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Ed Thompson
Gartner CRM Vision: Business and Technology Strategies for More-Profitable Customer Relationships
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• CRM budgets are less protected. So far, CRM has survived the economic slowdown, but pressure is building.
• CRM is dangerous. Failure rates are rising, mistakes will be seen by everyone and the impact on the enterprise will be greater.
• CRM is still a fantasy in most enterprises. CRM done at a department level suboptimizes the customer relationship.
• CRM can provide a fundamental competitive advantage. Those enterprises that succeed are reaping substantial long-term benefits.
• CRM should benefit both the supplier and customer. Few initiatives provide any benefit to the customer.
• CRM is not just about creating a unified view of the customer. The customer would like a unified view of the supplier too.
• CRM will evolve beyond customers. The future of CRM will include a greater focus on employees, partners and prospects.
Conclusions
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1. What is the value of CRM to enterprises, and what drivers are continuing to force its acceptance?
2. How will organizations develop and implement a business vision for CRM?
3. What will CRM look like in the future, and how can enterprises position themselves now to be prepared for these changes?
Key Issues
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0
10
20
30
40
50
60
Jan Feb Mar Apr May Jul
No change yet
No change, butmonitoring thesituation
Yes, planning tospend moreslowly, more in2H01 once I
have a better readYes, planning tospend less
Yes, seniormanagementrequested acutback inspendingYes, doing dealsthat are smallerthan I would haveotherwise
225 respondents with average revenue of $10 billion
Aug
Has the Slowing Economy/Stock Market Decline Made You Re-evaluate Spending in the Last Month?
No. of Respondents
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• Microsoft Office upgrade – 29%• E-commerce initiatives – 27%• Network equipment – 24% • Security software – 24% • Windows 2000 server – 22%• Windows 2000 desktop – 21%• Wireless initiatives – 21% • Unix servers – 20%• Storage hardware – 20%• PCs – 18%• Net. and app. mgmt. software – 18%• Call center projects – 18%• CRM software – 17%• Employee portal projects – 17%• ERP software – 16%• Web site enhancements – 16%• Consulting – 16%
• Database software – 14%• Customer service apps. – 14%• New custom development – 14%• Document mgmt. software – 13%• Marketing/analytics – 13%• Mainframe hardware – 13%• Content mgmt. – 11%• Business intelligence tools – 9%• Mainframe software – 7%• Storage software – 7%• Supply chain mgmt. – 5%• Sales force automation – 4%• E-mail response software – 4%• Mainframe system mgmt. – 4%• Procurement software – 2%• E-store software for Web site – 1%
Which Areas Are Likely to See the Biggest Spending Increase in 2H01?
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Market Trends
1. Increasing Customer Education and Expectations Consumer complaints 2000 = 5x 1995
2. Customer Relationship Complexity Rises R(f) = (Segments) x (Products) x (Channels) x (Partners)
3. Rising Global Internet Adoption More accessible competition and more coordination between partners
Executive Trends
4. Intensified CEO Attention on CRM CRM = profit increase = stock price increase = bonus increase?
5. Protected CRM Budget Allocation
6. Formalization of Governance for Customer Relationships CRMO, CCO, customer advocate?
CRM Implementation Trends
7. Shift in CRM Application Architectures and Spending DIY --> package; C/S --> Web; best of breed --> suites; per seat -->role-based; $2,500 -->$250 per seat; buy -->ASP + rent
8. Explosion of Customer Data Web, chat, e-mail, instant messaging, expanded contact centers
9. Vendor Churn Leading to a Power Shift 500 --> 50 vendors; best of breed --> ESP and ERP
10. Increasing Numbers of Project Failures 65 percent --> 80+ percent in mid-2003
Top 10 Trends: The Siren Call of CRM?
