Customer relationship management is a phrase that has been tossed around for years. Many database and data warehousing companies have touted their own solutions to help business learn more about their customers and how to target products to them. NCR Corp. is trying to make a name for itself in this market. Ron Swift, NCR’s vice-president of customer relationship solutions spoke with ComputerWorld Canada products editor Victoria Berry about its entry into this field and the CRM market in general.
CWC: NCR has not traditionally been a player in the CRM space, what made you decide to leap into the fray?
Swift: Our best customers have collected data on their supply, on their finance, on their customers, their orders, their services, their shipments, lot of things that they do with their customers. A number of years ago, we were building specialized data warehouses to deal with campaign management and marketing and the better stuff that was done in data warehousing to create larger revenue, higher profits and better margins. As we saw that and we started to develop our own software. We built a product called Value Analyzer. We also built products for relationship optimization. This is where you start to look at events that are in customer or business slides and you start to find business opportunities. Then we built other specialized tools.
A couple of years ago we were approached by business partners in the retail side, looking at how they were doing work in managing customers. We made an acquisition and some investing. We’ve merged those products into the NCR solution suite. We brought together a number of other products we developed. This is a profitable area for our customers with data warehouses, profitable for us in the services and software business, not just technology business. It’s helping to move NCR out of its traditional role of hardware provider and into the realm of the software provider.
We jumped from being a data warehousing division to being a leader in that and CRM.
CWC: A recent IDC survey showed CRM software will be a spending priority this year. In the past, other studies have shown that CRM spending was at the bottom of the priority list. What changed?
Swift: All these C-level officers have come to the realization that they have a higher profitability and higher retention rate from better relationships with customers. Now that they see the software out there, which will allow them to manage and service their customers and their information better, it is becoming not just a panacea for software but an opportunity to use this technology to improve business.
Churn (employee turnover) is a big problem in many industries – financial, insurance, airlines. People I’ve consulted with and worked with have determined one per cent churn is worth $1 billion over a certain number of years. Executives realize when they deal with those kinds of numbers that they have to start paying attention to the customer. The customer is smarter, the customer has more choice and the customer gets frustrated with poor service. The marketing officer is concerned because he has to keep old customers and find new ones as well.
CWC: What changes in corporate philosophy have led to the boom in the CRM market?
Swift: Last century was about market share and revenues. Big was in, the bigger you are, the better you are. That’s the way it was in North America. In the 21 st century there has been a big shift here to not just using technology, but it’s about profitability and relationships. The gap that’s bridging the difference is the use of technology to understand the differences.
Where you used to go for revenue, you’re now using technology to find what your strong points are in profitability, where your weaknesses are, where your highest expenses are, where your problems are. Where we went after revenue, now we go for depth in relationships. It’s not about selling black cars from Henry Ford (Ford once said customers could have a car in any colour they wanted – as long as it was black), it’s about selling the customer what they want and what they need now.
That changes the whole world for these guys. In one respect you can create customer loyalty through CRM, not technologies, but techniques. In other words knowing the customer, taking care of the customer, prioritizing the customer – then you can concentrate on keeping the customer.
CWC: Is there one word that needs more focus on it than the others in “customer relationship management?”
Swift: I think it’s all three words. It’s about the customer, but you want a relationship process to maintain, change it, nurture it, to manage it. Here is a new definition for CRM: it’s an enterprise approach to understanding and influencing the customer or the customer’s behaviour. You understand the customer but you want to stimulate them to buy your product or give you information. You’re not always using CRM to close a deal, to sell a product. It can be used to find likes and dislikes and future wishes.
The second part of the definition, if you put a comma after behaviour, is: through continuous, relevant and personalized offers or communications. You’re not sending them junk mail. You’re not making them offers for things they are not interested in – you’re not wasting their time and your money
Then another comma, with the objective of increasing customer profitability, customer retention, customer acquisition and customer satisfaction.
CWC: Why should companies be looking to CRM?
Swift: Companies that have a large amount of customers and want to use technology to increase their profits, to provide better products, at the right time through the right channel will use CRM to address the right customers. The expenses spent on other customers, the wrong customers, the wasted dollars can be oriented toward profit. This doesn’t mean they will stop doing mass advertising, although that may not be the way to go to market in the future.
You have two cell phone companies in town. Both highly competitive. One announces a two-cent price per minute decrease on Sunday night or Monday morning. You’re in the other company – what do you do? The 20 th century way is taking out an ad in Tuesday, Wednesday and Thursday’s papers saying you have a price equal or better. You keep your customers and maybe attract some of their customers. That’s not the way to do it. You make an announcement to your best customers, your medium customers, and only your profitable customers that you will lower your price. You don’t tell your zero profitable or losing customers. If you put the ad in the paper, who’s going to take advantage of that right away? The low price, the cheapos or the non-payers. That’s the difference between the 20 th and 21 st centuries.
If you know the profitability of your customers, which most companies do not – they know by product, by distribution. You have a lot of companies basing profitability by number of sales. You could be buying product A which is very profitable and product Z that makes no profit – if they don’t have a data warehouse and they don’t know you as a customer who buys product A and product Z – they have no way of realizing your profitability for them.
That’s what a lot of companies have not invested in. They don’t have a single view of their operations, their customers or whatever. People are excited about the interfaces in CRM, the graphics, the colours, but that’s not what it’s about – it’s about the analytics, the data and how you use it.
More than 50 per cent of customers in our clients are not profitable. They are break-even customers.
We don’t do a lot of national advertising. We know our markets we know what customers we are targeting, what markets we are targeting. Speaking to a group that wants to be there, that understands it. That makes us a bigger success. It’s not about the product, it’s about the process.