Every few years, the business world gets enveloped in a new concept or acronym that proposes to change the way companies do business. In the 80’s it was TQM. In the 90’s, it was re-engineering. Now, in the age of the Internet and E-business, the prevailing concept with its own new acronym is CRM, or Customer Relationship Management. But what is CRM really about and why is it essential for E-business?
CRM, a term coined by Gartner Group is a relatively new term for an evolving business strategy: customers are the most important assets to a business and retaining, growing, and leveraging the customer base is the business’ mission. This philosophy incorporates the latest technologies to identify a business’ most profitable customers, and to provide these customers with a unique experience of personalized value from the point of sale, to delivery, to the ongoing support afterwards. CRM is not a single software package implementation, but a phased series of software implementations and business process restructurings over a number of years. The result is a new business focus, which creates value for the customer. In the process of this transformation, the company becomes customer-centric rather than product-centric.
How does a business that is customer-centric operate? Since the focus is on the customer, products and services change or are customized based on the customer’s needs and expectations. Customer loyalty is a corporate strategy, with tactics implemented to gain the knowledge of customers’ wants, needs, expectations, and profitability. This is done not only by asking customers what they want, but also by analyzing customer behavior and anticipating what they will want. Each interaction with the customer provides new insight that changes the rules of the relationship between company and customer, to better suit the customer.
Enabling technology is essential in customer-centric organizations with a corporate commitment to ongoing investment in new technologies. Technology provides an integrated customer management process, enabling sales and service whenever and wherever the customer desires it via field agents, web-based, or call centers. Delivery of goods becomes efficient with the integration of front-office applications with back-office ERP and Asset Management applications. Customer-Centric organizations are analytically driven, implementing data mines and data warehouses to anticipate the characteristics, behavior, expectations, and short and long-term profitability of each customer.
CRM is an essential philosophy for E-business. Defined by Gartner Group as any Internet-enabled business activity that transforms internal and external relationships to create value and exploit market opportunities, E-business is driven by the new rules of an increasingly connected economy. The Internet has leveled the playing field between customers and companies. In a keystroke, customers can search for new products and services in a global community, comparing multiple pricing and delivery options and ultimately finding the optimal solution at reduced costs. New start-up companies with new business models compete effectively with established companies. Companies can no longer tell customers how the relationship operates, as customers continue to demand customized, immediate, around the clock information. To be successful in E-Business today requires a customer-centric focus.
The potential growth for those companies who are serious about a customer-centric focus is record-breaking. For example, Amazon.com’s first quarter results show that they added 3.1 million new customers in the first three months of 2000, with first quarter revenues up 95% from the same period in 1999. Repeat customer orders represented 76% of Amazon’s business during this period. Amazon’s business philosophy is, according to their website, ” to be the world’s most customer-centric company, where customers can find and discover anything they may want to buy online.” The success of that philosophy is difficult to ignore and is a lesson for companies seeking to be involved in E-business. Without CRM, E-Business cannot succeed.
Maggie Macary is with Complete Business Solutions, Inc. (CBSI). Check out their website at www.cbsinc.com
