A truly customer-centric approach will enable corporations to:

•   Maximize their current investment in eCRM to achieve the promised benefits and ROI

•   Make better decisions about the selection and implementation of eCRM

Electronic Customer Relationship Management (eCRM) is a powerful business concept that has (so far) failed to meet its promises

Current problems with eCRM are numerous

Ø Too technology-driven

•       Where’s the customer and what’s the business rationale?

Ø A myriad of packages

•       Which one is right?

Ø Overly aggressive eCRM vendors offering cookie-cutter solutions

•       How does this meet the needs of my company and customers?

Ø Resistant employees

•       Where’s the win-win-win for management-employees-customers?

Ø Incomplete / inconsistent customer data

•       I can invest millions, but what will matter to my customers?  

Look inside for Richmark’s thoughts on eCRM and a new (customer-centric) approach for eCRM...

The Latest Buzz

Volumes have been written - and nearly all companies are talking - about The Customer.  This recent interest in the customer and the technological explosion of the 1990’s (e.g., the Internet) has led to the introduction of customer relationship management, or electronic customer relationship (eCRM) as it is now commonly called.

eCRM has become the latest buzz.  There are a myriad of eCRM packages available today, and an army of IT firms ready to help companies implement eCRM.  Many companies have implemented (or are in the process of implementing) some form of eCRM.  The market for eCRM products and services is estimated to be ~$20B worldwide and growing at over 20% annually.

There are several reasons for the growing importance of eCRM:

•       The core markets for most U.S. companies have become mature, which means market growth in the single digits (i.e., typically less than 5%) for a significant portion of a company’s total business.

•       Competition in the core markets is becoming more intense, and U.S. companies are seeking ways to lower cost, but not performance or quality.

•       International markets are a possibility, but they are no panacea.  Many companies have already expanded internationally, and while the growth from these international markets can be good, growth rates are volatile and fast growth from a small base is still small revenues.

•       Wall Street is demanding above market growth rates and meeting sales and profit projections.  Success is richly rewarded, and failure is punished swiftly and severely.

•       Companies have numerous strategic alternatives to significantly grow their business, including new products/services and acquisitions, but none of these strategies can grow the business if their base is crumbling.

•       Therefore companies must retain/cultivate their existing customers to form a solid base, from which they can really grow and increase sales and profits.

eCRM vendors and service providers have tapped into this urgent need by promising a cure-all for companies’ customer issues/opportunities. The only problem is that eCRM has often not worked as promised.

Broken Promise

Meta Group reported in March, 2001 that 55 percent to 75 percent of eCRM projects don’t meet their objectives.  Much is being written today about why so many eCRM initiatives fail to deliver the promised results.  Most experts put the blame on internal factors.  They cite a lack of clear business objectives, failure to gain employee buy-in, limited consideration of the process changes, insufficient or inaccurate duty and of course, all of technological challenges/costs.

While Richmark would agree with all these reasons, we believe that the experts, eCRM vendors, and eCRM service providers have all overlooked The Customer.  Nearly all eCRM packages are “one-size-fits-all” technology solutions, not customer-centric solutions that use technology as a means to a desired end.  Despite what is promised, the current solutions are not based upon an in-depth understanding of the customers’ needs/expectations, the pur-chase process, or how eCRM can truly in-crease a company’s sales and profits.  Customer-centric solutions are required to deliver real competitive advantages and significant returns.

According to a report by Kennedy Information titled “E-Business Realities and Their Implications for Consultants”, clients perceive that consultants are weak when it comes to helping them understand consumer behavior for e-business purposes and develop a proposition around a genuine consumer need and identifying the technology that will facilitate that.

eCRM started with direct sellers, especially those that sell to consumers and it has now moved into business-to-business (B2B) mar-kets.  From Richmark’s recent experience many B2B companies, who are considering eCRM, are intrigued, yet confused.  And even companies that have implemented some form of eCRM are not sure what they have.

