Building the perfect customer engine

CRM is often viewed as an organisation-wide way of automating customer contact, leaving marketing as little more than the originator of creative and offers. As David Reed finds out, the operational reality is more limited.

It is hard to imagine now, but there was a time when companies barely gave a thought to customers. Standard operating procedure was to come up with a product, then look for a market and tell it what was so great about the thing on offer.

While the excitement about recent product launches, such as the iPad, might make it seem like little has changed, in reality business no longer works that way. Even a manufacturer of highly successful products like Apple will have spent time thinking about how people use technology, the tasks they are trying to complete and how they could be performed better. In other words, thinking customer.

Getting to this new state of play was not easy. From 1997 to 2001, it involved a lot of advocacy of business process re-engineering backed up by substantial investment into new software. While there may not be a “T” in CRM, most companies addressed it – at least at first – as a technology-led project. Only over time did the culture and processes change.

What that heavy IT spend has done is leave a legacy of systems and databases that support the new customer-focused way of working. So much so that it can seem as if CRM could be run “lights out”. If marketing just populates the right repositories with content and data, could the system run itself? Or is there still a need to drive the customer perspective out into the operational realm?

Epsilon Test Services, part of the PHS Group, has come at CRM almost from the other direction, starting with an operational focus and building its customer management capabilities. “We had identified a way to implement a system merging all our customer data for billing and invoices,” recalls Kieron Moran, IT manager. “Having built that, we realised it could serve as the foundation of CRM.”

The company provides safety testing and calibration services for electrical, fire and medical equipment, via a mobile engineering field force of 140. While Epsilon was delivering a good service, its billing process was slow and disjointed. For customers, being billed up to eight weeks after a service visit could have a negative impact on that experience. For cashflow, with around 300 services billed each day, the process was also too slow.

Having introduced PDAs for service engineers, this process time was reduced to five days. From there, opportunities for real competitive differentiation in a commoditised and price-driven market started to be recognised.

“We have improved the front end from information created in the back end,” says Moran. “By identifying where we had problems in information gathering it was easy to persuade people to adopt our CRM package once they realised it was going to make their life easier.”

One of the challenges for a company that delivers service via a distributed workforce is ensuring that the information given to engineers is accurate and up-to-date, so they are not attempting to visit and service the wrong premises, for example. Equally, the data about what has been carried out and other potential sales opportunities from those services needs to flow back to the centre. With a paper-based system, there was no real ownership of customers and, admits Moran, a “blame culture”.

By asking staff what would make their life easier and modelling the CRM processes around existing work practices, a new end-to-end way of working was introduced that got buy-in, had minimum disruption and yet also diluted the “them and us” mentality.

“We have now been able to leverage the CRM system to grow the business considerably over the last couple of years without the number of staff growing proportionately. It has helped us to become more efficient, so if somebody is off sick, for example, their work can be picked up by anybody else because all of the information is in there,” he says.

This is one of the major advantages of operational CRM that is often overlooked in the emphasis on communications outcomes. Customers may have a direct relationship with a specific individual, especially in the B2B space. But if they require support or service when that person is not available, they do not want to wait.
Epsilon is now able to offer a customer-facing website for contracts where it might be managing hundreds of sites, providing the client with all the information in one place. This centralisation of data and the streamlining of processes has allowed the company to win new contracts and also extend its proposition, by offering fixes as well as tests of equipment.

“The business has become bigger through CRM. People do still call it CRM, but it is a core part of their work. They have forgotten that it started as a sales tool and is now something that is accepted as the way they do business. It is a customer service thing,” says Moran.

The escalation of his company’s project from an inward efficiency focus to an outwards customer focus is a perfect example of how CRM can change a business. It has also been enabled by the progression of its technology partner, Sage CRM, beyond its origins in accounting and contact management solutions and into business-wide process management tools.

Duncan Wood, product manager for Sage CRM, argues that, “in the mid-market, there is still a large opportunity for business to improve itself by implementing CRM. There is still a big opportunity for the original CRM concept of putting the customer first.”

