowered with the right facts about their customers and business, the new era leaders look to refine or change their business models in ways that will enable them to deliver more while spending less. The first order of business is a win-win — for customers and profit margins alike. These leaders target cost- and complexity-reduction strategies that make operations more flexible, leaner, and more accessible to customers.

No customer ever said, "Can you make it harder for me to achieve my goal?" Make it easy for customers to do business with you and they will flock to you and stay loyal. Remove jargon, remove unnecessary steps, expose the process to the customer, and he will reward you with his business.

The leaders also use new social frameworks to act in concert with customers to determine new needs. As consumers ourselves, we marvel daily at businesses that are changing the fundamental ways we use our phones, gather advice online, or share information with communities of friends. Yet, as CRM practitioners, we too often fail to see how our own businesses can achieve similar marvels online.

We CRM practitioners must also incorporate strategic service delivery that improves customer interactions through new and existing channels to engage in dialogue creation and continuous, data-driven learning. At every interaction, customers give us loads of feedback on how they like to be served, what their needs are, and what they want next. Unfortunately, we don't always listen to them — not because we don't care, but because we haven't tuned our model to do so. And listening is just the crucial first step in the process we're proposing, in which CRM professionals "listen, learn, engage, and harvest these valuable interactions."

So I challenge you with this: Are you getting ready to run that same, tired campaign again? Are you looking to cut costs by offering less and less to your customers? For a change, take a look at how useful your information is. Take a look at whether you're creating something new. Think hard about how you might use service delivery that really builds a dialogue.

Stop trying to do more or less of the same. Be brave: Change the model.


About the Author

Lori Steele (steele1@us.ibm.comis the leader of North America Consulting Services for IBM Global Business Services — a global leader in business and technology consulting. With more than 24 years of experience helping top enterprises in retail, life sciences, and other industries create success, Steele possesses a unique perspective on today's business drivers, leadership challenges, and successful innovations.


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For the rest of the September 2010 issue of CRM magazine, please click here.

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