Richmark believes in the promise of eCRM-if it is done right.  There are companies that have implemented some form of eCRM and reaped significant benefits.  So it can be done, but how?

The purpose of this monograph is to help B2B companies think more clearly about eCRM.  Richmark will identify the important questions for eCRM and provide our thoughts on what eCRM could mean for your company. 

Defining eCRM

Any search of the Internet for eCRM will find a myriad of eCRM packages.  There is enterprise and non-enterprise, operational, collaborative, analytical, demand chain management, and so forth.  Siebel, the market leader, has eight families of eCRM (or eBusiness) packages: sales; marketing; service; interactive selling suite; in-dustry; partner relationship management; employee relationship management; and mid market.  Each of these families has individual packages, e.g., Sales has Siebel sales, Siebel Mobile sales; and Siebel eLearning.  It’s no wonder that B2B executives are confused by eCRM.   But what is eCRM in a nutshell?

•          eCRM is a highly automated system that supports and manages many of the inter-actions (i.e., the relationship) between a company and its customers

•          With increased automation and a more rigorous and consistent management of its customer relationships, a company can improve customer satisfaction, strengthen customer relationships, increase productivity, realize efficiencies, and thereby grow sales and profits

•          eCRM software providers have developed technological solutions that cover many aspects of sales, marketing, and customer service, and in some cases, they developed solutions for specific types of companies or industries.

There are, broadly speaking, two levels of eCRM:

1.  Basic

•          A Basic eCRM system supports electronic transactions/purchases and pro-vides customers and management a greater amount of data faster and in a more attractive format.

•          Limited analysis of that data is done by the Basic eCRM system.

•          An example of Basic eCRM is providing customer service reps with better information that enables them to…

-       Have the complete customer history available and understand the customer’s importance to the company

-       Provide status immediately for the customer’s existing orders or information regarding any other issues/ requests

-       Product availability and shipping information for any new orders

-       Remind the customer of any promotions and new products/services

2.  Enhanced

•       An Enhanced eCRM system is the Basic system plus analysis of for customer-related data (i.e., analytics) to provide additional value to a company and its customers

•       Analytics provide the company’s management valuable information regarding marketing, sales, and operations that can be used to develop new strategies and tactics.

•       Analytics also enable a company to “reach out” to customers in a more automated fashion with awareness/ promotional campaigns and product and service recommendations.

•       A good example of an Enhanced eCRM system is Amazon.com’s suggestions for books and videos based upon one’s past purchases.

As mentioned the eCRM definition continues to change and expand.  Some industry players now include a company’s employees and sup-pliers under the eCRM umbrella.  Although this definition is conceivable (given that all activities eventually affect the customer) Richmark uses the more narrow definition, i.e., all activities and systems that directly affect the customer. 

Important Questions About eCRM for Your Company

Does eCRM make sense for your company?  If yes then how eCRM applies, and what specific features/benefits should your eCRM system provide?

Whether or not eCRM makes sense for your company lies in the answers to five strategic questions:

1.   What is your company’s business strategy, and how can eCRM support that strategy?

2.   Would your company’s customers value the features/benefits of eCRM?

-   The success/failure of any new offering depends upon how well/poorly it meets customers’ needs/expectations

3.   Does eCRM offer value to your company in terms of greater internal efficiencies and/or more effective marketing and sales?

-   In some cases, customers may not see any immediate value from certain features/benefits (e.g., proactive marketing communications), but your company realizes that they are important for long-term growth

4.   What are your competitors’ initiatives regarding eCRM?

-   Can your company gain a competitive advantage by implementing eCRM, or must it do so just to keep up with competition?

5.   And ultimately, what is your company’s ROI for eCRM?

-          Can eCRM positively affect customer behavior such that your company can increase customer retention, gain incremental sales from existing customers, acquire new customers, and/or realize higher prices/greater margins?

