According to Gartner, IT spending is predicted to grow by 5.3% in 2010. With that in mind, companies will be strongly advised to begin changing customer strategies, expanding from a purely retentive approach into a more acquisitive model, in which they use sophisticated techniques in the area of cross-selling and up-selling to better leverage the customer base. With more IT budget available, companies may also be in a position to begin considering more adventurous projects, such as customer relationship management.
In June, Gartner company will be discussing key elements of CRM strategy at its Customer 360 Summit, but its analysts have already provided some basic lessons. Ed Thompson, president and distinguished analyst at Gartner, outlines three basic steps to CRM success.
1) The first involves setting your destination. Without a goal in mind, any CRM project will be unlikely to succeed, because implementers will not know where they are going. The vision will be heavily dependent on the company leadership and should encompass governance structure and roles.
2) Secondly, organisations should audit the current situation before beginning a deployment. They should take into account the skill levels available, what competitors are doing, and what partners need when they are deciding where to start from. Customers should also be consulted, which raises the interesting question of customer groups. Technology software companies often have user groups, either officially sanctioned or not, that can be used as a useful conduit when communicating with the larger customer base. Organisations might want to consider this when creating a CRM project.
3) Finally, Thompson advises customers to map the journey. This is a quantative process, which requires companies to nail down answers to questions such as: what is the ideal customer base? What products or services will be sold, to whom, and through which channels? However, Thomson emphasises the qualitative nature of the process, too. Assessing the best way to build customer loyalty and brand awareness is an important part of this process.
In the past, Thompson has also drilled down to provide a more comprehensive view of effective CRM strategy. In addition to board-level vision and the concrete assessment of goals using metrics and key performance indicators, there are other steps to success. Changes to organisational structure to better encourage collaboration is an important part of the procedure, he has said. And successful CRM also involves customer process re-engineering, to create processes that meet customer expectations and provide competitive differentiation. In short, different, more effective ways of selling are important. Readers may remember, for example, when companies first began selling car insurance via the telephone. The results in terms of customer appreciation and brand awareness were impressive at the time, and it set a precedent for future practice in the industry.
Thompson has also outlined the importance of customer information to a successful CRM project, which he has described as a blood supply that flows around the organisation. Operational and analytical systems must be tightly integrated if this information is to flow effectively.
With software as a service now fully established as part of the CRM portfolio, the ability for smaller companies to engage in this potentially profitable practice is increasing exponentially. But, as with any technology that pervades an organisation at many different levels, it is important to take a strongly strategic approach to implementation before addressing the challenge at a tactical and operational level.
I've been writing about technology for nearly 20 years, including editing industry magazines Connect and Communications International. In 2002 I co-founded Futurity Media with Anthony Plewes. My focus in Futurity Media is in emerging technologies, social media and future gazing. As a graduate of philosophy & science, I have studied futurology & foresight to the post-grad level.