business and technology strategies for more-profitable customer relationships - vision for crm

Ed Thompson
Gartner CRM Vision:
Business and Technology
Strategies for More-
Profitable Customer
Relationships
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•
CRM budgets are less protected. So far, CRM has survived the economic
slowdown, but pressure is building.
•
CRM is dangerous. Failure rates are rising, mistakes will be seen by everyone
and the impact on the enterprise will be greater.
•
CRM is still a fantasy in most enterprises. CRM done at a department level
suboptimizes the customer relationship.
•
CRM can provide a fundamental competitive advantage. Those enterprises
that succeed are reaping substantial long-term benefits.
•
CRM should benefit both the supplier and customer. Few initiatives provide
any benefit to the customer.
•
CRM is not just about creating a unified view of the customer. The customer
would like a unified view of the supplier too.
•
CRM will evolve beyond customers. The future of CRM will include a greater
focus on employees, partners and prospects.
Conclusions
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1. What is the value of CRM to enterprises, and
what drivers are continuing to force its
acceptance?
2. How will organizations develop and implement
a business vision for CRM?
3. What will CRM look like in the future, and how
can enterprises position themselves now to be
prepared for these changes?
Key Issues
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0
10
20
30
40
50
60
Jan Feb Mar Apr May Jul
No change yet
No change, but
monitoring the
situation
Yes, planning to
spend more
slowly, more in
2H01 once I
have a better read
Yes, planning to

spend less
Yes, senior
management
requested a
cutback in
spending
Yes, doing deals
that are smaller
than I would have
otherwise
225 respondents with average
revenue of $10 billion
Aug
Has the Slowing Economy/Stock Market Decline Made
You Re-evaluate Spending in the Last Month?
No. of Respondents
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•
Microsoft Office upgrade – 29%
•
E-commerce initiatives – 27%
•
Network equipment – 24%
•
Security software – 24%
•
Windows 2000 server – 22%
•
Windows 2000 desktop – 21%

•
Wireless initiatives – 21%
•
Unix servers – 20%
•
Storage hardware – 20%
•
PCs – 18%
•
Net. and app. mgmt. software –
18%
•
Call center projects – 18%
•
CRM software – 17%
•
Employee portal projects – 17%
•
ERP software – 16%
•
Web site enhancements – 16%
•
Consulting – 16%
•
Database software – 14%
•
Customer service apps. – 14%
•
New custom development – 14%
•

Document mgmt. software – 13%
•
Marketing/analytics – 13%
•
Mainframe hardware – 13%
•
Content mgmt. – 11%
•
Business intelligence tools – 9%
•
Mainframe software – 7%
•
Storage software – 7%
•
Supply chain mgmt. – 5%
•
Sales force automation – 4%
•
E-mail response software – 4%
•
Mainframe system mgmt. – 4%
•
Procurement software – 2%
•
E-store software for Web site – 1%
Which Areas Are Likely to See the
Biggest Spending Increase in 2H01?
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Market Trends

1. Increasing Customer Education and Expectations Consumer complaints 2000 = 5x 1995
2. Customer Relationship Complexity Rises R(f) = (Segments) x (Products) x (Channels) x (Partners)
3. Rising Global Internet Adoption More accessible competition and more coordination between partners
Executive Trends
4. Intensified CEO Attention on CRM CRM = profit increase = stock price increase = bonus increase?
5. Protected CRM Budget Allocation
6. Formalization of Governance for Customer Relationships CRMO, CCO, customer advocate?
CRM Implementation Trends
7. Shift in CRM Application Architectures and Spending DIY > package; C/S > Web; best of breed
> suites; per seat >role-based; $2,500 >$250 per seat; buy >ASP + rent
8. Explosion of Customer Data Web, chat, e-mail, instant messaging, expanded contact centers
9. Vendor Churn Leading to a Power Shift 500 > 50 vendors; best of breed > ESP and ERP
10. Increasing Numbers of Project Failures 65 percent > 80+ percent in mid-2003
Top 10 Trends: The Siren Call of
CRM?
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Top 10 Causes of Failure in CRM
Today
1. Management has little customer understanding or involvement
2. Rewards and incentives are tied to old, noncustomer objectives
3. Staff culture does not have a relentless focus on the customer
4. Limited or no input from the customers’ perspective
5. Thinking technology is the solution
6. Lack of specifically designed, mutually reinforcing processes
7. Poor-quality customer data and information
8. Little coordination of multiple departmental initiatives and
projects
9. Creating the CRM team is left to last and lacks business staff
10. No measures or monitoring of benefits and a lack of testing