-   To what degree will the increased productivity and greater internal efficiencies result in lower costs/greater margins?

-   Multiple scenarios could be developed for eCRM investment (and ROI) and timetable, and these should be considered in light of your company’s resources and the competitors’ positions  

If eCRM makes strategic sense, then the tactical issues of how eCRM applies and what features/benefits it should provide become relevant.  These issues can be addressed by answering the following key questions:

•   What is your company’s customer base in terms of type, number, and size?

-   Customer is defined as to whom your company sells products/services, although the OEM, contractor, and/or end user could also be considered a “customer” for manufacturers that sell via indirect channels of distribution

•   What are the customers’ needs/ expectations of a supplier and eCRM system?

•   What information can your company cost-effectively generate, access, and use as part of an eCRM system?

eCRM is implemented to change and improve the process for managing customer relation-ships.  For change to be beneficial companies must consider their current situation carefully. The answers to these key questions describe the existing situation for your company’s customer relationships and provide insights and recommendations for tactical issues.

There is typically less scope for eCRM for companies that sell via indirect channels and/or directly to relatively few OEMs, contractors, or end users (i.e., the “ultimate” customers).  The formal agreements and proactive presence largely de-fine the customer relationship.  Unless these customers seek dramatic change any eCRM implemented would build upon and support the existing agreements and process.

Manufacturers that sell via indirect channels face a particularly unique challenge: how to work with or go around their channel partners to reach and know the “ultimate” customer. Historic tensions and suspicions between manufacturers and indirect channels still exist, although manufacturers and their channel partners have begun to share information in new ways (e.g., point-of-sale data).  Indirect channels have long been, and usually still are, guarded about providing detailed data about their customers.  The channel fear has always been that the manufacturer may try to “give” the account to another distributor or take the account direct. 

One Richmark client has successfully worked with its dealers to obtain detailed customer data.  However, this company’s dominant market share (i.e., >90%) and long-standing support of its dealers help convince its dealers to cooper-ate.  If your company is in a similar situation then it may be able to follow this client’s example.

But few companies have the luxury of being in this position.  So now what?  Quite frankly we are into terra incognito in terms of channels marketing.  The starting point is the manufacturer-channel relationship built upon mutually beneficial strategy/tactics and trust, and with this a manufacturer can present a clear rationale for how such an eCRM system would benefit its channel partners.  If a company has less-than-harmonious relationships with its channels it would be futile to attempt such a program.

An alternative is to build an eCRM capability that “reaches out” to the ultimate customer in terms of marketing communications, advertising/pro-motion, product/technical information, etc. The relationships formed with the ultimate customer and the data obtained can be used to generate leads for the company’s channel partners and strengthen the manufacturer-channel relationship.  Eventually it is possible that the company could work more closely with its channel partners to obtain detailed customer information.

For companies that sell directly to a relatively large number of the ultimate customers, there is greater scope for eCRM since the customer relationships are typically underdeveloped and ill defined.  An eCRM system can become an important (if not the primary) tool to manage customer relationships more effectively and thereby strengthen those relationships and increase sales.  The eCRM system could play a role in a wide range of marketing and sales activities: gathering and analyzing customer information; marketing communications/advertising; promotion; lead generation; product and service recommendations; customer service; technical support; and handling sales transactions.

Understanding The Customer

Within this broad context, an understanding of customer needs/expectations is required to develop the specific features/benefits of an eCRM system.  The depth of understanding drives the breadth and depth of the features/ benefits delivered by the eCRM system.  Generally speaking there are two levels of under-standing that correspond to the previously de-scribed Basic and Enhanced levels of eCRM. 

With a Basic understanding a company under-stands...

