The State of eCRM, Part II

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Previously, I discussed the first two industry trends, in which I predict that: 1. We’ll learn to better use the Internet as a CRM tool and, 2. Businesses will get smarter about how to use client data.

Here are the remaining three of the five trends:

3. Cross-channel integration will still be a good idea. But it’s still mostly an idea. To reiterate, most businesses today realize that the only sustainable competitive advantage in attracting and retaining customers will be to know them individually and better than anyone else, and to be able to offer them what they want, when they want it.

An important step toward achieving this vision is to integrate offline (call centers, kiosks, point of sale terminals) with online customer-facing operations in order to achieve a unified view of a particular customer. With such an integrated customer view, a global and diverse multi-channel organization could achieve the same sort of intimacy and personalization that the neighborhood shopkeeper has with the local patrons by providing customized service and engendering brand loyalty.

But the ability to integrate the different customer views across multiple channels to create a personalized offering “on the fly” at the point of sale is still a vision, not an actual system (despite what the press releases from certain CRM and eCRM solution vendors would lead you to believe).

A major roadblock to implementing such a system is how to integrate customer data, which comes in both electronic and non-electronic form. Just integrating the electronic customer data feeds, using middleware to translate the different data formats and structures into a common form, is a major challenge in itself. It is not uncommon to have fragmented and disperse views of customers held hostage, essentially creating “islands of computing” within an organization, and those corporations that have a complete and integrated view of their customers are few and far between. One good example of integrating electronic customer information is Harrah’s winner’s information network (WINet), touted as the gambling industry’s first national customer database.

But perhaps even more challenging is a management mindset. I suspect that one of the biggest reasons why there are so few actual integrated customer-facing technical architectures is that there truly is a lack of integrated customer-facing management strategies in place.

The concept of sharing customer information and taking a holistic approach to customer demand is, sadly, still a revolutionary concept to most organizations. Even in the most sophisticated corporate cultures, operating units are loathe to share customer information, and, in fact have strong financial incentives not to cross-sell customers, as the perceived risk of doing so is not adequately rewarded.

Adding to the problem is that many managers still see the Web as a self-service tool to reduce call center
customer-handling functions — not an integrated part of customer sales and service. In fact, many companies have added more customer service functionality on their sites, only to see inbound call center traffic and related costs increase instead of decrease (as they had planned).

What they fail to appreciate is that this is good news, not bad. The more value you offer customers, the more interested they become. If they had an integrated customer facing strategy, they would be able to better capitalize upon the increased interest. But most companies don’t.

So while integrated, cross-channel CRM will continue to make for great sales pitches for technology package vendors, it will remain simply a vision for most organizations, at least this year.

4. eCRM, like CRM, will begin to be seen as part of the supply chain (now called the “demand chain.”) In my not-so-humble opinion, we’re still in the Stone Age when it comes to sales and customer service. For most
businesses, the prevailing mode of operation is: “If you can figure out what you need and want, and if we have it, we’ll sell it to you.”

Most businesses have only begun to scratch the surface at fulfilling current demand, much less predicting and anticipating customer needs. But, ultimately, the consumer will take center stage as the focus of an organization’s inner-workings (as opposed to the company’s product line, its technical infrastructure, or, in some egregious examples, the ego of its CEO).

Some years back, thought leaders and industry pundits introduced the concept of a “closed loop” marketing system, in which customer needs are identified, produced and fulfilled in a continuous loop. Put into practice, one can imagine an integrated, multi-platform customer intelligence-gathering process to identify and define needs. This customer-facing system would be tightly integrated into a Web-enabled supply chain (or, perhaps more accurately, fulfillment network), which is dynamically configured to produce and fulfill this demand in a given point in time. Translated into plain English, this means businesses will have the ability to find out what a consumer wants and pull together a set of business partners to provide it at the right time, at the right price, in the right way.

The “demand chain” is still a concept. But with the growing power of XML-based business networks, the realization of this concept may not be too far away.

5. eCRM, like CRM, will remain extremely challenging to implement Tom Peters once wrote, “The technical part is harrowing; the politics are horrendous.” He was writing about enterprise resource planning software implementations, but it could also be said of CRM and eCRM projects.

As a strategy consultant, it never fails to amaze me how difficult and painful it is to introduce anything new or different in an organization. You may be familiar with the symptomatic cries: “This new system just doesn’t work.” “The old system had its flaws, but we could at least figure out ways around it.” “Management really made a big mistake buying this system!” The reasons? There are many, but here are the top five:

1. Some applications are, in fact, prematurely released, without all the major bugs identified.

2. Staff are often inadequately prepared, and many small, inexpensive readily-addressed training issues become big, expensive help desk technical support problems.

3. Vendors of software packages that typically require tremendous amounts of custom coding and/or configuration often sell this technology as “plug and play” solutions.

4. Corporate managers tend to believe that implementing this software will in itself magically improve employees’ talents and capabilities as well as re-engineer the company’s business processes.

5. Some consultants make the same mistakes as their clients in underestimating the cultural and political obstacles to implementing such systems. Organizations are facing serious challenges in adoption rates as they put larger, more complex, and more integrated systems on faster time frames for implementation. Not only are employees being asked to work smarter and do more (via self-service HR portals), but so are customers — often without the required incentives or enabling user experience (the reason for many dot-com failures).

As long as people are involved, the elements of awareness raising, acceptance, training and adoption must be factored into the approach. This is particularly true of eCRM, which like any another customer-facing strategy, must be implemented with care and precision.

Those are my predictions for this year, write me back and let me know what you think.

Arthur O’Connor is a senior manager in the financial services practice of KPMG Consulting specializing in customer-facing strategy as well as related architectural and organizational issues. An accomplished author, speaker and consultant, Arthur is one the country’s leading experts in customer relationship management (CRM) and eCRM.