By Karl Boone, PA Consulting Group
At the beginning of this new century, businesses are using a combination of traditional and new methods to reach customers. Now seen as an essential tool rather than a gimmick, e-business is beginning to bring greater efficiencies to the workplace, and customers are being offered a number of different ways in which to shop, bank and interact with companies. The aim is to increase the number of routes to market, and hence sales, whilst improving customer choice and service.
The key to success is not the fact that you're seen to be doing it, but how you're doing it and at the moment it all seems like a token effort, not a central part of customer relationship management (CRM) strategy.
Consider the facts. PA Consulting Group recently undertook a survey of 120 leading organisations in the UK, US and Scandinavia to see how companies were combining CRM and e-business, and the results were astounding. Whilst all of the companies that were asked had a multi-channel strategy, only 5 percent could share customer information across all points of contact with the customer, be it the Web, a call centre, direct mail or the high street.
This may not mean very much to the average consumer, or even many board directors. But in real life, it results in the following scenario. The consumer arranges a loan with their bank during a visit to the branch. They check their account on the Web and the first installment appears not to have been deducted. So they call the contact centre, which has no record of the loan agreement ever having existed but when they next use an ATM, the payment seems to have been deducted from their account.
The consumer's overwhelming feeling at the end can range from frustration to confusion and disillusionment. Here is another all too common scenario. The consumer sees a service of interest on the Web, so they click for information to be sent. Two days later, nothing appears, but a sales person calls to thank them for their interest and asks if they'd like any additional information.
At first sight such scenarios might not seem that serious, but situations like these have serious long-term repercussions: they inevitably cause the customer to think that the company doesn't know what it is doing. Apart from the obvious brand damage that this can cause, it strikes at the bottom line, from a reduction in sales and loyalty. This observation is supported by a recent study published in Harvard Business Review that indicates a 5 percent increase in customer loyalty translating into a 25-95 percent increase in profitability.
This failure to link up multiple touchpoints effectively is a business problem that undermines organisations' best efforts to appear responsive, helpful and efficient and, like most problems, it has its roots in the best intentions.
Companies want to deliver top-notch customer service, so they invest in a CRM system. Nobody would argue with that approach, but like everything in business, it has to be done with one eye on strategy and the other on people. Many companies fall down here by spending 70 percent of effort and budget on the technology. They spend the remaining 30 percent not nearly enough defining what the organisation needs from the technology, making sure it meshes with business strategy, training staff, and tailoring projects to what the customer wants. The lesson is that those organisations that make strategic CRM investments and align with their customers, are in a better position to deliver seamless, quality customer services across all channels.
The proof is in the pudding
The PA survey reveals that less than 25 percent of companies interviewed can deliver a single view of the customer across multiple channels. Less than 50 percent can achieve it over a single channel. In short, CRM is not being applied effectively by many companies, but a few innovators have successfully solved the integration problems, which are seriously hindering CRM's rollout over multiple customer touchpoints.
In today's changing economy, investing in customer-centric technologies is critical for competitive advantage. The solution is to offer a seamless experience across all customer touchpoints. This includes integrating e-business and CRM strategies, direct channels and physical branches. To achieve this, the CRM system must tie together all the back-end systems across products and channels to ensure a high degree of consistency and fast delivery of accurate information to the people who need it.
This is just stage one, but it has to be complete before companies can begin to think about more advanced forms of marketing techniques, such as focusing high-cost channels on high-worth customers or creating greater sales efficiencies.
In terms of the technology needed, there are a number of approaches. Shrink-wrapped solutions are generally best avoided, except by small businesses with a limited budget and size. There's no such thing as one size fits all; larger organisations or fast-growing small- and medium-sized enterprises (SMEs) will quickly find that off-the-peg products lack the flexibility and scalability required.
At the opposite end of the spectrum are the large, customisable systems. The behemoths of the CRM space, as supplied by big hardware manufacturers and former enterprise resource planning (ERP) vendors, are good, solid, tailored systems, but available at a price. The technology and consultancy fees involved can run well beyond seven figures, but the biggest threat isn't the immediate outlay.
The real problem is that these systems are so big and complex that, as an organisation changes (as it will in such a fast-moving era), what's perfect at the start may well be out of date by the end. Also, a customer's strategy should be a constantly evolving, living, breathing entity, able to adapt to new or changing demands, additional channels, and economic shifts. If your system needs expensive, lengthy work each time you want to fine-tune it, then your customer relationships will be equally unresponsive.
To address the issues arising from PA's research, it appears that companies who are planning to revamp their CRM approach should look long and hard at the mid-tier independent software vendors, in particular. Various companies in this sector offer "lite" versions of the large, customisable systems, with many of the benefits but greater speed and flexibility. Looking across the market, the best-placed vendor in this area is Onyx Software. On speed of deployment, flexibility and scalability it falls directly between the out-of-the-box and large enterprise solutions, making return on investment (ROI) faster and ensuring that processes don't become obsolete just after they're changed.
As with all technologies, what's right for one user may not suit others. But, given its strength in these areas, it's safe to say that Onyx's software addresses service shortfalls found within the largest companies, not just those in its traditional mid-market base. Anecdotal evidence suggests that only around a quarter of licences for large, customisable CRM systems are actually used. Systems like the Onyx CRM solution which are more agile and easier to implement quickly make a much stronger business case and ultimately will be a better fit for any business.
Ultimately, technology is only an enabler. The biggest challenge for companies in the New Economy is to foster a customer service culture across the board, and across every channel they operate. From the board to the call centre agent, the whole organisation needs to be brought in, and systems put in place to support them. After all, it doesn't matter how good an organisation's product or service is; if it can't inspire customer confidence, it's likely to be elbowed out by a slicker, more service-oriented competitor.
PA Consulting Group is a management, systems and technology consulting firm with approximately 4,000 people operating worldwide from over 40 offices in more than 20 countries.