CRM focus shifts to information

Customer relationship management (CRM) has evolved yet again, according to Charles Schwab Canada CIO Steve Kruspe.

Kruspe recently addressed the subject at the Conference Board of Canada’s event called A Growth Strategy For Your Business.

He pointed out that in the early days, CRM was usually implemented because of the technological pull, as opposed to what the business objectives of CRM were. It was seen as a sales supporting product which responded to clients based on a variety of activities. And while sales and business need to be in harmony for CRM to be successful, the latter is what drives the former.

“Business development is more of a strategic activity, how do you define clients, who meets our criteria (and) who has the needs we can fill with our products and services. That lays the foundation for subsequent sales efforts,” Kruspe said. Today, CRM should be approached as a discipline that is implemented throughout the organization; it is no longer to be envisaged as a sales tool.

CRM was never really about the customer, per se. If in the early days, CRM was seen as a way of appeasing clients, that perspective has vanished. The software is a tool for gathering information about the client, either through a call centre, data centre or sales history. But, regardless of how the information ultimately finds its way back to the organization, the clients’ history is the golden apple.

“We’ve found that with CRM, once you build a knowledge base of information about a client, you can more effectively deal with that individual,” he said.

At Schwab Canada in Toronto, Kruspe said that Siebel’s CRM solution, which they have used for the past three years, was chosen mainly because it had already been implemented in the U.S. Still, he added that they did a fair amount of fine-tuning and tweaking so that it would reflect their needs. One area they have used the technology was in tracking information on traders who were completing transactions online. Ultimately it helped the company increase per client/ per year trades performed.

Kruspe used a daisy to illustrate how Schwab views its customers through CRM. It is a 360-degree view of the client, with each petal representing a potential piece of knowledge about the customer. For example, on the left of the diagram, sits a category called Help & Advice. He outlined a simple scenario where a potential client would call the centre, seeking advice on buying an energy stock. The help desk person would then walk the individual through a list of companies that met the requirements in the sector, and could make a recommendation as to whether to buy at that time.

From the point of initial contact with a client, all the information about the person is recorded into its CRM system. The petals then, he said are a logical representation of an activity. And, basic information about a client, such as the person’s name or address, is useless for the solution to be successful.

He attributes the high failure rate of CRM (estimated by Boston Consulting Group at 65 per cent) to the fact that businesses don’t clearly define how to use the technology, or set goals they hope to achieve. “What are the benefits you look to achieve with a CRM solution?” he suggests one asks. “You need to focus on those components of (the) software and establish a discipline around use.”

Even at Schwab, where he said they initially approached CRM for the technology first, they now agree it is a discipline first and foremost, to be implemented throughout the organization. And, it has taken over three years since implementation to reap the benefits of the solution by continually adding information to its customer profile.

He lists those benefits as including:

• Better client experience;

• Transparency of employee performance;

• More “wallet share”;

• Potential for pricing premiums;

• Less liability;

• Better forecast of sales and revenue; and

• Segment clientele & focus marketing.

Schwab Canada, Co. is a brokerage firm offering investment services that span self-managed investments, advisory services and portfolio management. In October, the company launched the SchwabOne account that allows clients to combine banking and cash access services with their investment accounts.

Data quality is vital to CRM success

By Siobhan Chapman


Corrupt data costs global businesses more than US$1.4 billion a year, according to a study last year by PricewaterhouseCoopers LLP (PwC). It revealed that only one in three traditional companies and half of the e-businesses surveyed reported being very confident about the quality of the data they collect.

The “code, load and explode” mantra for CRM solutions, which involves the ability to receive and analyze information in real time from a single viewpoint and watch the money roll in, becomes complicated when it is time to add the data, say data experts. Data that is lost or corrupted – due to complicated integration from disparate legacy systems – is crippling CRM implementations. However, the ownership of responsibility for data quality is an issue for business management, not for the IT department, experts agree.

Steve Hitchman, managing director of Management Information Principles (MIP), said: “SAP or Siebel solutions are not a headache to install, it is populating the system with the data that causes the problems.

“The only people that understand the data are the business users, but the IT guys are the ones that check it, even though they are five steps removed and may not understand the business processes the data is used for,” Hitchman said.

“The responsibility for the data goes all the way up to the CEO level of an organization. They dismiss it to IT, but the most important part of the business is data,” he said.

Trevor Richards, managing director of Interact Management Consultants, said, “Ownership of responsibility for data quality is at senior level. IT managers and architects don’t have an appreciation of the quality of the data.

“The ‘extract, transform and load’ approach, to get a single viewpoint is essentially flawed. The rollout should be built from the ground up, not just stick it on the front end and hope it’s going to work,” he said.

Hitchman and Richards both agreed that, before implementing a CRM, ERP, or SCM solution, a company must clean up its data.

“The technology has the potential to deliver customer management, but you have to get your house in order first,” Richards said.

PwC’s data management analyst for Asia-Pacific, Willie Jordaan, said the study revealed a complacent attitude towards data quality.

“Boards blame management for quality, but it should be a board-level responsibility and CEOs have a big role in this. Data quality is not getting the right level of attention. Companies implementing a new software solution, such as CRM, over an old existing infrastructure are taking old information and putting it in without a proper cleaning of the data,” Jordaan said.

PwC found 60 per cent of respondents had no formally documented board-approved strategy on data management and data quality. Of the 40 per cent who claim to have such a strategy, results showed that it amounted to nothing more than a piecemeal collection of reactive policies.

Yet 75 per cent of respondents reported significant problems and losses as a result of defective data, while a similar proportion reported substantial benefits arising from good data management.

Richards said: “The most common thing we witness is that a CRM vendor interested in a sale claims the software has got the capability of a single viewpoint of all clients, products and services. But the vendor ignores all the existing disparate legacy systems. The sale goes through, only for the client to realize how hard it is to integrate all the data from all its back-end infrastructure.

“The CRM vendor will then back out of claims, saying the infrastructure the client uses is to blame, but won’t tell the client that information in the beginning when it may have impeded the sale.”

Some large enterprises may have 50 to 60 systems that need to be integrated into the single viewpoint, Richards said. A badly implemented CRM solution can cost enterprises tens of millions of dollars.

“The biggest cost is not the cost of the disruption to the business, but of missed opportunities such as the retention of customers. The most important aspect of a quick fix, short-term solution is it literally runs potentially into hundreds of millions of dollars a year. If it goes on, and sometimes it may take three years for enterprises to fix, you can imagine the costs.”