CRM rises again: Why it's more relevant than ever
Customer relationship management (CRM) applications can help companies understand who their customers are and what they want. In years past, however, CRM was a one-size-fits-all approach that was difficult and costly to implement, essentially putting it out of reach for midsize organizations.
Today an important change is taking place in the world of CRM offerings. In simple terms, CRM is shedding its reputation as expensive and unwieldy and is experiencing a real resurgence.
The timing couldn't be better for midsize companies. As Brendan Read, Industry Analyst at Frost and Sullivan explains, "Midsize companies are in a crunch. They're facing competition from small businesses, which are fleet of foot. On the other hand, they're facing competition from enterprises that can compete on the basis of marketing power and price. So midsize companies are caught between those, and I'm seeing receptivity [to CRM] among midsize businesses in order for them to survive and grow in a slow economy."
How has CRM changed? To start, CRM has become much easier for companies to purchase, allowing companies to incorporate additional CRM capabilities as needed. Read explains, "CRM has become more modular, using service-oriented architecture which permits new pieces be put in without requiring changes to the software that's already there." For midsize companies with limited IT staff and resources, this has been a blessing.
In addition, Read notes, "There's been the rise of open source, which permits easy customization and which gives redundancy protection."The result of all these changes has been a much more cost-effective and less cumbersome solution to both implement and use.
But something else is afoot. Over the past few years, social media has emerged, revolutionizing how people communicate and as a result has had an evolutionary impact on CRM. On a smarter planet, understanding the way customers use all channels to research and buy products can be critical to a company's success. Indeed social media has become another channel unto itself, offering a whole new way to think about CRM and its role in operations.
Evolution of CRM
"Social media provides a platform unlike any other," says Carolyn Baird, Global CRM Research Lead for the IBM Institute for Business Value. "It's a platform that gives companies unprecedented insight into customer patterns, attitudes and behavior. The risk for companies is that if they don't leverage social media the way that they should, they will be left behind."
And companies fully recognize this urgency. IBM's recent study, "Insights from the Global Chief Marketing Officer Study," revealed that 82 percent of respondents plan to use social media more extensively. However, while companies place value on the role of social media, they are less clear on the best way to approach it. According to the same IBM study, 68 percent of those interviewed felt under-prepared to manage the impact of social media on the marketing arena.
Social media is in many respects a parallel interaction channel. Suddenly, company employees that have never been trained to address traditional media are interacting with the public via social media and are functioning as corporate spokespeople. As Read puts it, "It is the realization that whatever they say, whatever they write, whatever they do, has an impact on their company and on their brand, and you're rarely given a second chance."
Even though some organizations have traditional CRM solutions as well as basic social media tools, many of these companies fail to fully integrate CRM with their social media initiatives. Today there are analytics tools in the marketplace that can monitor and sift through these social conversations so the company can react and respond appropriately.
And with customers increasingly interacting with companies across multiple channels – in stores, on web sites, via social media, on the phone, it has become imperative that employees have the right information at their fingertips at every point in the customer relationship. These days, CRM can be tightly integrated with other business processes like billing and fulfillment. As Read puts it, "Tight integration ensures that everyone gets on the same page. For example, it permits a contact center agent to check up on the status of the order. Or when a customer calls in and they happened to be past due on a bill, integration allows for that information to pop in. Billing, fulfillment, shipping, services, sales, that's all part of an end-to-end continuum."
And CRM is not only integrating with other business processes. New CRM solutions are also integrating unstructured data that comes out of channels like call centers and web sites with a company's traditional, structured data. The potential of leveraging unstructured data is considerable. According to Read, around 80 percent of all data right now is unstructured. By integrating the data that is captured as part of the social dialogue, companies are able to better understand their customers by using predictive analytics and business intelligence applications to gain additional insight.
Moving to truly customized customer interaction
There's little doubt that customers today have higher expectations. The marketplace is moving toward delivering highly customized interactions for each individual customer. And that has midsize companies asking themselves how they can meet these expectations for increasing customization.
The first step for midsize companies is to ensure a consistent experience for customers. Read explains, "Both the customer's experiences and the information has to be consistent. Nothing annoys a customer more than getting one set of information on one channel and a different set of information from another channel. This also frustrates the contact center agents and the sales reps who are serving them."
New CRM capabilities allow companies to begin to tailor offerings for customers based on information on what an individual customer wants. And this customized interaction tailored to the individual will bring a radical change for how companies operate. "CRM is the technology, the tool, the process of extracting value from customer relationships," says Baird. "But with the advent of social media, we are starting to see more focus on customer experience management strategies, or CEM. CEM provides an ability to understand what the customer wants in both the short and long term, delivers experiences that will keep the customer happy and uses that to impact the products that are created and the customer care that is delivered."
Read adds, "CRM is about obtaining knowledge and insight. The more you know about the customers the better you can serve them, and that requires pulling in data from a wide range of sources, integrating it, normalizing it and making sense of it."
CRM for every budget
Although midsize companies and their needs may grow over time, there is no guarantee that their budgets will increase proportionally. And while the modularity and open architectures of today's CRM offerings have made it more affordable, incorporating new CRM capabilities can still challenge the midsize companies that are cost-conscious and resource-constrained.
Cloud computing has emerged as another way for midsize companies to supplement their existing CRM capabilities on limited budgets. By accessing CRM applications via the cloud, companies can achieve greater visibility into sales and marketing while delegating implementation and maintenance to a third party. CRM via the cloud allows companies to take advantage of virtualized, shared architectures which allows for scalability, flexibility and cost savings.
Turning insight into action
Today customers are dictating a new set of terms in the dynamic between buyer and seller. While CRM itself isn't new, CRM applications today are designed to meet the demands of a new breed of customer that is digitally connected, social and informed.
In effect, the sale itself is just one aspect of the customer relationship. A relationship with a customer can begin as early as researching products all the way through successfully delivering that product. And when companies start to see it that way, they recognize that each customer interaction can provide a wealth of information and can turn customer insight into action.
Baird explains, "The customer is in control of the relationship. Businesses need to think about not only how to manage the relationship, but also how to facilitate dialogue with the customer to understand what the customer wants, what he or she values, and how to best deliver that."