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Friday, 12th April 2024
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Customer relationships lead to radical business change Back  
Wesleyan Assurance, Virgin and Ford are examples where management of customer data in new channels transforms business, according to Brian Moore
In late 1990‚€ôs the business world has witnessed the birth and growth of Customer Relationship Management (CRM). Increased competition in our information-reliant, service-based economy has transformed customer data into an increasingly important asset. Soon data mining will become a standard capability of every business‚€ôs information systems infrastructure. Smart organisations recognise that streamlined operational efficiency in back office systems must be regarded as a preliminary hygiene factor. The quest for sustained growth and competitive advantage is now all about segmentation, differentiation through customer understanding and massive realignment of front office systems.

The primary drivers behind the CRM explosion are intense competition driven by globalisation, the high cost/low success rate factor of mass marketing, significant advances in technology, high customer volatility and changing consumer needs.

Fast growth
Today, companies are beginning to adopt a customer-centric business model and becoming increasingly responsive to and developing deeper relationships with customers. Nevertheless, many companies have yet to realise its full potential. The Wesleyan Assurance Society, an early adopter of CRM techniques and one of Britain‚€ôs fastest-growing mutual financial services organisations, now manages funds in excess of ¬£3 billion. In the mid-1990s, Wesleyan conducted a thorough overhaul of its front office systems via the implementation of fully integrated sales process. By introducing a CRM capability, Wesleyan were provided with real-time customer account information, and a sophisticated data analysis function enabling maximum capitalisation on client customer needs and trends.

The ability to identify, fulfil and retain profitable long-term customer groups depends upon smart manipulation and capitalisation of huge amounts of customer purchasing data. Total business transformation is required in order to move from a product focused perspective to full customer focus. Hence, it is clear why explosive growth in CRM capabilities and customer retention strategies has been forecast.

Customers as marketeers
The customer is now the key to the sustained growth of an organisation, and it is long-term customer retention not short-term new customer capture (the traditional focus of the short-termist product-oriented organisation) that will ultimately enhance business performance and shareholder value. The trick is to create customer ‚€ėapostles‚€ô whose satisfaction and loyalty levels are so high that they cannot help but spread the word. Non customer-centric organisations run the risk of producing customer ‚€ėterrorists‚€ô whose widely articulated complaints can do untold damage to their organisation. It should be borne in mind, however, that CRM cannot fundamentally change customer buying habits nor should it be forgotten that customers want to control the relationships they enter into.

Such radical transformation requires significant strategic change encompassing dynamic process, technology and culture shift. It is a long, slow journey marked by distinct incremental change commencing with immediately operational support functions and ultimately moving on to investment in more sophisticated tools and technologies such as interactive web sites.

The multi-channel challenge
An organisation‚€ôs greatest challenge in order to gain a single clear picture of a customer is to be able to combine e-world information with real world understanding. A holistic approach is key. Rich customer information can be gleaned from a variety of online and offline communications channels - from fax, letter, direct mail or telephone through to email, internet, kiosks and interactive TV. It is important to be able to analyse how customers interact with all customer-facing systems. Data mining of multi-channel information and associated predictive modelling techniques enable an organisation to determine distinct customer patterns and initiate value-added customer service initiatives.

We are not yet at a stage, however, where the majority of companies can truly offer multi-channel communications offerings to their clients. A recent gap analysis survey by Cap Gemini in conjunction with Datamonitor revealed that very few sectors currently have the capability to meet customer expectations with regard to fully optimised distribution channels. While many customers expressed a clear desire to employ greater use of direct channels such as telephone communication via call centres or online channels via the Internet, few market sectors are as yet fully operational in this respect. One exception, however, is the travel sector.

Travel companies are least reliant on traditional channels and make extensive use of integrated direct channels such as call centres. They are also making great strides in their adoption and use of e-channels; EasyJet, GO and lastminute.com all bear witness to this trend driven by customer expectations of convenience, 24-hour accessibility and competitive pricing.

Virgin‚€ôs TrainLine internet website is another travel success story. Expressly designed to integrate with Virgin Trains‚€ô existing call centre infrastructure. It represents the first phase of a much larger CRM project designed to underpin Richard Branson‚€ôs wish to transform and modernise the UK rail industry. The fact that this simple change (albeit entailing highly complex legacy integration) has meant that Virgin now sell more rail tickets than any other provider, only serves to demonstrate the power of integrated distribution channels.

The automotive sector is also making great strides in customer-focused CRM strategies. A good example of dynamic sector leadership in this context is Ford which is steadily transforming itself into a global consumer products and services group. By altering its mindset and seeing itself in the business of transport solutions for people, rather than as a pure car manufacturer (it recently outsourced vital parts of its car assembly operations), it has been able to extend its core offering beyond the provision of cars to associated financing packages, servicing and emergency services. Thus not only can Ford now claim a far larger slice of the total private transportation cake, but, via integrated CRM techniques making maximum use of the flow of information from and between all of these affiliated services, it can also gain extremely valuable customer data. In effect, a self-reinforcing cycle.

HOW TO REAP THE BENEFITS
What about the real strategic and return on investment benefits that can be gained from customer-centric CRM techniques? A fully integrated single view of the customer enabling the same degree of personalised service, whether the customer buys in the real world or the virtual is a clear imperative for any organisation‚€ôs business strategy. Speed to market, in a climate of constant, unpredictable change, is vital to glean competitive advantage.
CRM cannot be a stand-alone solutions package but, rather, must become a business culture and holistic philosophy that pulses through very heart of an organisation.

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