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No implementation
Unintegrated
departmental
projects
Integration of more
than one project
"True" CRM
2000 2001
7%
3%
45%
35%
17%
30%
33%
30%
United States – 75 percent implementing, 8 percent “true”
Implementing CRM Is a Fantasy
for Most in Europe 2000 vs. 2001
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Applications

Emphasis



Goals

Population
Mix
Dedicated/
Proprietary
Call Center
SFA
Varies
Cost Reduction
Revenue
Enhancement
Complex
Infrastructure
10% to 20%
45% to 50%
10% to 30%
5% to 10%
Less than 1%
Sub-
departmental
(Type C)
Departmental
Multidepartmental (Type B)
Enterprise
Extraenterprise (Type A)
Varies
Efficiency
Closed
Loop
Analytics
Universal

View
CRM
Infrastructure
Competitive
Advantage
Not All CRM Strategies
Are the Same
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Guiding Principles for
Successful CRM
Extend breadth and
depth of relationships
Leverage and
enhance brand equity
Touchpoints
Value Network







Focus on customer
value, satisfaction
and loyalty
Minimize transaction
barriers and lower costs







E-CRM
Self-Service
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CRM is a business strategy whose outcomes optimize
profitability, revenue and customer satisfaction (the why?)
by organizing around customer segments, fostering
customer-satisfying behaviors and implementing
customer-centric processes (the how?).
CRM technologies should enable greater customer
insight, increased customer access, more-effective
customer interactions, and integration throughout all
customer channels and back-office enterprise functions
(win-win outcomes?)
Gartner Definition of CRM, But … Every
Enterprise Should Have Its Own
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Best Time/Cost
Best Product
at Best
Time/Cost
Best Time/Cost
Plus High Touch
Operational

Efficiency
Customer
Intimacy
High Touch and
Best Product
Best
Product
Enterprise
Resource
Trade-Off
Product
Superiority
Best
High Touch
Customer Value Propositions
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External:
Customer
Experience
Internal:
Organizational
Collaboration
Organizational
Structure
People: Skills
and Empowerment
Incentives and
Compensation
Data Mgmt. and

Applications
IT Infrastructure
Processes
Metrics
Definition and
Segmentation
Customer
Communications
Customer
Requirements
Customer
Feedback
Metrics
Customer
Expectations
Processes
Zen and the Art of CRM:
Yin and Yang
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The Eight Building Blocks of CRM
Perceived pain points: Least pain Some pain Most pain
Strategy
Organizational
Collaboration
Customer
Experience
Metrics
Information
Technology

Processes
CRM
Vision
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Customer Process Re-Engineering
1. All customer-facing processes are mapped
2. Key processes are identified with customer input
3. Prioritized by impact on customer satisfaction
4. Measured by contribution to customer value
5. Implemented in front and back office
6. Given a cross-functional “owner”
7. Implemented with partners
8. Targets sent to customers
9. Compensation for failure
10. A customer SLA
11. SLAs vary by
segment?
12. By…….
Telecom
Provisioning
Fault Restoration
Service Reliability
New Service Intro
Salesperson Know-How
Auto Insurance
Claims Hotline
Claims Processing
Inquiry Handling
Claims Tracking

Problem Resolution
Retail Banking
“We’re speeding up your processes”
Interbank Transfers
Available Balance
Seven-Day Account Transfer Processing
Real-Time Account Balance
ATM, Telephone, Branch, TV, Internet
Horizontal
Death
Welcoming
Change Address
Quote to Cash
Winback
Campaign to Compensation
Individual?
Customer Processes and Metrics
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►
Unified view of supplier, customer
►
Accessible: Nearby or within reach
►
Available, convenient: Open 24x7, self-service
►
Approachable: Via multiple channels
►
Simple: Easy to use
►

