CRM as business engine - notes from IT&Innovations class

Studies report that from 86% to 92% (British) of customers would stop buying with a company in case of bad customer experience. However, 70% state they will return if the problem is solved with 95% committing to come back in case solved quickly. This highlights the key role customer relationship plays in business success.

In few words CRM is about growing and retaining customers. It helps to understand whom to target and how. Given the reality of 80/20 applicable to marketing CRM gives the answer of where to invest to get the best output. Good CRM systems enable to efficiently use company’s resources shifting from mass marketing to segmenting and all the way to one-to-one marketing. 

Amazon represents an excellent example of good customer experience. It is not just customer friendly, however, tailored individually for each user. As soon as you log in the personalized greeting suggests that the company addresses specifically you. To that it provides valuable from customer point of view serveses such as digital tracking status of delivery, suggestions for products that match your taste.

Strong technological base supports the “culture of metrics” prevalent in Amazon. The company is tracking every click. It uses a web search engine, called A9, that can remember everything every customer ever searched for and the site reserves the right to share that information with its retailing arm. Amazon also funds a website called 43 Things. It seeks to link people with similar goals, such as getting out of debt.

Amazon tracks data for years to deliver excellent customer experience. Jezz Bezos, Amazon’s CEO says “ “We don’t make money when we sell things; we make money when we help customers make purchase decisions”.

However, before rushing into installing the Amazon type of CRM system it is important to clearly understand the Customer – have a strategic business view. Then plan Process, ensure People are there to support it and are trained. Technology comes after to put the strategy to life.

CRM system is an overall system supporting or performing activities involved in customer contact processes. The secondary task is related to providing customer and management information. 

There are several key CRM applications:

1. -       Identify customers
2. -       Define their value
3. -       Determine best resources
4. -       Profile and History of customers
5. -       Learn from that

Further on CRM consists of Operational and Analytical also called Strategic CRM. Operational CRM represents the front office, which covers all channels, which have direct interaction with customers and enable collect data to store in the Operational database. Analytical CRM is the back office analyzing the stored data. As it is crucial to ensure data collection through all inbound and outbound channels they should be up to date. For instance traditional call center along with the Phone and IVR needs to be supported by email and web chat.

Companies are using CRM with different key objectives. For instance, Starbucks sets as a goal to acquire and retain customers. Harley Davidson aims at increasing the share of wallet. Amazon aims at attaining operational excellence.

While most companies tend to think they need complicated CRM systems like Siebel, Oracle, Microsoft it can well be that the required functionality is delivered by open sources CRM systems. For example Starbucks is using open source Sugar CRM with limited functionality.

CRM is executed as a program and a project and should involve all parties early on for full alignment. As installing the CRM system is quite costly it is crucial to be aware of key risks that exist on company’s and vendor side.