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Follow UsThese are some common facts that clearly indicate the value of a customer and
the significance of maintaining a good relationship with him/her. As a concept,
customer relationship management (CRM) may not be new, but it has acquired new
meaning and form in the technology-driven era. It is now more clearly defined
and accepted as an essential business practice. Whether it is due to competitive
pressures or to keep up with changing times, most organizations today are alive
towards the need to have a CRM strategy in place.
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Although still in the nascent stage, CRM in India is becoming an area of
interest among both vendors and users alike. As large organizations finish off
with back office integration, the focus is now shifted towards optimizing the
front office. Most of the small and medium enterprises (SMEs) are looking at
customer retention as a key area. In a recent survey conducted by IDC India
across 1,700 organizations spread over eight cities and 11 vertical segments, it
was seen that on an average, one out of five organizations contacted was aware
of the CRM concept and its benefits. The market for packaged CRM solutions has
been estimated to be in the tune of Rs 23.7 crore in 2000-01, which is expected
to touch Rs 135.2 crore by 2005-06, exhibiting a Compounded Annual Growth Rate (CAGR)
of 41.7%.
However, it is interesting to note that less than 5% of those organizations
that are aware of CRM have either implemented or are seriously planning to
implement the solution. Worldwide, consulting companies warn that about 60-70%
of CRM projects don’t produce measurable business benefits. Beginning from
choosing the right solution to dealing with implementation hurdles, enterprises
have to tackle many issues before they can expect to get the best out of their
CRM implementation.
What does CRM mean for you?
Customer relationship management can have different connotations for
different market players. CRM is a strategy used to learn more about customers’
needs and behavior patterns in order to develop stronger relationships with
them. As a business application, it allows an organization to record, analyze
and report on all its interactions with its existing and potential customers.
The idea is to enable businesses use technology and human resources to gain
insight into the behavior of customers and the value of those customers.
As such, CRM constitutes any or all of the following components i.e.
pre-sales activity management, marketing automation, sales force automation,
sales management and customer care/ support automation. If implemented
effectively, it can be used by any business to provide better customer service,
increase efficiency, cross sell products more effectively, help sales staff
close deals faster, simplify marketing and sales processes, discover new
customers and increase customer revenues.
It’s not just about technology
There are many technological components to CRM, but thinking about CRM in
primarily technological terms is a mistake. The more useful way to think about
CRM is as a process that will help bring together lots of pieces of information
about customers, sales, marketing effectiveness, responsiveness and market
trends. The biggest mistake most enterprises make is to let technology features
drive CRM functionality. Instead of defining the business problem upfront and
then locating the technology to solve the problem, companies are doing it the
other way round.
By having a customer database or reorganizing a new customer focus, one
cannot claim to have a CRM deployed in the organization. CRM means changing your
focus and the business processes to support it, and applying technologies to
automate those new processes.
To begin with, you need to first define the problem, understand how it can be
solved it and define the functionality of the solution. Once you understand a
requirement, you can find technologies to support that particular functionality.
That’s the right way to do it: the requirement, the functionality and then the
tool.
Customize with care
There’s no such thing as off-the-shelf CRM. By nature, CRM is customized.
That’s a controversial statement, but it’s true. However, one has to
customize judiciously, avoiding elaborate changes in existing processes.
"Experience shows that minimum customization brings the benefit of adopting
best business practices. One has to be careful in identifying and satisfying
only critical business requirements through customization and not replicating
existing practices on the CRM platform," says Manoj Deorukhkar, CRM head,
Mahindra Consulting.
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There are plenty of CRM packages available in the market. Some of the leading
vendors include SAP, Siebel, Clarify, Oracle, Peoplesoft, Kana, Talisma and
E.Piphany. "There are solutions available to suit any budget. However the
vision, vertical-specific solution, scalability and the ability to upgrade are
some of the key issues to be considered before making a choice," says
Deorukhkar. Then there are many homegrown CRM packages available that are much
cheaper than the solutions offered by multinationals. "Some of these
solutions do a tremendous job, especially if your needs are very clearly
structured. But most of them are quite weak when it comes to analytics,"
says Vijay Ghei, general manager, enterprise architecture, NIIT.
While each of these has its own advantages, there is no single out-of-the-box
solution that can solve your problem. Siebel and Oracle both claim to offer
complete CRM solutions. However, Gartner analysts argue that no vendor covers
all the areas a typical Fortune 500 company would need in a full-scale CRM
initiative. In a recent Gartner rating of top CRM application suites for large
enterprises, Siebel scored the highest, but only delivered 51% of the sales lead
management, call center and marketing components necessary to get a complete
view of the customer.
Small is beautiful Vendors such as Siebel Systems say that large enterprises,
especially Fortune 500 companies, should focus on large-scale rollouts instead
of smaller-scale pilot projects in order to get the maximum benefit from a CRM
software. A phased approach, in which companies commit to a large rollout and
proceed in stages, allows them to get maximum benefits quickly. Oracle also
stresses the benefits of large CRM projects and promises to reduce failures by
providing integration with legacy systems and making such installations easier
to use.