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Top 10 Causes of Failure in CRM Today
1. Management has little customer understanding or involvement
2. Rewards and incentives are tied to old, noncustomer objectives
3. Staff culture does not have a relentless focus on the customer
4. Limited or no input from the customers’ perspective
5. Thinking technology is the solution
6. Lack of specifically designed, mutually reinforcing processes
7. Poor-quality customer data and information
8. Little coordination of multiple departmental initiatives and projects
9. Creating the CRM team is left to last and lacks business staff
10. No measures or monitoring of benefits and a lack of testing
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No implementation
Unintegrateddepartmentalprojects
Integration of morethan one project
"True" CRM
2000 2001
7%3%
45%
35%
17%
30%
33%30%
United States – 75 percent implementing, 8 percent “true”
Implementing CRM Is a Fantasy ... for Most in Europe 2000 vs. 2001
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Applications
Emphasis
Goals
Population Mix
Dedicated/Proprietary
Call CenterSFA
Varies
Cost Reduction
RevenueEnhancement
ComplexInfrastructure
10% to 20%
45% to 50%
10% to 30%
5% to 10%
Less than 1%
Sub-departmental
(Type C)
Departmental
Multidepartmental (Type B)
Enterprise
Extraenterprise (Type A)
Varies
Efficiency
Closed Loop
Analytics
UniversalViewCRM
InfrastructureCompetitive Advantage
Not All CRM Strategies Are the Same
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Guiding Principles for Successful CRM
Extend breadth and depth of relationships
Leverage and enhance brand equity
TouchpointsValue Network
Focus on customer value, satisfaction and loyalty
Minimize transaction barriers and lower costs
E-CRM
Self-Service
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CRM is a business strategy whose outcomes optimize profitability, revenue and customer satisfaction (the why?) by organizing around customer segments, fostering customer-satisfying behaviors and implementing customer-centric processes (the how?).
CRM technologies should enable greater customer insight, increased customer access, more-effective customer interactions, and integration throughout all customer channels and back-office enterprise functions (win-win outcomes?)
Gartner Definition of CRM, But … Every Enterprise Should Have Its Own
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Best Time/Cost
Best Product at Best
Time/Cost
Best Time/CostPlus High Touch
Operational Efficiency
CustomerIntimacy
High Touch and Best Product
BestProduct
EnterpriseResourceTrade-Off
Product Superiority
BestHigh Touch
Customer Value Propositions
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External:Customer Experience
Internal:OrganizationalCollaboration
Organizational Structure
People: Skillsand Empowerment
Incentives and Compensation
Data Mgmt. and Applications
IT Infrastructure
Processes
Metrics
Definition and Segmentation
Customer Communications
Customer Requirements
Customer Feedback
Metrics
Customer Expectations
Processes
Zen and the Art of CRM: Yin and Yang
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The Eight Building Blocks of CRM
Perceived pain points: Least pain Some pain Most pain
Strategy
OrganizationalCollaboration
CustomerExperience
Metrics
Information Technology
Processes
CRM
Vision
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Customer Process Re-Engineering
1. All customer-facing processes are mapped 2. Key processes are identified with customer input
3. Prioritized by impact on customer satisfaction4. Measured by contribution to customer value
5. Implemented in front and back office6. Given a cross-functional “owner”
7. Implemented with partners8. Targets sent to customers9. Compensation for failure
10. A customer SLA11. SLAs vary by
segment?12. By…….
TelecomProvisioningFault RestorationService ReliabilityNew Service IntroSalesperson Know-How
Auto InsuranceClaims HotlineClaims ProcessingInquiry HandlingClaims TrackingProblem Resolution
Retail Banking“We’re speeding up your processes”
Interbank TransfersAvailable Balance
Seven-Day Account Transfer ProcessingReal-Time Account Balance
ATM, Telephone, Branch, TV, Internet
HorizontalDeath
WelcomingChange Address
Quote to CashWinback
Campaign to Compensation
Individual?
