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Is CRM Part of Customer Management?

Marketers who live and breathe customer information management already know that the analytical applications are proliferating at an incredible rate and the choices are many and mostly expensive. The rest of us who work at breakneck speeds will be glad to know that software is coming which will really help. Our challenge is getting these tools employed throughout the enterprise and justifying the cost in terms of productivity, return on investment or cost savings.

The solution may lie in redefining customer relationship management.

Rather than standing alone, it may be necessary to make CRM part of the broader concept of customer management because customer management fits better within the overall enterprise. It doesn’t exclude one department over another and it embraces shared, open-system technologies.

The need for a customer management focus stems from the growing demand for more customer information. As firms launch customer relationship management strategies to build loyalty, fulfill a broader scope of customer needs and increase customer service, they’re turning to new, internal customer information architectures designed to assemble diverse customer information into a valuable business asset.

Is this the right way to go?

The customer data repository is the foundation for successful customer information architecture. CDRs combine relevant fragments of customer data to provide a complete view of the customer and make it available to a wide variety of application-specific needs.

There can be no doubt in any CEO’s mind that knowledge and quick-to-market technology provide a competitive advantage. As organizations focus more on their planning and operational processes, the need for customer information is skyrocketing. Marketers are demanding faster access to more customer analytical applications such as cross-selling, campaign management, customer loyalty and customer profitability. Can CRM alone provide the results? Or is it just one part of a marketing database designed to deliver timely selling or relationship building messages?

New customer-focused, front-office and customer service applications and integrated billing systems are often required to support operational needs that emerge with CRM strategy. The greatest challenge is to keep the CRM system from becoming little more than a campaign manager, or worse, relegated to a mailing list.

A critical factor to the success of CRM applications is a deep knowledge of individual customers and their relationships with the organization. Surprisingly, few organizations have a complete view of their customers. At most firms, customer information is fragmented and distributed across historical, product-centric, business-line systems in databases that are designed to support specific operational functions. Data-hoarding by employees wanting to achieve power by withholding customer data for use among many departments often compounds the problem.

A new generation of integrated customer data management solutions offers a better approach. In the broadest sense, customer management is the utilization of customer information and data from a central depository that can be shared through integrated systems appropriate for each department.

Of course, only a fully implemented, integrated and optimized database marketing program can give the complete benefits of advanced relationship management. But even a less than complete commitment to this new way of business opens up some interesting, practical alternatives. Several years ago, BAIN, a Boston-based consulting group, demonstrated how a mere 5 percent increase in customer retention can translate into a 25 percent to 125 percent increase in company profitability in the business-to-business marketplace. In every industry, retention is a crucial profitability factor. By using data to identify customers who are likely to drop out, marketers can develop appropriate retention strategies to significantly reduce churn and attrition.

Hence, the focus on CRM as part of a bigger strategy.

Gone are the days of empty “customer is king” lip service. The key to the new rules of success is the ability to address each customer’s idiosyncrasies and needs, balanced with their current and future value to the company. Firms that do this can differentiate themselves from the competition, forge long-term customer relationships, engender customer loyalty, stop attrition and enjoy success in the 21st century.

How do they do it? By refocusing the entire company on customer management. Smaller companies provide a good example, where the entire organization is centered around the customer, the legacy systems are adaptive enough to support a new technology, all departments have agreed with the power shift from an operation-centered to a customer-centered focus, and the control exists at marketing or some newly formed internal entity like a “CRM Department.”

Here are the steps to follow to achieve a customer management breakthrough:

Have a clear definition. Begin with a clear internal understanding of the three types of direct marketing and steadfastly follow the guidelines to avoid internal confusion.

The medium may change to e-mail or Web site content, but the practices don’t seem to change. In the broader concept of customer management, the traditional methods of marketing are still fully utilized:

• Direct marketing. There are excellent off-the-shelf technologies and service bureaus that deliver cost-effective solutions for transaction-based communications designed to get the consumer to take specific action.

• Relationship marketing. This alters the behavior of a customer over time, thus increasing share-of-wallet.

• Loyalty marketing. Customer-focused communications designed to improve customer attitudes and increase lifetime value.

Begin with the end in sight. We always need to be reminded to start with the end goal in mind. Is this a transactional direct marketing program, a relationship program or a customer loyalty program? Understanding which type of system and program is being implemented will eliminate a lot of chaos.

Do the numbers first. Because there are many marketing objectives, systems and tactics, there is no single equation which readily measures all of the value that data can return. Identify the business problem to be solved and the appropriate data-related technique to evaluate.

Use all the tools available. The odds of creating a successful program increase enormously when you include the Internet in the marketing mix. The challenge here is fire walls and the ability to make customer data exchangeable to a customer data repository.

Get the customer involved. Include customer input as you design the system or program. Quantitative and qualitative research should be implemented and cross-referenced. While customer satisfaction is important to measure and benchmark, include customer profitability and ROI measurements.

Ramp up the program. As with any program, and particularly leading edge programs, there will be pitfalls. Learn from small mistakes rather than big ones.

Find the best-of-breed programs. Look for applications that support and reduce operational costs, yet capture the relevant and personal history information. To review excellent product assessments, visit David Raab’s Web site at www.raabassociates.com/content.htm.

With the new generation of integrated customer data management solutions, it’s easier than ever for companies to make a truly customer-centric enterprisewide commitment. Those that have enjoy more sophistication, faster technology, greater access to information and more talent than ever before.

There’s no excuse to run the same old program anymore.

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