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While vendors may encourage large CRM investments, experts advise companies
to instead consider pilot projects. Behind the scenes, many consultants say that
starting out small with pilot projects may be the best alternative right now
given the problems that some companies have had with massive rollouts. In
comparison with the early days when enterprise-wide projects like ERP that took
several months, CRM can become functional in a couple of weeks. However,
enterprises should not get swayed by vendors who claim their CRM solutions can
be installed and working in less than a week. Packages like those are not very
helpful in the long run because they don’t provide the cross-divisional and
holistic customer view needed.
The total time and cost required to put together a well-conceived CRM project
depends on the complexity of the project and its components. "In a typical
CRM implementation, 28% of the total cost covers buying software, while 38%
covers services such as software customizations, application integration and
training, according to Wendy Close, a research director at Gartner in Stamford.
Hardware makes up 23% of the cost, while telecommunications expenses make up the
remaining 11%.
Plan, integrate and implement
For CRM to be truly effective, an organization must first decide what kind
of customer information it is looking for and what it intends to do with that
information. For example, many financial institutions keep track of customers’
life stages in order to market appropriate banking products like mortgages to
them at the right time to fit their needs.
Next, the organization must look at the sources from where customer
information flows in–where and how this data is stored and how it is currently
used. One company, for instance, may interact with customers in myriad of ways
including mail campaigns, websites, brick-and-mortar stores, call centers,
mobile sales force staff as well as marketing and advertising efforts. This
collected data flows between operational systems (like sales and inventory
systems) and analytical systems that can help sort through these records for
patterns. Company analysts can then comb through the data to obtain a holistic
view of each customer and pinpoint areas where better services are needed.
"The CRM system needs to be integrated with other Enterprise Systems
like ERP and Supply Chain Management (SCM) or other business critical systems.
If the product chosen is open and easy to integrate, then the efforts in that
direction also are considerably lesser," says DV Jagadish, director, SAP
India. Adds Deorukhkar, "The success of CRM implementation lies in not
disturbing the present business model, but to make it far more efficient by
radically improving the management of customer interactions and relations. CRM
means conducting your existing business by new ways."
Together we stand...
The biggest returns come from aligning business, CRM and IT strategies
across all departments and not just leaving it for one group to run. To
implement CRM successfully, you’ll have to reorganize your customer
interactions and change your organizational mindset. When CRM works, it helps to
solve this problem by meshing everyone together and focusing the entire
organization on the customer. Eliminating the layers of bureaucracy between
customers and those employees best equipped to solve their problems is the first
step in building cross-functional cooperation. As successful companies have
discovered, the best way to streamline customer service is to provide a
cross-functional team structure and training so that these teams understand the
entire customer cycle–from the first contact with the company to the follow-up
that accompanies a sale or an order.
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Barring the CEO, managers often don’t have a cross-functional perspective
on what is needed in order to change to a customer centric organization. The
fact is that many managers are comfortable in their traditional, functional
silos. Most were trained as functional specialists. Therefore, the best way to
drive a CRM initiative is to involve the top management, while keeping all the
departments together. Making CRM work often depends on your openness to change
and your determination to reorganize teams around your customers.
Being an enterprise-wide initiative, CRM requires ownership of the best
possible levels, throughout the length and breadth of the organization and a
pro-active process of frequent communication. All areas of the company will be
affected by a shift to CRM. This includes sales, service, marketing, finance and
even manufacturing. From the beginning, lack of a communication between everyone
in the customer relationship chain can lead to an incomplete picture of the
customer. Poor communication can lead to technology being implemented without
proper support or buy-in from users. For example, if the sales force isn’t
completely sold on the system’s benefits, they may not input the kind of
demographic data that is essential for the program’s success.
Who needs CRM?
At present, owing to the nascent stage of the market, the adoption is either
an extension to the already implemented ERP solution or a standalone point
solution. The strategy and benefits would vary, according to the industry
vertical. Given the nature of a few industry verticals, CRM benefits and
strategy would vary depending on who is defined as the customer. Telecom
companies, retailers and financial services would see benefits in higher
retention rates and higher share of the customer business. Meanwhile,
automotive, engineering, pharmaceutical would see benefits in customer loyalty
and continuous customer interaction. The services industry has traditionally
been in the forefront of CRM investments. Other sectors that are on the CRM
bandwagon include consumer goods makers and retailers and high tech firms.
The downturn or recession has only spurred the move of enterprises towards
developing and sustaining strong relationships with customers. CRM is turning
out to be lowest cost growth and profitability option. With opportunities in
call centers and SMEs coming up, the market is expected to grow further.
Considering the interest shown by Indian corporates, CRM is on the threshold of
a take off and experts expect that year 2002 should see a lot of large CRM
deployments.
SHWETA VERMA in New Delhi