Customer Processes and Metrics
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► Unified view of supplier, customer► Accessible: Nearby or within reach► Available, convenient: Open 24x7, self-service► Approachable: Via multiple channels► Simple: Easy to use► Transparent: Within the enterprise and across
the supply chain► Trustworthy: Privacy is respected
Greater Customer AccessLower-Cost Access
► Unified view of customer, supplier► Minimizing customer transfers► Creating cross-functional roles► Retraining employees► Empowering employees and restructuring
compensation ► Involving partners► Tracking customer processes
More-Effective InteractionsLower-Cost Interactions
► Unified view of customer, supplier► Churn likelihood► Current profitability► Lifetime value► Channel preference► Life events► Relationship events► External events
Greater Insight Into CustomersGreater Insight for Customers
► Integrating across channels► Providing consistency across channels► Ensuring people resource per channel► Planning new channel life cycles► Consolidating internal and external data► Trading information with partners► Sharing information with customers
Unified View of CustomerUnified View of Supplier
Customer/Supplier Win-Win Outcomes
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Dow Chemical consolidated all customer service and sales information into one corporate memory to ensure a consistent face to the customer after having measured customer interface costs and activities per channel.
Compaq created a Partner Relationship Management solution to allow channel partners consistent and greater access to information about leads, products, services and user profiles.
Harrah’s Entertainment shared data across multiple casinos and hotels to create a unified personalized loyalty and rewards system based on customer profitability through greater customer insight.
Ford added a Web-based product configurator to simplify the order-entry system and thus aid its fleet sales dealers in more-effective interactions with fleet buyers and the drivers of the vehicles.
Case Studies of Successful Outcomes
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24-Month ROI
Stage
BusinessImpact
2X - 5X
Departmental
1X – 3X
Functional
Efficiency
4X - 7X
Partial CRM
Effectiveness
5X - 10X
Total CRM
Competitive Advantage
Finance SalesService
SupportMarketing
ServiceSalesMrktg
StrategyMetrics
DepartmentsSystems
The Evolution of CRM: Ajax?
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Industry CRM InvolvementTechnology & High-Tech
BankingFinancial Svcs.
TelecomRetail
UtilitiesInsurance
Media Petrochemicals
Pharma.AutomotiveDistribution“Dot-Coms”
FMCG or CPGManufacturing
Business ServicesHealthcare
GovernmentConstruction
Gartner estimates:Percentageorganizationsthat haveimplementedmore than oneCRM function
90%
1. More CommodityProduct/Service
2. More Channelsof Communication
3. More GlobalCompetition
Current 5 Yr Projected95%
10%5%
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Access: Data Exchange
Integrate: Link Systems
Collaborate: Create a CRM Ecosystem
Implications: – Communities – “E to E” Approach – Part of Several Different CRM
Ecosystems – Not Only Will Channels Merge/Morph, But so Will the Argument of
Who Owns the Customer
Your Company
Customers Prospects
Employees
Channels
Suppliers
PartnersAffiliates Influencers
Future CRM: It’s Not Just for Customers Anymore
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Corporate HierarchyValue Chain Network
Franchise
4 companies, 10 vendors each =10,000 permutations
Front Office
Supply Chain Infrastr
ucture
Back Office
Customers
Partners
EmployeesMktg
Fin
Sales
Serv
Prod Revenue Streams
Metrics
Initiatives
$$$Mission
Analytics
Operational S
ystems
The Competitive Future: CRM Ecosystems
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Recommendations
1. What is the value of CRM to enterprises, and what drivers are continuing to force its acceptance?
• Recognize that the long-term trends and drivers behind CRM have not changed, despite the slowdown in the U.S., European and other economies.
• Protect the budget for CRM investments — it will come under even greater pressure during the next six to nine months.
• Examine the past mistakes of others and avoid considering CRM a technology issue.
2. How will organizations develop and implement a business vision for CRM?
• Define both enterprise and customer value propositions before charting a CRM strategy.
• Use the “Eight Building Block” model as a checklist to determine which elements of CRM are currently lacking and to identify areas of responsibility where no one is in charge.
• Focus on customer-centric processes and metrics — these are the areas of the Eight Building Blocks that most enterprises have found to be most problematic areas. Implement processes based on customer benefits; start with customers and then work backward.
• Balance the internal focus with that of the customer experience — appoint an individual who is responsible for the external viewpoint.
3. What will CRM look like in the future, and how can enterprises position themselves now to be prepared for these changes?
• Aim for “total CRM” with involvement across the whole enterprise, but don’t try to do it all at the same time.
• Benchmark and invest appropriately for the industry in which your enterprise operates, avoid over-extending investment unnecessarily or being left behind.