Customer relationships may be priceless

CRM, many analysts believe, will a bigger trend than even ERP was. One problem, however, is that everyone seems to have a slightly different definition of the term.

Cameron Dow, Canadian software research analyst with Toronto-based IDC (Canada) Ltd., said CRM could mean anything from contact management to front-office automation, and could even include other acronyms in its definition.

“In my thinking, ERP is CRM, in its broadest sense. Because if you didn’t have a powerful back-end system that’s fully integrated, that affects your ability to execute and to manage your customers,” he said.

According to Dow, a recent IDC Canada survey of 300 Canadian corporations revealed that 46 per cent of respondents are planning to

invest in customer-facing applications in 2000, compared to just 34 per cent in ERP. It also showed there is a pent-up demand for this type of initiative in many Canadian companies, which will most likely explode in Q2 2000.

Numerous companies need a CRM strategy because they tended to keep their e-commerce initiatives separate from their traditional channels of delivery, Dow said.

“What we found happening was there was a real disconnect between the e-commerce strategy and their CRM strategy, which didn’t make any sense. So what we are seeing now are the convergence of these applications, and many CRM vendors are starting to play in that e-commerce space.”

The ultimate “nirvana” for all this customer patterning is predictive modelling, Dow explained.

“We used to have local grocery stores, and the grocer would know exactly who you were and what you liked. We got away from that, but now we are going back to a system where the company you do business with knows who you are, knows your tendencies and behaviour. The difference is we are applying this to companies with hundreds of thousands of customers, potentially,” he said.

“If you own the customer relationship, it doesn’t matter what your competitors are doing.”

Bob Runge, vice-president of marketing for Vancouver-based CRM vendor Pivotal Corp., said companies are just starting to recognize that the cutting edge of competition is the customer relationship.

“Ultimately, if you can personalize interactions with your business buyers, if you can effectively interact with them and provide the information they need to make decisions – give them choices – then there’s never any reason for them to go to the competition.”

True CRM consists of information gleaned from many customer interactions including phone calls, face-to-face meetings and e-mail, which is then stored in a common repository, Runge explained.

“So technically anybody could build a customer relationship management solution by starting with a database, and just building on top of that pages, forms, agents, triggers and all that kind of stuff,” he said.

“Of course, what keeps companies like ours in business is that we’ve thought through all that already.”

Liz Shahnam, senior program director, application delivery strategies, for Burlingame, Calif.-based Meta Group, said in an effective CRM strategy, the customer must be the design point. Companies should initiate process patterns, such as marketing automation, sales automation or call centres, in order to engage the customer.

“But there is a chicken and egg issue. You can’t implement customer patterns if you don’t have good customer data. And most organizations don’t know their customers well enough to create patterns,” she said. “So what we recommend our clients do is implement customer-neutral process patterns as a way to get started.”

Shahnam believes CRM is going to be “bigger than ERP ever was, in terms of magnitude of organizational change, in terms of dollars spent and in terms of cultural impact,” she said.

“I tell my clients that if they think that just by implementing the technology, they are going to do CRM, they might as well forget it, because they will be wasting their money. It requires comprehensive cultural change.”

Carl Theobald, vice-president of CRM products, sales, marketing and business intelligence with Redwood Shores, Calif.-based Oracle Corp., said CRM represents a new paradigm in information gathering.

“In a call centre, if your call comes in and you haven’t paid your bill, [a CRM product can] direct you to the collections department, because the information about you is there on the system; or you are on the Web and you want to see your history of all you have ordered in the past; or you want someone to be able to call you back and give you some personalized information about products.”

The ultimate goal is to learn so much about the customer that the company is able to do product recommendations on the fly, Theobald said.

“So it’s all tied together, it’s all about seeing that 360 degrees around customers – everything they’ve done, and everything that they’d like to do.”

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