The Importance of Being Integrated
CUSTOMER relationship management is one of the most talked-about topics today. But what constitutes CRM? How did it evolve and what promise does it hold for the future?
These are some of the key questions being asked by marketing and information technology departments and managers alike. As long as there has been commerce, there has been a need to build customer relationships. The widespread availability and low cost of computer technology has made it possible for marketers to pose questions about their customers, and to receive the answers within seconds. As computer systems become more powerful, the volume of customer information being stored increases.
The convergence of technology and customer information paved the way for the evolution of database marketing beginning in the late ’60s. Today, businesses large and small routinely maintain customer databases that track customer history, purchases and promotion responses. Vast knowledge repositories contain customer profile information that is continually monitored to help businesses target their marketing initiatives in highly customized and cost-effective ways.
Today, the competition to get and keep customers is as intense as ever. What’s new is the sophistication of the systems and processes being rolled out to support this mission. We are in the midst of the ongoing automation of marketing and sales functions, and the integration of these systems and information enterprisewide.
What Does It Mean? CRM means automating processes, employing technology, capturing customer information and building knowledge repositories, all for the purpose of developing customer relationships. CRM done correctly enables you to build customer loyalty and respond faster and more directly to customer needs in ways that are cost-effective, focused and profitable.
Every meaningful marketing objective begins and ends with the customer. But are customers always the same? Do customer relationships change? Customers are complex and dynamic, not simple and static. For example, a customer may be an individual, a household or a business. A business customer may be a multinational corporation or a single individual responsible for buying decisions.
It is the notion of the customer changing over time that is a source of much chagrin to marketers charged with tracking and measuring each relationship. The transient nature of customer relationships underscores the necessity of maintaining a real-time understanding of customers wherever possible. To respond to a customer’s needs, it is critical to understand who they are, who they have been and who they may be tomorrow.
Understanding past behavior is within our means. This is the domain of customer-centric knowledge repositories, where historical information on each customer resides.
As competition for customers becomes more aggressive, companies with the greatest access to information may be at an advantage…if they can access and assimilate data quickly and then act upon it in a relevant fashion. A relevant response is one that translates into a benefit to the customer-the right offer at the right time.
CRM must be customer-centric and instilled throughout the company. To understand the inherent difficulty in realizing CRM, it is necessary to appreciate that customers have many interactions with a business.
Customers buy goods and services. They open and close accounts. They make inquiries and respond to promotions. These interactions are likely to occur at many different points of contact between a company and a customer. For example, a customer may maintain a checking account with a local bank branch, and also have a loan relationship through the bank’s main office. Another customer may purchase software from several retail outlets, as well as through a Web site or by calling a telephone number given in an advertisement.
Most companies are able to capture individual transactions and maintain an electronic record on operational accounting systems. It has been a challenge for most companies to extract and link information from these disparate legacy (older) systems to ensure a comprehensive customer view. Generally, it has only been through marketing databases or customer-centric data warehouses that achieving such a view has become possible.
Hard Work Another challenge is the difficulty of integrating the many marketing and sales functions-such as lead management, channel management and sales tracking-that involve customer interaction.
Understanding our customers implies knowing the answers to the “who, what, where, when and why” of their varied interactions. Integration enables us to pinpoint why we had a given customer interaction, what its purpose was, when and where it occurred, and who was our point of contact with the customer.
Data warehousing and CRM initiatives are a response to the fragmentation that exists as a result of standalone legacy and back-office systems and processes. Successful one-to-one marketing depends on our effectively linking accounting, billing, shipping, marketing, sales and customer service data and processes to ensure that fuller customer perspective.
The new CRM paradigm is about bridging many different islands of information and processes to shorten the time it takes to respond to customer needs. This means tying existing systems and processes together so we can respond to our customers at the point of sale or interaction-regardless of where that may be.
The processes we engage in as we interact with customers represent another critical component that’s necessary in helping to build a comprehensive approach to CRM. The emerging discipline of knowledge management shows it takes information and processes together to truly know how to respond to many of our most critical business challenges.
Understanding our customers and acting on this necessitates integrating the many strands of customer data and processes existing across the organization’s “touch points.” Integration of sales, marketing and customer service processes, achieved through technology, is one of the principal objectives of CRM. In its fullest incarnation, CRM represents a convergence of customer-centric activities across an enterprise. These activities include lead capture and management; market, customer service and sales force automation, database marketing, customer analysis, data mining, campaign management and one-to-one marketing. Each activity is customer-focused, technology-driven and intended to improve customer responsiveness.
An appreciation of the benefits derived from integrating front and back office systems, information and processes depends on an awareness of how poorly customer systems have been interrelated in the past. Back-office accounting, billing and order-entry systems have traditionally been the source of much of the most keenly valued nuggets of customer information. More compelling than demographic or attitudinal data, transaction history information represents customer actions.
Each time a purchase is made, the transaction is recorded in an operational accounting system. Information captured on a sale typically includes date, place, time, amount and item purchased. These transactions, taken together and over time, reveal patterns of activity and can be extrapolated to predict purchase behavior.
Transforming and organizing this data from a customer perspective becomes critical to the sales and marketing health of the business. This premise has become a guiding principle for most companies, driving the need for development of customer-centric information repositories.
Identifying customer transaction data in back-office operational accounting systems, extracting that data and transforming it into business intelligence that can be fed to front-office sales, marketing and customer service systems “closes the loop” in an effort to increase responsiveness to customer needs.
Interactive marketing is the final piece of the CRM puzzle. Interactive marketing is about responsiveness. It happens between a company and a customer now. History and experience can be a guide, but the opportunity must be seized when it’s at hand.
The computer was a significant advance, because it gave us the ability to capture, store and manage large quantities of data on our customers. This information then provided the foundation for a better-informed understanding of our customers. Today, we stand before an equivalent advance, the Internet-the medium that transforms real-time marketing into a reality. However, successfully employing the Internet to ensure that we present the right offer to the right customer at the right time will depend on our ability to effectively integrate all our knowledge, experience, information and media.
With the Net’s help, it finally becomes possible to build customer relationships one at a time. Companies can now identify, differentiate, interact, tailor and remember, using a single medium. Therein lies the power and elegance of Internet technology for marketing.
Technology is an enabler and customer information a resource. CRM may offer new tools to assist us in taking action, but it will be those tools coupled with judgment, insight, perspective and execution that will distinguish those who are most successful from those who fall short.
