Adjusting the CRM focus

Companies with vested interest in CRM are breathing a sigh of relief: Clients are finally realizing the shift to effective CRM requires a massive change in the corporate culture and philosophy - not just going out and buying a whack of software.

Companies with vested interest in CRM are breathing a sigh of relief: Clients are finally realizing the shift to effective CRM requires a massive change in the corporate culture and philosophy – not just going out and buying a whack of software.

At the core, CRM is a business strategy – corporate philosophy, some would say – with the ultimate goal of understanding, anticipating, managing and personalizing the needs of current and potential customers.

The Toronto-based Customer Relationship Management Association of Canada tracked the global failure rate of CRM at between 40% to 80%. The top five reasons CRM fails are: organizational change requirement; company politics and inertia; lack of CRM understanding; poor planning; and lack of required CRM skills.

‘At least now, people are realizing the concept has not been wrong, the focus has,’ says Stan Brown, partner in the CRM consulting practice at PwC Consulting, and author of a recent study (IDEAS 2001: Achieving Success Through Performance Driven CRM) issued by the PriceWaterhouseCoopers unit. According to the findings, many organizations are still struggling with the basic question of how to make CRM improve customer service, build customer loyalty and increase profitability.

‘More organizations are stepping back and saying, ‘I’ve got different units making different investments, it’s time for us to find out what level of integration we need among the silos,’ and ‘What are the best investments we can make to leverage across the organization?’ That’s the new understanding coming in,’ he says.

The challenge, pundits say, is still executing enterprise CRM – operational CRM (managing the customer touchpoints) and analytical CRM (understanding the customer) – and bringing various tactical initiatives together. But as long as the customer, and in turn customer data, is at the heart of the organization, continuous improvements to CRM will be made.

Colin Tener, president of Toronto-based Tener Solutions Group, acquired earlier this month by Transcontinental, says most companies today are practising CRM tactically within individual portions of their business.

‘They may not have CRM practices or metrics in every one of the business units, or they’re doing it in one division first as a testing ground, and then rolling it out to other divisions,’ he says.

‘It’s a bit of a hybrid model, but what they’re trying to do is make sure all of the information is available at all the customer touchpoints, while making sure the decision rules are in place to use the information intelligently. It’s probably a practical way to proceed – to be doing all the organization change at the same time is a pretty daunting task. The integration across the enterprise will come later, over time.’

Companies are also cutting up their ‘implementations’ into manageable 90-day chunks. Instead of a multi-million dollar investment over 18 months, there will be smaller, proof-of-concept investments or pilot programs in the various channels or customer segments, adds Brown.

It’s better to first focus on the customer, says Laura Pollard, president of CRMA Canada. Often, she says, companies don’t gain a proper enterprise-wide view of their customers. ‘Companies should start with an exercise where you look at your customers as value-needs clusters. And this is not happening.’

Telus has gone through a transformation to be ‘customer-facing,’ says Lorne Hill, director of database marketing in Telus Business Solutions. The Burnaby-based telco is no longer organized by product or process, he says, but rather by customer groups.

‘To develop integrated solutions, and to understand customer potential, we’ve got three business-oriented divisions, a consumer division and a mobility division,’ he says, adding that for Telus, CRM is a way to understand customers and prospects, make good customer-level investment decisions and provide seamless service.

Part of that equation is collecting and understanding effective data. ‘The customer profile is key,’ says Hill. ‘The data is the glue that holds all this together.’

‘You have to have folk who are constantly monitoring consumer behaviour changes,’ agrees Rob Shields, VP CRM at HBC, of Toronto. ‘Understanding what people are buying in any given basket and whether that is a good thing or a bad thing. Do people shop in different stores, or at different times of the day? There’s a bunch of operational things you can get to take the guesswork out of it. Aggregated data, for example, is OK, but it’s really only telling you half the story.’

HBC, for its part, started its CRM journey with a philosophy that senior managers and employees bought in to. The maxim, ‘The customer is king,’ now transcends into every aspect of the business strategy and individual business objectives, he says.

‘Start providing and implementing tactical elements that sit inside the strategy, and demonstrate that you can in fact influence and change behaviour to benefit both customer and business,’ says Shields, citing a recent example within HBC.

‘We are always looking at our real estate portfolio. In retail you are opening and closing stores all the time to maximize changes in urban sprawl. We closed a Zellers store this year, but re-opened it around the corner,’ he says. ‘Instead of putting an ad in the paper, we actually wrote directly to our best customers saying ‘We are closing… our new store is here… and we want you to come in at a special time, and view the improvements with our store manager.’

Part of its CRM strategy, HBC Rewards loyalty program was also tied in, adds Shields – customers received bonus points for showing up. Communicating with its eight to 10 million customers about what HBC is doing operationally, holds incalculable value, he says: Left to their own devices in this case, customers may have simply gone to the Wal-Mart across the way.

While few clients are offering up concrete ROI figures, Hill says Telus’ CRM strategy, for one, is paying off – even though it’s difficult to effectively measure the return.

‘Clearly, if there are efficiency gains, and you are able to change your cost structure – those are the most direct benefits. It is harder to measure customer satisfaction, and therefore retention, cross-sell and other revenue retention and growth issues,’ he says. ‘It comes back to a business strategy and putting the customer in the centre of your business processes. If your initiatives are related to pragmatic business deliverables, you should be showing return.’

‘CRM is the end game – understanding customer potential and lining your investments up against that potential. Everyone recognizes that’s where we need to be,’ adds Hill, and right now, the challenge is pragmatically rolling out the various initiatives.