•       The customer’s perspective of e-commerce and if customers have any significant desire or resistance to conducting business via the Internet

•       What the customer identifies as important for eCRM to deliver in terms of information and format

•        Who within the customer’s organization should have access to and will use the information

-       Purchasing is obviously a key player within the customer’s organization, but others such as top management, engineering, and sales are, in all likelihood, important too

-       Thus the number of contact points would vary between a company and its customers, depending upon the customer’s organization and preferences and the business processes involved

•       What the potential effect of these eCRM deliverables is on the customer relation-ship and the company’s sales and share

All of this understanding is necessary for developing and implementing a Basic eCRM, but is only part of the equation for an Enhanced eCRM.

With greater depth of information and analysis a company can gain unique insights regarding customer needs and expectations, the pur-chase process, and what factors drive the pro-duct, brand, and channel decisions.  This includes its existing customers, potential customers (i.e., prospects including competitors’ customers or non-users), and (if relevant) its customers’ customers.  A company can then determine if and how it can “win” more from its existing customers, what it takes to “win” with potential customers, and (if relevant) how to help its indirect channel partners “win” in the market.

This enhanced understanding delivers several valuable eCRM features/benefits:

•       Development of customer-centric analytics that enables a company to “reach out” more effectively and consistently to customers

-       Analytics is decision-making software that take various inputs, analyzes this information using a set of rules/guide-lines, and produces a result, suggestion, or recommendation 

-       But what is the basis the software’s rules/guidelines? Richmark believes it should be based upon what matches/ drives customer behavior (i.e., customer-centric), but it rarely is

-       The foundation of customer-centric analytics is practical, needs-based segmentation that segments customers by their distinct set of needs and expectations and sorts them by well-known (or obtainable) factors

-       The graphic on page 8 illustrates what customer-centric analytics could deliver

•       Identification of critical inputs for customer-analytics

-       The “Garbage In, Garbage Out” concept applies to eCRM systems too

-       Companies typically do not lack data, but is the company’s internal data relevant or accurate?  Can a company obtain the necessary data fairly easily?

-       With an enhanced understanding a company can identify the critical but obtainable (i.e., by asking 5 easy questions) market inputs that is augmented by company or secondary data

•       Guidelines to help management analyze and track more effectively the company’s performance and thereby take appropriate action

-    From Richmark’s experience companies that have purchased and installed an eCRM system do not really know how to use the system to its fullest

-    Management can do almost anything, but what should they do?

-    This is partly due to poor training by eCRM vendors, but also because management lack an enhanced understanding of customers

-    If management knows what customers need and expects and what drives the brand decision then they can use the eCRM system more effectively

•       The subsequent results of these three features/benefits is a stronger focus on high potential opportunities and important problem areas and a better ROI for eCRM

To win in the market means to win with the customer. This is an old concept that drives the need for understanding the customer.   However, many companies and eCRM vendors have forgotten this concept in their rush to do something about eCRM.  Companies must return to that concept if they want to get real value from eCRM. 

The Implementation Challenge

Implementation, as you might have guessed, is critical.  It involves not just IT hardware and software, but people and processes too.  It also involves both internal and external communication.  But before implementation a company must first…

•       Make the business case for eCRM

•       Define clearly the key objectives for the eCRM system

•       Develop set of specification/benefits of the eCRM system based upon an in-depth understanding of customer needs/ expectations

•       Identify and assess the role, responsibilities, and benefits for key managers and employees with eCRM

Given this, there are six major steps for implementation: 

1.  Clearly understand what portions of the employee and customer experience will be addressed through the eCRM initiative

2.  Communicate the objectives and implementation plan, as appropriate, to both employees and customers

-   Position the implementation of the eCRM system as win-win-win for the company-employees-customers in both the short-and long-term

-   Identify milestones during the project that can represent successful programs

3. Select the “right” eCRM software package given the objectives, the budget, and the implementation requirements

4.     Identify the “gaps” between the existing vs. the required IT infrastructure, people skills, and business processes

5.     Implement the eCRM package and internal change program for IT infrastructure, people skills, and processes

-    The package would likely be customized to meet a company’s specific objectives

6.     Measure the effectiveness of eCRM and adjust accordingly to meet objectives and deliver the expected benefits

An in-depth understanding of customer needs/ expectations provides valuable direction for implementation and thereby helps to ensure.  From Richmark’s experience this in-depth understanding, whether it is Basic or Enhanced, acts as a blueprint for the implementation plan.  Everything that is done during implementation should be delivering what is required to “win” with the customer.

