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The Changing Face of Customer Relationship Management

As companies review their CRM strategies, the next generation of products is emerging.

VentanaView™

Summary
After enterprise resource planning (ERP), customer relationship management (CRM) is probably the best-known enterprise business application; for some time it has been the cornerstone of companies’ efforts to become more customer-centric. CRM has long been associated with the call center, but that perception is changing as companies realize that managing customer interactions is a business-wide issue. It also has long been thought of as a single application; that too is changing as companies recognize they need to cover all customer-facing processes and this typically requires separate applications. Ventana Research believes these changes will become more emphatic as new technologies and applications arrive in the CRM domain and companies focus on improving the effectiveness of managing their customer relationships.

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Customer relationship management (CRM) has been a topic of conversation dating back to early discussions about why and how companies should become customer-centric. Preaching that in a highly competitive market “the customer is king,” analysts and consultants called on companies to realign both their organizations and their processes from being internally focused to being focused on the customer. Furthermore, they said, companies should establish better relationships with their customers by building better profiles of them, getting a clearer picture of the business each customer transacts and a better understanding of how customer and company interact. The result would be a more proactive approach and more personal interactions.

From this promise CRM was born. More than 20 years on, not much has changed. Analysts and consultants are still saying the same things. Businesses still listen, but not many have taken positive action. Most companies are still organized in separate “stovepipe” departments or lines of business. They have not applied key performance metrics focused on the business and customers. And it would seem the customer-facing processes haven’t improved a great deal, because survey after survey shows that customer satisfaction has gone down, not up.

As companies began to centralize customer interaction management, CRM became closely associated with one particular stovepipe department: the call center. These centers were supposed to give customers a single point of contact with the company, to make handling customer interactions more efficient, to provide a single view of the customer and to increase not only customer satisfaction but new business opportunities. Today CRM has lost its appeal because company after company has reported that it didn’t gain the returns it expected from CRM projects; indeed, many companies report that they haven’t even been able to complete their intended projects.

One thing that did change was that many new software vendors appeared and made lots of money selling CRM-related products. In fact, so many appeared that the market has become so overwhelmed with products that no one seems to be able to tie down what a CRM product is. At last year’s ICCM conference 13 vendors chose to categorize their products as CRM; in its recent report e-consultancy.com evaluated 12; yet crmGuru includes 20 on its web site. The most surprising thing is there is very little overlap between the various lists, which include not only the highly recognizable CRM products from Oracle and Siebel (now of course to be part of Oracle), Onyx and Pivotal, but vendors as diverse as Act!, Aspect, Broadvision, Cisco, eStar Communications, FrontRange with GoldMine and Opus. Surprisingly, only one of these lists included SAP, which, based on license sales, claims to be the number one CRM vendor. No wonder there is such confusion!

An explanation for this confusion requires going back to basics. Part of the mantra of how companies should become customer-centric was to create a call center that would centralize the management of customer interactions. This turned out to be a huge challenge because customer interactions — whether phone calls, letters or Web-based — were not confined to the centers but occurred across all areas of the business, including in many of the silo departments of marketing, sales, service, support. After all, customer-facing processes are an integral part of business operations in these departments, so it is not unusual for companies to have separate systems to support each of them. Vendors and analysts alike categorized products being used in each of these domains as CRM, even if they were not really very similar. 

Of course, companies don’t care much what vendors and analysts say until it has an impact on their organization, which it now is doing as businesses reassess their CRM strategies in the light of past experience. Executives are realizing the shortcomings of centralized call centers and have developed a list of new requirements, among them more channels of communication; coverage of more customer-facing processes; involvement of more employees across the organization including home workers, mobile workers and what were once considered back-office workers; better customer-focused performance metrics; and new techniques and technologies. They realize they need to virtualize the center and spread customer interaction management across the company. Above all, though, companies have to decide whether customers are really that important to them — to many customers it would appear they aren’t — and if they are, how to adapt their culture and processes to really become customer-centric. Technology is no longer the issue. CRM is now more about culture, people and process changes; there is more than enough technology available to support most any initiative.

Assessment
The CRM world is changing, from both process and technology points of view. Customer contact and customer satisfaction are no longer seen as just the responsibility of the call center. A company needs to identify all its customer touch points, what process changes have to be made and how to handle all the points of contact consistently and cohesively, no matter where or when they occur or through what channel they arrive. Correspondingly, Ventana Research believes that CRM technology should no longer be viewed as a single application but rather as an integrated family of applications that in aggregate can support the handling of any customer interaction. We believe that some new technologies, such as speech recognition and analytics, can help drive process change to bring about much improved customer relationship management. Ventana Research therefore recommends that companies that truly want to become customer-centric take a careful look at some of the newer and more innovative products coming onto the market.

About Ventana Research
Ventana Research is the leading Performance Management research and advisory services firm.  By providing expert insight and detailed guidance, Ventana Research helps clients operate their companies more efficiently and effectively. These business improvements are delivered through a top-down approach that connects people, process, information and technology. What makes Ventana Research different from other analyst firms is a focus on Performance Management for finance, operations and IT. This focus, plus research as a foundation and reach into a community of over two million corporate executives through extensive media partnerships, allows Ventana Research to deliver a high-value, low-risk method for achieving optimal business performance. To learn how Ventana Research Performance Management workshops, assessments and advisory services can impact your bottom line, visit www.ventanaresearch.com.

© 2006 Ventana Research

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