CRM nearing expiration date: Gartner

CRM (customer relationship management) as a brand is nearing its expiry date, as large companies realize successful CRM strategy lies in adaptable management and business savvy, not technological know-how, industry analysts Gartner Group said.

“CRM is getting close to its use-by date as a product because it’s inextricably linked with CRM application suites,” said Gartner Asia Pacific research director for ERP (enterprise resource planning) applications, Neil McMurchy.

Stressing that the notion of the “customer as an asset” has never been more crucial to businesses than at present, he said enterprises will focus more on a sophisticated customer intelligence mind-set rather than on technology itself.

Telecommunications carriers for instance, would most likely concentrate more on customers who exhibit less loyal behavior and those that it loses, than on exploiting such information to re-attract them, McMurchy said.

He added that large CRM projects were failing at a dismal rate as organizations were ignorant of their most loyal customers.

“CRM is a hot area for valid business reasons. In a commodities market you can’t compete on price. Service is the differentiator, not the definition of a commodity’s features. Quality should be a given.”

He added that as more lucrative industry sectors like financial services, telecommunications and utilities become deregulated across the region, product features or cost of production would not lend an organization a competitive edge, whereas service would.

Thus the mind-set shift to ‘service is key’ places an onus on IT project managers to step back and clearly define their business objectives early in the project, then know how they will fulfill them through CRM implementation, McMurchy said.

Commenting on the management mix needed to lift their game in project management, he said problems could not be linked with anyone in particular, but to the reluctance of individual units to own a project. “The problem tends not to lie with the CIO or IS manager – they have a good understanding of the entire project. But you see significant frustration coming when a business unit brings on a project, then they hit the age-old problem of business ownership.”

“You see this happening now in large-scale IT projects. It’s a classic management issue, a problem with a conservative management style in Australia. So chief information officers and IT people are moving into general business roles, particularly with the e-business frenzy 12 months ago.”

In McMurchy’s view, once the project is executed, the key lies in exploiting both the good and bad of customer data; creating granularity by segmenting data by customers who were both more and less profitable to the business. “Deal with the customer by segment and focus your intelligence resources on customers with a lifetime value.”

Blue-chip financial services is the industry sector leading the mind-set change owing to its traditional focus on a high-volume customer base, according to McMurchy. The retail sector on the other hand lacked smart CRM strategies. “In reality, retailers don’t exploit their customer data well, but base their CRM heavily on loyalty programs.

“Australia is quite (behind) the United States in terms of the aggressiveness of CRM deployment, and I’m not optimistic about things changing. Even though organizations are buying the technology, the Asia-Pacific region has absolutely not exploited CRM opportunities, except in some areas like government since its interest is in service delivery.”

“One of the biggest issues is who owns the customer. In the United States you’re seeing the appointment of chief customer officer (CCO) at senior management level. CCO is an interesting marketing approach deciding: ‘Do we really exploit this thing called the customer base?” he said.

He added that even economic downturn would not push organizations here to learn how to exploit CRM to increase the margins. “They will focus on cost production instead,” he said.