A New Approach For eCRM

Richmark believes that technology is critical for effective and efficient B2B marketing.  And we believe that eCRM can provide significant benefits to B2B companies.  In other words we believe in the promise of eCRM – if done right.

Nearly all companies should implement some form of Basic eCRM.  Basic eCRM is fast becoming a requirement for doing business.  Many customers are demanding it, and such a system can increase efficiency and lower costs.  There may be opportunities for a company to gain a competitive advantage by being the first to implement Basic eCRM or by implementing a better system, but Richmark expects that Basic eCRM will typically offer competitive parity.  Therefore your company better do Basic eCRM (or at least think about it) or else….

But whether or not a company should implement Enhanced eCRM is a much more complex question.

Companies can gain a real competitive advantage by implementing Enhanced eCRM.  An Enhanced eCRM system is developed such that a company capitalizes on its in-depth understanding and insightful analysis of customer needs/expectations and the market.  This pro-vides a real competitive advantage because the system is unique and customer-driven (i.e., a company wins if the customer wins).

Nearly all companies could use Enhanced eCRM to obtain/analyze customer information in more meaningful ways.  Companies that sell direct to a relatively large number of the “ultimate” customer are even better candidates for this type of analytics given the significant value of eCRM to helping them strengthen their customer relationships.  And companies that sell via indirect channels could also use eCRM to “reach out” to the “ultimate” customer. 

However an Enhanced eCRM system will re-quire a greater investment in time and money.  Are the benefits of Enhanced eCRM (i.e., the return) worth the investment?  Well, it depends on the factors previously discussed in this article.  Every sensible company would only commit to a major investment after conducting a thorough evaluation, and in Richmark’s opinion, companies should do the same for eCRM.

But so far most companies that have bought eCRM have been oversold or have not implemented eCRM effectively.  As a result these companies have not realized a return on their eCRM investment and have become frustrated and dissatisfied. 

Richmark, working with our technology partners, offers a better solution for eCRM, a way to do eCRM right.  A successful eCRM design and implementation involves clear thinking about business strategy, market/customer knowledge and insights, and the appropriate technology infrastructure.  Richmark starts with first things first – the business strategy and the customer needs/expectations – and then delivers a customer-centric blueprint that is used to design and build the technology infrastructure.

With Richmark’s solution your company will…

•       Select/develop the “right” eCRM package

•       Understand why your existing eCRM  sys-tem is not delivering what was promised

•       Get more value from your existing eCRM system by fixing what’s wrong and/or enhancing its capabilities

Unlike the current providers of eCRM solutions Richmark is a marketing consulting firm, not a technology firm.  We have been developing strategies and tactics for over 15 years that enable our clients to “win” with the customer.  Throughout the process we work with technology partners that understand how technology integrates with business strategy and can successfully implement the blueprint to provide real competitive advantage for our clients.

Final Thoughts

The potential partnership of the customer, marketing, and technology is a much-discussed topic.  It makes a lot of sense, and some companies have done it successfully.

But too often companies buy (or invest in) technology-driven solutions without thinking it through, and they end up frustrated and poorer.  Witness the dotcoms and telecoms.  The introduction of eCRM has started that way, but it does have to end up like other technology failures.  eCRM can deliver significant benefit, but like any business idea companies must start with the customer.

For more information about the Richmark Group, please visit our web-site at www.richmark.com  To discuss this topic in detail, please call Rainmakers at 847/251-3327