"The customer is king," said department-store pioneer John Wanamaker almost 100 years ago. Yet some experts say cost cuts and labor constraints dramatically decreased responsiveness and personalized services years ago. The old adage "the customer is always right" seemed to become a suggestion, not a rule.
Realizing that improvements in efficiency, quality and distribution have made competing firms virtually identical in the eyes of customers, some businesses are using customer relationship management (CRM) to retain customers and bring them added value.
"Customers have unprecedented power, and they're learning how to use it," says Dick Lee, author of The Customer Relationship Survival Guide and principal of High-Yield Marketing, a CRM consulting firm in St. Paul, Minn. "Companies that continue to treat customers the way they have historically are going to be history."
The global CRM market already has become a regal force. Last year, it was valued at $13.5 billion, according to Aberdeen Group, a Boston-based IT market analysis and positioning services firm. By 2005, the CRM market is expected to mushroom to an estimated $27.8 billion.
"CRM is no longer an option, it's a mandate," says Jim Cecil, president of James P. Cecil Company Inc., a one-to-one marketing firm in Bellevue, Wash. "The most precious asset businesses have is their customers. Any investment businesses make in their future survival has to be CRM-related."
Print Solutions talked to five experts who offered insight on CRM. On the following pages, they share details about what CRM is, how it benefits businesses and their clients, what steps firms should take to start CRM, and CRM mistakes to avoid.
Your quest: Help clients take the throne. Learn answers to the four questions in this story, and give customers the royal treatment.
The Royal Treatment
Helping Customers
Become King
reating clients like royalty can take your firm to new heights. Distributors and manufacturers who recognize the value of customer loyalty seek to establish personal relationships with clients. They understand that the customer should be wearing the crown.
BY KARA S. CARPENTER
What is CRM?
It seems everyone involved in the CRM industry has a different perception of CRM. In a survey of 50 executives in charge of CRM projects at leading firms, META Group, a Stamford, Conn.-based research and consulting firm, found no consensus definition of CRM. In fact, the survey found that even employees within the same firm often have multiple, inconsistent and sometimes contradictory definitions. (See "Defining CRM: Managers Don't Agree" on page 50.)
People tend to perceive CRM within the lines of their own business function, says Lisa Loftis, co-author of Building the Customer-Centric Enterprise and vice president of Intelligent Solutions Inc., a business consulting firm in Boulder, Colo. For example, a marketing pro may think CRM encompasses campaign management, a marketing database and marketing research. A sales rep may view CRM as a way to maintain contact lists, manage schedules and close leads. "Because CRM deals with the customer, people tend to look at it based on their dealings with the customer," Loftis says.
Perhaps the biggest misconception
about CRM is that it's simply a software tool that will manage a firm's customer
relationships. This misconception can be attributed to CRM software vendors, who
have deep pockets when it comes to marketing and selling their products, Loftis
says. As a result, businesses often underestimate the investment and
requirements necessary for successful CRM implementation. "CRM isn't just one
thing," Loftis says. "It's aligning business strategy, organization structure
and culture, and customer information technology so that all customer
interactions [improve] the long-term satisfaction of the customer and profit the
organization."
CRM is a business approach that integrates people, processes and technology to maximize a firm's relationships with its customers, says Barton Goldenberg, author of CRM Automation, publisher of The Guide to CRM Automation and founder of ISM Inc., a Bethesda, Md.-based CRM consulting firm. "CRM is a comprehensive approach that provides seamless coordination between everyone who touches the customer," he says. "Rather than sales having its own information, and marketing having its own information, and customer service having its own information, everybody shares common information about the customer."
Although CRM doesn't refer to just technology, software such as ACT!™, GoldMine®, Maximizer®, SalesLogix®, Onyx® and Siebel® is essential to the success of CRM because it allows firms to track customers and orders, monitor revenue and expenses, and target marketing prospects. Most software includes time-management functions such as calendars, task lists and alarms; sales-management functions such as contact management, account management, proposal generation, order entry, sales forecasting and sales cycle analysis; customer-contact center functions such as incident assignment and tracking, problem management, and order management; and marketing functions such as lead generation, campaign management, and targeted email and traditional mail marketing.
Ultimately, the concept of CRM isn't new at all. It allows businesses to understand and anticipate the needs of current and potential customers just as the neighborhood grocer did decades ago. "CRM is an enormously powerful resource tool for companies that truly want to pamper customers," Cecil says.