Transparent: Within the enterprise and across
the supply chain
►
Trustworthy: Privacy is respected
Greater Customer Access
Lower-Cost Access
►
Unified view of customer, supplier
►
Minimizing customer transfers
►
Creating cross-functional roles
►
Retraining employees
►
Empowering employees and restructuring
compensation
►
Involving partners
►
Tracking customer processes
More-Effective Interactions
Lower-Cost Interactions
►
Unified view of customer, supplier
►
Churn likelihood
►
Current profitability
►

Lifetime value
►
Channel preference
►
Life events
►
Relationship events
►
External events
Greater Insight Into Customers
Greater Insight for Customers
►
Integrating across channels
►
Providing consistency across channels
►
Ensuring people resource per channel
►
Planning new channel life cycles
►
Consolidating internal and external data
►
Trading information with partners
►
Sharing information with customers
Unified View of Customer
Unified View of Supplier
Customer/Supplier
Win-Win Outcomes
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Dow Chemical consolidated all
customer service and sales
information into one corporate
memory to ensure a consistent
face to the customer after having
measured customer interface
costs and activities per channel.
Compaq created a Partner
Relationship Management
solution to allow channel
partners consistent and greater
access to information about
leads, products, services and
user profiles.
Harrah’s Entertainment shared
data across multiple casinos and
hotels to create a unified
personalized loyalty and rewards
system based on customer
profitability through greater
customer insight.
Ford added a Web-based
product configurator to simplify
the order-entry system and
thus aid its fleet sales dealers
in more-effective interactions
with fleet buyers and the
drivers of the vehicles.
Case Studies of Successful

Outcomes
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24-Month
ROI
Stage
Business
Impact
2X - 5X
Departmental
1X – 3X
Functional
Efficiency
4X - 7X
Partial CRM
Effectiveness
5X - 10X
Total CRM
Competitive
Advantage
Finance
Sales
Service
Support
Marketing
Service
Sales
Mrktg
Strategy
Metrics

Departments
Systems
The Evolution of CRM: Ajax?
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Industry CRM Involvement
Technology & High-Tech
Banking
Financial Svcs.
Telecom
Retail
Utilities
Insurance
Media
Petrochemicals
Pharma.
Automotive
Distribution
“Dot-Coms”
FMCG or CPG
Manufacturing
Business Services
Healthcare
Government
Construction
Gartner estimates:
Percentage
organizations
that have
implemented

more than one
CRM function
90%
1. More Commodity
Product/Service
2. More Channels
of Communication
3. More Global
Competition
Current 5 Yr Projected
95%
10%5%
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Access: Data Exchange
Integrate: Link Systems
Collaborate: Create a
CRM Ecosystem
Implications:
– Communities
– “E to E” Approach
– Part of Several Different CRM
Ecosystems
– Not Only Will Channels Merge/Morph,
But so Will the Argument of
Who Owns the Customer
Your Company
Customers
Prospects
Employees

Channels
Suppliers
Partners
Affiliates
Influencers
Future CRM: It’s Not Just for
Customers Anymore
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Corporate Hierarchy
Value Chain Network
Franchise
4 companies,
10 vendors each =
10,000 permutations
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The Competitive Future: CRM
Ecosystems
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Recommendations
1. What is the value of CRM to enterprises, and what drivers are continuing to force its acceptance?
• Recognize that the long-term trends and drivers behind CRM have not changed, despite the slowdown in the
U.S., European and other economies.
• Protect the budget for CRM investments — it will come under even greater pressure during the next six to
nine months.
•
Examine the past mistakes of others and avoid considering CRM a technology issue.
2. How will organizations develop and implement a business vision for CRM?
• Define both enterprise and customer value propositions before charting a CRM strategy.
•
Use the “Eight Building Block” model as a checklist to determine which elements of CRM are currently
lacking and to identify areas of responsibility where no one is in charge.
• Focus on customer-centric processes and metrics — these are the areas of the Eight Building Blocks that
most enterprises have found to be most problematic areas. Implement processes based on customer
benefits; start with customers and then work backward.
•
Balance the internal focus with that of the customer experience — appoint an individual who is responsible
for the external viewpoint.
3. What will CRM look like in the future, and how can enterprises position themselves now to be
prepared for these changes?
• Aim for “total CRM” with involvement across the whole enterprise, but don’t try to do it all at the same time.
•
Benchmark and invest appropriately for the industry in which your enterprise operates, avoid over-extending
investment unnecessarily or being left behind.