Analysis & Commentary:

CRM 2002 - STOP TALKING IT, START DOING IT

In recent years, customer relationship management (CRM) has been one of the more dominant buzzwords in the corporate world. Businesses, consultants, and the media alike learned to speak the language of CRM, using terms such as "customer centricity" and "multi-channel integration" to talk the talk. But all of that will change in 2002, as companies and the CRM industry stop talking about these issues and start doing it.

As it stands today, technology and strategic thinking have evolved to a point where, from a CRM standpoint, what used to be theoretically possible has become fully executable. And now is the time to deliver on the promises that technology and strategic thinking have offered to businesses -- CRM as a means of keeping your best customers and gaining new ones. Now it's time to get to work.

Based on the current economic environment and the industry momentum carrying into the latter part of 2001, outlined below are the top trends that we at Braun Consulting believe will have the greatest impact on the industry in 2002.

1. In a down economy, highly successful companies will invest more in customers, not less -- During the past 18 months, the economy has gone from exuberance to retrenchment, forcing companies to closely examine their CRM investments and IT expenditures. Successful companies will be those that continue to invest in CRM initiatives and shift their efforts from customer acquisition to customer retention. The focus in 2002 will be on maximizing the value of existing relationships, and using customer information to both expand those relationships and extend an organization's brand into other competitive marketplaces. To meet these goals, companies will apply technology and strategies to keep high-value customers, convert moderate-to-low-value customers to higher-value, and minimize investments in customers that detract value.
2. Companies will compete for customer share, not market share -- In 2002, the average customer will likely spend less than in previous years, so companies will need to focus on how they are going to increase or maximize the individual share of each customer's spending by managing and increasing the value delivered to each customer. As a result, customer share will be a top priority, while market share will be of secondary importance.
3. CRM will evolve to CVM -- As companies begin to recognize that satisfying all customers does not guarantee increased revenues or profits, Customer Value Management (CVM) will become the standard approach to maximizing the return on customer investments. In 2002, companies will seek to exceed expectations with customers that contribute the majority of value, satisfy customers that positively contribute value, and pursue lower-cost alternatives for servicing low-value customers. This, in turn, will require companies to actively engage in "customer shaping" activities, such as understanding customer value drivers, focusing on the value contributions of different customer segments, and applying this knowledge to change the value equation for customers. As a result, we'll start to see the measurement of customer value evolve from revenue-based metrics to individual customer profitability.
4. Companies will heighten their focus on data analysis and organization to avoid information roadblocks -- In 2002, companies will place a much greater emphasis on the analysis and organization of data so they can better differentiate their customers, establish clear customer value (profitability-based) segments, and create richer and more measurable marketing campaigns. During the past few years, companies have collected large amounts of customer data which, in turn, has created a "CRM roadblock" in that companies have not been able to use this data effectively and efficiently. This will change as companies begin to make managers accountable for the analysis, application and ROI of customer data.
5. Companies will realize customer satisfaction doesn't translate to loyalty -- In the year ahead, companies no longer will be able to assume that a satisfied customer will remain a loyal customer. That's because people often make purchasing decisions based on shifting and migratory preferences, inclinations, and attitudes, with satisfaction being just one factor among many. In 2002, successful companies will move beyond contact center performance metrics and a customer's "stated happiness with a current purchase" to assess their performance in offering their customers "better value for the money." To better understand their customers' behavioral patterns, companies will ask, for example, why their customers are staying with or leaving a current service plan, and then apply that knowledge to adjust product and service offerings in order to minimize migratory purchasing behaviors.
6. Companies will focus on "thoughtware," not software -- There's a reason why 55 to 75 percent of current CRM projects don't meet their objectives (Meta Group). It's because companies often confuse CRM strategy with technology implementation, when in fact, CRM is a broader business strategy that technologies can enable. Over the past year, many companies have realized that a successful CRM program begins with the business strategy, and that it is enabled by organization structure, core business processes and technology. In 2002, successful companies will go beyond "software" to include "thoughtware" -- the required thought processes and application of information for implementing the business strategy and strategic initiatives. For example, if an organization's strategy is to become more responsive to customer needs by shifting decision making closer to the customer, then not only do sales and customer service reps need more information, they need the training and business logic to apply this information in order to make the "right" trade-off decisions.
7. Companies will stitch their customer channels together -- The trend will be to create -- not just talk about -- seamless interplay among all customer channels (customer service, field service, Web, marketing, sales, etc.) in order to create a consistent, valuable experience for customers regardless of how they choose to interact with an organization. As these channels are integrated, a true marketing portal will be created to effectively and efficiently manage the promotion of each one. This will allow the marketer to go into a portal and have one comprehensive view of the customer.
8. Companies will embrace PRM as a means to maximize value to end-customers - As organizations finally integrate their customer channels in 2002, forward-thinking firms will begin to focus on partner relationship management (PRM), a strategy to better serve end-customers by leveraging a company's business partner network. A key component of the extended enterprise, PRM will enable organizations to integrate -- and better collaborate with -- their indirect channel (e.g. distributors, VARs, resellers) with the goal of delivering enhanced business values that end customers will recognize, whether it be in price, overall quality, ease of doing business, etc. In addition, a host of strategic and financial benefits will flow to firms that embrace PRM across their extended enterprises in 2002, including increased revenues from indirect channels; decreased product time to market; increased transaction efficiency; greater visibility into inventory levels and end-customer demand; and improved product/service design.
9. Companies will create CRM platforms and plug in best-of-breed applications -- In 2002, we'll start to see companies return to the large application suites to provide a holistic CRM platform for their organizations, as well as integrate best-of-breed applications for specific functions that give them competitive advantage. This trend will trigger an awakening of the sleeping giants like Oracle, PeopleSoft, and SAP, which provide a common database for non-customer facing ERP applications. These vendors will compete with companies like Siebel who already provide CRM platforms by providing integrated channels and personalization capabilities all in real time. Companies will analyze individual modules of these platforms (sales, customer service, field service, etc.), determine which ones give the company a competitive advantage, and may opt to supplement these modules with best-of-breed applications. This approach will give companies the best of both worlds and help them to achieve both efficiency and customer intimacy. We will also start to see the integration and convergence of the Internet platforms (like BEA) with CRM platforms.
10. Companies will shift to a long-term focus -- In 2002, IT departments will closely examine long-term investments and ask, "How long will it last?" "What are the ramifications of going down this path from a maintenance and support perspective?" And, "What benefits will I see down the road?" The Internet frenzy created havoc for IT organizations across the world and forced them to make short-term decisions, to just "get it done", and look at point solutions. Now organizations will think about total cost of ownership and long-term application viability, and will focus on enterprise architecture and IT strategy to enable integrated CRM solutions.
11. 2002 will be a year of implementation and follow-up -- As CRM moves from theory, vaporware, and concept into maturity and reality, 2002 will be a year of implementation and results. Show, don't tell. Yes, some of the above-mentioned trends have been in development for the past year or two. And leveraging existing technology investments, refining organizational support mechanisms, and ensuring quick value demonstrations will be the order of the day as companies keep a tight hold on budget resources and look to optimize ROI. But 2002 will be the "do it" year for all. To finally put into action what so many have thought and spoken of for the past several years.