In the current economic scenario, a well framed CRM strategy can help retain customers and create avenues for more business

CRM (Customer Relationship Management) is probably one of the most hyped management concepts in recent times. Everyone, from the ever-expanding services and finance sectors to traditional manufacturing companies have adopted CRM or are in the process of adopting CRM solutions in some form or the other. CRM is not new. It's actually something India has traditionally subscribed to strongly. As the saying goes "The customer is God." CRM has been omnipresent in some form or the other.

Picture this. My local grocer from whom I buy my monthly provisions from knows exactly what my requirements are and delivers it to my house. This is mostly because he has a good idea about what items I usually need and its quantity. In case I may have forgotten to order a particular item he reminds me. His judgement is based on the record of my previous purchase history. I have been his loyal customer for over 40 years now.

This is just one example of primitive CRM.

Uproar
Then why do you think is there so much hullabaloo over CRM? A closer look at the situation brings out the realization that we have been culturally tuned to the traditional form of CRM. Try doing it with a million customers and two million transactions a month, the task seems humongous. As the number of customers, transactions, and interaction increases, traditional CRM has to give way to technology-based CRM. And its important for enterprises to understand this.

Smaller companies can resolve their CRM-related issues by improving the attitude of the human capital that they employ. You can gain a customer for life if your employees are tuned to the customers needs. If your organization has a larger customer base and greater transaction volumes, in addition to being sensitive and focussed, you should help employees be customer-centric. Many times we make processes which facilitate companies but make it hard for the customer.

With the complexities of business increasing and multiple products lines being pushed through multiple channels, the task of being customer-centric becomes more difficult resulting in more misery to the customer. Technology-based CRM can emerge as a savior.

A closer look
This is how I define CRM: An enterprise approach to understanding and influencing customer behavior through continuous and relevant personalized communication to improve customer acquisition, customer retention and customer profitability.

Enterprises have now optimized their operations and profits have planed out as costs can no longer be minimized. The focus is now on the customer as it provides the much-needed impetus to the rapidly sinking bottom line.

These customers have a question, "Does your company really know and understand me?" It becomes imperative that companies today understand customer relationships across the organization and look at the value of that relationship for the complete organization and not across a product or channel. CRM therefore is an enterprise approach and partially integrated projects are rarely successful.

Am I wrong?
A question often asked by marketers is "Am I wrong in trying to sell my product to my customer?" The answer is "no you are not." Today we push our products because we are desperate to sell and in the bargain compromise on being sensitive to the customers needs and his requirement. Would it not be wonderful if we had a system that could at the beginning of every day, pull out a list of only those customers, from the millions in the database, who has a need for one of your product and why he needs it?

All I then need to do is establish contact with the customer and based on the need make a relevant offer and close the deal. Such a system will help me contact the customer only when he has a need. And the offer made would be based on the understanding of that customer's needs.

Other than understanding the customer's needs, it's important to use the understanding to influence the customer's behavior with relevant communication leading to organizational benefit.

Process
The process of CRM is not as simple as it is advocated. The first portion 'the enterprise approach' is by far a challenge to achieve in India today. The current state of our networks and computerization is the major deterrent to achieving the 'single version of the truth.' Companies today tell me that they have never collected data from their customers, the data is not in an electronic form, there is so much of duplication they could populate very few fields, its branches are not networked, and they have currently only summarized data. Despite these problems you need to start somewhere, the earlier you start the better. With every passing day the problem will only get bigger.

Under such conditions, the first step would be to prioritize the company's need for a CRM Solution. If you are doing it because everybody is doing it, or because your CEO has asked you to implement CRM, please don't proceed. It will never succeed that way.

Successful CRM
Two things are extremely important for any CRM strategy to be successful. It needs to have unrelenting senior management support and the CRM vision needs to be clearly defined. You may have hundreds of problems currently facing your organization, but you need to select the business issue most important for you to resolve. This would be your short-term goal.

Coming to a conclusion on this in itself is a big achievement. Then you list out the other business issues you would like the CRM strategy to resolve over a period of time in terms of priority. This would form your final CRM vision (or long-term vision). The starting point is therefore a business discovery and if done correctly will normally achieve these objectives.

The next step is to perform information discovery. You have to create an information bank that will help you understand the problem. An information discovery helps you identify the information you need to help achieve your short-term goal. You then need to establish certain process changes to ensure the data is collected. It could mean adding some fields to your application form and ensuring that no form is accepted without all the data being filled.

End goal
The end goal is to populate the Data Warehouse with information which will currently help you achieve your short-term goals. As you start populating the warehouse you will start getting a single breathtaking view of your business.

The first view that you get to see is what is happening in your organization across products and channels for all customers. The system would now notify you as soon as a customer had defected to competition. You see customers as they leave your organization because your are now actively tracking all transactions. Once you know what happened, you now gradually ask the question why? You analyze the data to find out why customers are leaving you. Based on the result you take necessary action. The result of your action again finds its way to the warehouse for future analysis.

The power to know what and why things are happening will gradually move on to being able to predict which customers are likely to leave you based on the behavior patterns shown by customers who have left you in the past. You can take action before the customer leaves you thus achieving your short-term goal of reducing customer defection by 2 percent and pocketing the savings this achievement has brought. This is phase one.

Phase two takes off on the successful foundation of phase one. The objective is to increase the cross sell ratio by 5 percent. You perform an information discovery process identifying the information currently available and the information necessary to resolve this business issue. As your data warehouse is up and running you utilize the same infrastructure to resolve the next business issue.

The ROI from phase one will continue as you embark on phase two. Here again as you load the relevant data into the warehouse you begin to see a few answers to important questions emerge. The questions are, what happened in your business, what are the cross-sell opportunities available today, and which opportunity am I loosing?

The next move is to identify why you are loosing these opportunities. Understanding makes resolution easier. The ability to predict what will happen will enhance your capability to proactively react to these opportunities and generate ROI in phase two. Phase three can be followed in the same manner.

In an already stressed economy CRM is a process which when implemented correctly will create the difference between survival and extinction. But the key issue is your understanding of true CRM. Remember without information you cannot manage anything, not even your customers.

Sudesh Kuckian is Marketing Manager-SE Asia, NCR Teradata and can be reached at sudesh.kuckian@india.ncr.com