He notes that companies that have been successful with CRM are those where the project continues to evolve, rather than being seen as an end state. “You need to feed and water it by constantly going back. You need to ask if the business has changed and whether the assumptions made when you first started are still correct,” says Wood.

This is one of the biggest arguments against viewing CRM as a form of marketing automation. While the marketing function can benefit from the process and workflow involved – and especially from a centralised repository of customer data – the way customers behave and their needs several years ago will be very different to now.

CRM often forces a company to acknowledge where it has broken processes that need to be fixed. “It could be that your sales function is not working well with marketing or that customer service is still not quite there,” says Wood.

Recession has helped to bring – or often force – functions closer together and ensure that they are working efficiently both in their own right and as part of the whole. Closing the loop between different marketing channels and their responses is one benefit. So is understanding which products are proving successful and those that are triggering a lot of calls for after-sales support.

That is a long way from where the concept of “relationship marketing” originated in 1982 or how Jagdish Seth explained the idea of CRM in an academic journal in 1983. Back then, it was about how to formalise what were often disparate approaches to marketing and customers. Technology during the 1990s helped to bring it together into the concept we now understand.

And that remains part of the problem, according to Ed Thompson, vice-president and analyst with Gartner. “The technology is better than ever. It is still not perfect, but the fit is getting better. Yet still only half of all CRM projects are being done with packaged software. For the rest, it is still custom built,” he says.

Whereas business-critical systems such as ERP are largely implemented out of the box, call centre and web-based systems for CRM either need a lot of bespoking or are created from scratch. While this requirement for heavy programming is going down each year, it still acts as a limiting factor on the ability of home-grown CRM systems to link up with external web services or other internal business solutions.

Even so, Thompson does not believe that this should be seen as an issue. “The real struggle is with people. Marketing tends to flit from one technology to another, particularly if a test is seen as a failure. Marketing will decide it doesn’t like it, so it can be a struggle still to get it to adopt CRM,” he says.

Acceptance of technology to support customer data is much better, yet even here, Thompson sees gaps. “If you split these into two types of project – the first is a departmental or business line project to deliver a specific benefit. Those are 90 per cent of the projects we see. The second is business-wide, cross-departmental CRM and they are only 10 per cent,” he says.

Customer data integration at this scale may still be a minority activity, but it has maintained its momentum from the mid-00s onwards. Companies that have realised how much can be gained from a unified view of their customers are continuing to invest into the single customer view.

“When we hit the downturn in 2008, we assumed we would see those projects slow down as they can be difficult to tie to business benefits. Surprisingly, they have held up well and kept going with relatively few shut down,” says Thompson.

From a marketing point of view, this is steadily building a really significant resource which it will become increasingly difficult to ignore. Customers want to be recognised regardless of the channel they are using and be treated as individuals. Marketing may say it wants to behave like this – the reality is that it rarely does so.

One of the reasons is that the individual elements of CRM that have been implemented in different places by companies have yet to be sown together and fed from that single view.

Marketing may want to get data, customise messages and propagate them out into every channel. Achieving that is not easy.

“I don’t think we have conquered the operational challenges of CRM,” says Pete Anderson, planning director at Underwired Amaze. Even for pureplay companies, he notes that delivery of a product or service may be offline. Integrating data backwards and forwards from these channels is still not easy, despite the importance to the customer experience of recognising when they have received a broken item next time they log in, for example.

Laithwaites is an example of a business using the website as its primary route to market, yet relying heavily on physical world logistics. Anderson’s agency has just started working with the distance selling business and is already able to improve the customer experience through online channels. “The web allows you to serve content and connect the front end with the back end, for example by emailing people who abandon a basket. You couldn’t do that in-store,” he says.

With a lot of companies now operating across multiple channels, a new task around CRM is emerging for marketing. “Part of the challenge is managing customer expectations. What we have found is that you can have a positive impact by saying, ’we know there is a problem and we are on the case’,” says Anderson.

Where CRM has struggled in the past has been in attempting to co-ordinate each and every part of the customer journey. Realising that this is not always possible, but that marketing’s input can help to fill the gaps, is a more realistic objective than striving for a fully-automated operation.

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