Customer Relationship Management is all the rage at the moment but behind the hype lies a fundamental truth: the customer relationship is important to any company selling non-commoditised products and services. And while CRM has only come to the fore in the last few years, the concepts it contains have been around for much longer, says Andy Matthews, director of consulting at Cap Gemini.
“We are moving away from the old model where organisations had a product which they sold to anyone, to a world where a lot of companies have a group of customers to which they sell a range of products,” he says. “It is really about owning a customer base and managing and satisfying that base; looking after people better than anyone else.”
And that, he says, involves changing people, technology and processes.
Michael Juer, director of sales and service technology with consultancy SalesPathways, agrees. “Organisations are beginning to understand what CRM is but many are not seeing it as a cross-functional issue.”
Clients approach it from two different directions, he says. “There are those who have heard about CRM and think it simply involves buying some new technology, and others who want to change the way they are servicing customers and selling themselves because of increasing competition in their marketplace.”
Projects involve sales transformation strategies, technology selection and performance-related work, says Juer. “We often have to take clients who want help on technology back to look at process and people issues first.”
Juer adds: “Early CRM projects were based around the acquisition of new customers but that is becoming increasingly difficult to deliver with growing competition. Now it is about retention and extending customer value. The cost of acquiring a new customer is 10 times that of selling to an existing one.”
Juer foresees massive growth in the CRM marketplace and his views are shared by Nick Hewson, managing director of Hewson Consulting. His company specialises in strategy and process consulting, with customers mainly in telecoms and financial services. Hewson is also involved in analysis and publishing. Its market sizing report for 1999 put end user spend with CRM vendors at $750m across Europe, with the UK at the top of the list. Hewson expects growth this year of 70 percent, rising to 100 percent next year as vendor and delivery infrastructure becomes established.
The biggest driver in the rapidly expanding CRM marketplace is e-business, he says. “Organisations know that it has to be addressed and that involves CRM.”
Two years ago, he says, people were buying tactical solutions to specific problems but increasing numbers of companies, particularly bigger ones, now see the whole thing as a strategic issue-how do you acquire and retain clients and maintain market share and survive. “It is much more of a systems-based reality now than it used to be.”
For Cap Gemini’s Matthews, the really interesting thing is the move towards Internet-based business. “It allows CRM to be done specifically by the customer himself. For example, a telco customer can log onto the Internet and check a bill, order something at midnight and track its delivery status.” This has two benefits, he adds. It allows customers more flexibility and saves companies money on staff.
He does not foresee the demise of the call centre, however. “Any good company will have a call centre to back up the Internet site,” he says.
Few companies have yet perfected the self-service phenomenon but there are some good examples. Matthews cites Tesco and Virgin Trainline as frontrunners. “If organisations know how to use it properly it can be a very satisfactory service,” he says.
A major issue here is integration. “Proper links into legacy systems and business processes are vital,” says Matthews. “There is little point in reading e-mails from customers and retyping them into legacy systems. And if customers don’t get results, they will give up.”
Not surprisingly, then, Cap Gemini does a lot of website integration. It is also involved in systems integration around the ever more sophisticated CRM packages available, aligning business processes to supporting IT systems.
Another increasingly important facet, says Matthews, is data warehousing and data mining. “Many companies have huge amounts of data on customers and they want to know how to organise it and derive value from it,” he says. “Data warehousing enables you to organise it sensibly, giving a single view of the customer. Data mining takes that a stage further, to see how it can be used and if there is any value in it.” For example, he says, for one customer Cap Gemini has used mining to determine the kind of people who might want to buy ethical bonds, stocks and shares. “It helps a company to understand its customer base,” he says.
CRM is a very important service offering for Cap Gemini, says Matthews, and it is growing. “CRM and e-business are really taking off and we are recruiting people in those areas,” he says. But it is a competitive market. “It is difficult to get very good people with the breadth and depth we would ideally need. We retrain people internally all the time.”
Vertical industry experience is very useful, he says. “We like to know as much about an industry we’re trying to service as we can, but we also need two other kinds of people: technical experts at the leading edge of technology; and high calibre consultants who have been around and have seen how it is done in different places. For example, if you are developing a CRM system in a utility, it might be useful to know how to do it in a bank.” There is no doubt, he adds, that clients want to see a track record in consulting.
Small players like Hewson and SalesPathways tend to use networks of associates to cater for their resourcing needs. Says Juer: “CRM is still relatively niche in terms of penetration of business, so in relative terms there is a small amount of skilled resource available.”
Vendors and clients face the same challenge on staff, he says, and there is quite a lot of crossover from the ERP camp and the software industry. “Good skills are in short supply and freelancers can command huge fees,” he adds.
Hewson agrees. He sees training as the answer for bigger firms. “Increasingly, people will take individuals with good vertical knowledge and map CRM expertise on to it-that is the best way to get the sort of animal they want.”
See Management Consultancy website for case study.
Mary Huntington is a freelance journalist
Return to the Management Consultancy websiteB>Customising management applications
MGt, a provider of customer management services for digital broadcasters, chose Coranta’s Profile CRM suite to manage its clients’ customers.
The integrated applications developed by the two companies enable MGt to market to its customer base, to provide fulfilment, such as the activation of a customer’s satellite TV services through BSkyB, and to manage the financial accounting and billing for each client’s service.
Coranta CEO David Keith says planning was the most difficult aspect of the project.
A key factor was communication and a close working relationship between the two companies, he says. “We were developing from a blank sheet of paper but MGt’s intimate knowledge of the broadcasting world meant that we knew what the end game should look like.”
Says Ian Sewell, MGt’s business development director: “By working in partnership we have met the complex and specific CRM needs of digital broadcasters.”
MGt also services telcos and e-commerce firms. Return to the Management Consultancy website
Why not check out?
The latest CRM trends from around Europe
A very comprehensive site with a CRM search service
Slightly out of date but good case studies and links
News-driven site with a good discussion forum
As the title suggests, the consultant’s slant on CRM
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