CRM has long been the buzzword for companies aspiring to 'one-to-one relationships with all our customers, all of the time'. Its underlying principles are well established too - those businesses that can effectively attract, serve and retain the best customers will see significant positive effects on their bottom line profitability. The deeper the relationship the company holds with these customers, the more opportunities there will be for selling additional products and services.
However, with the emergence of e-business and the 'new economy', the challenges of building strong customer relationships have become even greater.
Over the last few years numerous companies have felt the chilling effects of increased 'customer power', as greater customer choice and lower barriers to defection have turned keeping customers into a battle that must be fought anew each day.
So, if the issues around CRM are so well understood by businesses, why do so many senior executives lose sleep over the level of customer churn? And why are so many disappointed that despite significant investment in CRM solutions, the benefits envisaged are just not being delivered?
In order to answer some of these issues, PA Consulting Group conducted a comprehensive survey among sales, marketing and CRM directors in leading organisations covering a diverse set of industry sectors in the UK. The sample spanned a variety of industries including services, leisure, transport, retail, manufacturing, pharmaceuticals, finance, utilities, telecoms, IT and software.
PA's 'Customer Focus - Accelerating Success' survey was carried out in conjunction with Compaq, SAS, and Siebel Systems. Among the questions the survey set out to answer were 'What do companies really believe to be the benefits of customer focused initiatives?' and 'What barriers prevent companies from achieving these benefits. The survey's main aims were to provide an overview of the current state of play of CRM programmes among leading organisations today and to learn from 'star performers,' i.e. those companies that had exceeded their expectations of success and felt they had achieved a truly customer-centric business.
Four steps to CRM success
Findings from the survey showed that 89% of respondents viewed being customer-focused as important to business success. Achieving customer retention was the highest rated benefit of this approach - not surprisingly, as it tends to be the long-standing customers who deliver the most value. Increased profitability, revenue and greater customer satisfaction were rated the next most important benefits.
However only 10% of companies surveyed reported results that exceeded expectations - and even they acknowledged the need for significant improvement. These respondents were mainly large corporations, spread across all industry sectors, which suggests that the success of a customer-focused approach is dependent on the strategy and implementation of the project, and not necessarily the industry.
Although there is no 'magic ingredient' that will guarantee success when implementing a CRM programme, PA's analysis shows that star performer companies consistently have the following distinguishing characteristics. These cover four key areas that have proved critical to a company's successful implementation of a customer-focused approach:
1) They have a clear overall strategy to achieve enterprise-wide acceptance of a customer-focused culture. Without clear direction, resources are likely to be misdirected and return on investment sacrificed. Underpinning this must be senior management sponsorship of the complete culture, process and business change needed to successfully re-focus a business on its customers rather than its products.
2) They have maximised value from their investment in technology to achieve the sought after 'single view' of each customer. Being customer-centric is not just about technology, however any company considering using on-line channels to reach its customers knows it needs a clear vision of what it wants the technology to do. It is essential to have a coherent strategy for unifying multiple customer contact channels but ultimately, success lies in ensuring that the online customer experience is relevant, personalised, and supported with excellent customer service, support and fulfilment. Done badly, e-business provides an open door for mass customer defection.
3) They have united people and technology for outstanding performance. It is essential to have staff able to proactively connect with the data and create and sustain an appropriate relationship with the customer. Achieving this empathy requires defining new customer-focused, technology-enabled behaviours and delivering these through teamwork and aligning reward recognition with customer delivery. Without proper staff training and motivation, companies will fall at the last hurdle.
4) They use an accepted method of measuring success to justify initial and ongoing investment in customer-focused initiatives. Organisations need to develop appraisal systems for enterprise customer management, which identify all likely costs (including people, technology and process change) and benefits before any investment is made. The creation of robust measurement methods will be key to achieving board-level support.
Although the majority of companies interviewed perform well on certain points, what separates the star performers from the rest is a consistently strong and co-ordinated performance across all the above criteria. Star performers have set themselves a clear measurable strategy that has gained enterprise-wide acceptance and optimised the combination of people and technology to achieve success.
Star performer insights
PA's survey features case studies of three FTSE 100 companies that showed strengths in each of the above areas. These snapshots provide unique insights for other companies trying to achieve high levels of customer focus that deliver results.
Enterprise-wide buy-in
HSBC initiated its CRM drive within marketing; however with senior management backing the CRM philosophy, the practice has spread through the organisation. They have worked hard to bring together product silos to support a customer perspective.
Effective use of technology
Rentokil Initial has consolidated its many sources of customer information into a master database that makes available the sought-after single view of the customer. They also instigated a centralised contact point to which field staff can refer problems and queries, and redeveloped their Web site to include customer-friendly features such as on-line advice centres. Work is also in progress to allow customers access to their service records via the Web.
Unity of people and technology
HSBC's training and reward systems are geared to promoting a customer-centric view. Call centre staff are measured on the quality of service they provide, and rewards for all staff are linked to overall customer contacts rather than short-term sales. This approach is supported by technology that logs every contact and produces a weekly report detailing them by member of staff.
Active measurement
Bass Brewers invests in qualitative and quantitative 'reality checks' to ensure its 'Club Carling' CRM initiative is working. For example, measurement includes finding out whether people feel a closer affinity to the brand since becoming a member of 'Club Carling', compares members with control groups to explore the differences and uses the findings to tune and develop their approach.
Star performers have succeeded by getting the CRM issue on the agenda and securing senior management commitment to help get over the hurdles. Such commitment has come from a strong appreciation of the benefits and disciplines of managing customers for value, coupled with constantly measuring performance to drive continuous improvement of their CRM programmes.
By a strong and co-ordinated focus on these factors that characterise star CRM performers, organisations that currently struggle to achieve the envisaged benefits with their own CRM projects may be able to develop strategies to climb the ladder of success.
