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SAP AG

CRM without compromise means taking a customer-centric approach and building a synergisticecosystem with employees, customers and partners that consistently creates and deliverscustomer value.

Investments in CRM applications have produced a broad spectrum of results. Some companies experienced dramatic increases in revenue and customer satisfaction along with significant cost savings, while other companies have experienced limited returns and disappointing results. The benefits would be greater if more companies took CRM to the next level by designing their CRM strategy for future aspirations instead of just implementing software to support current capabilities. The focus on bottomline costs and departmental goals limits the top-line potential of CRM investments. To gain a competitive advantage and promote sustainable, profitable growth, organizations need to take a holistic approach to CRM and develop bold strategies to win, know and keep their customers.

Refocus on the Customer

Notwithstanding notable success stories, we have been witnessing a paradox trend. While implementing CRM, many organizations lose sight of their customers. Their attention centers on efficiency gains. They focus on single channels, ignore back-end integration needs and get only a limited view of the customer, resulting in missed opportunities and a negative customer experience. Organizations often automate existing bad processes instead of redesigning their customer-facing operations based on best practices. It’s time to refocus on what CRM is really about – the customer – to achieve the results CRM has promised to deliver.

Let’s not forget: No business can exist without customers. No matter how good a product is or how efficient an organization operates, without customers there is neither growth nor profitability. Customers make the purchase decision. They bid the price up or drive it down depending on the value they perceive in a product or service. The customer decides which way and when he wants to interact with a company and how he wants to buy – online, over the phone, in a store or through any other channel. It’s the customer’s perception of everything a company does that creates an image of its brand and eventually determines its success or failure as a business.

That’s why successful companies build their business around the customer. (Figure 1 illustrates this concept.) They know who their most valuable customers are and they understand their needs and buying habits. They target and tailor their offerings and personalize the interactions with their customers. Successful companies design and continuously improve business processes across their entire ecosystem – including suppliers and channel partners – to respond quickly to changing customer needs. They strive to become fully customer-driven, deliver superior customer value and consistently provide exceptional customer experience across all customer touch points. They make every effort to build long-term relationships with their customers, recognizing that keeping customers is more profitable in the long run than winning new customers over and over again. Essentially this is what “CRM without compromise” is about.

Generate Sustainable, Profitable Growth With CRM

More than ever, CRM is critical to an organization’s success. After more than a decade of harnessing cost-savings potential to remain competitive in an increasingly global economy, driving growth has replaced cutting costs as the most important goal for most CEOs. Hence it’s no surprise that CRM is back on the agenda of many top executives. To stimulate new growth, organizations are beginning to explore a more disciplined approach to exploit untapped opportunities and make the most of relationships with customers. They seek new ways to increase wallet share, deploy new channels, penetrate underserved segments, reach out to new customers and enter entirely new markets. To ensure sustainable, profitable growth CRM must take a leading role in the value chain, enabling organizations to excel not only across, but beyond customer touch points and rapidly adapt to changing business needs.

(Re)Define and Achieve Operational Excellence
When price and efficiency were the driving forces of competition, many companies focused on increasing their competitiveness by improving their internal processes. Continuous, standardized processes were the key to new efficiency potential and to survival in the market. But the spotlight has since shifted to relationships with customers and partners. Internal efficiency alone is not enough to guarantee market differentiation and competitive edge. Success is no longer determined only by price and product, but by well-designed sales channels and service processes.

At first, companies focused on CRM for a single department or function. They often turned to niche CRM vendors to support their CRM efforts. However, while sales productivity, call center efficiency or marketing effectiveness may have improved, progression to effectively managed customer relationships was often prevented by an internal focus, deployment of tactical departmental solutions and inadequate integration of front-office and back-office systems. Successful companies have realized that integration along the entire process chain is the only way to gain a lasting competitive advantage. But so far, few companies have used this time profitably, redefining their own strategies and reshaping business processes for a truly customer-driven enterprise.

Operational excellence in business today needs to encompass not only customer-facing operations within departmental boundaries but also end-to-end business processes in an industryspecific context. To succeed, an organization must achieve more than simply running an effective marketing campaign or operating an efficient call center. Entire business processes such as order to cash or customer problem resolution need to be customer-driven; seamlessly connected to other critical business functions from finance to the supply chain; and designed to meet customer expectations regarding quality, speed, convenience and reliability. Organizations need to break down the silos and redesign business processes from end to end, intertwined and coordinated across front and back offices for a common goal: to create and deliver customer value.

Attain Competitive Agility
In today’s dynamic market environment organizations need to continuously develop distinctive capabilities to quickly perceive, adapt and respond to ever-changing customer and business needs – ideally before their competitors are even aware of an opportunity. Agility and speed have become critical competitive differentiators. Constant innovation and business transformation have become imperative. In some respects, it is this capability for an organization to reinvent itself that ensures its long-term survival and success. As less emphasis is placed on the products and services offered by an organization, what becomes more important is how quickly it can deliver those products and services to customers and how flexibly it can respond to market changes. For a company to enjoy success in the coming years, flexibility, openness, collaboration and speed must become an integral part of its corporate culture.

Coping with constant change and market dynamics, adapting business processes rapidly and quickly turning innovation into customer value are not only key to improving the bottom line, but are also fundamental to achieving sustainable top-line growth. This puts CRM at the core of a successful business strategy. By capitalizing on customer insight, organizations can better and more quickly identify and prioritize new sales opportunities; discern and leverage sources of differentiation that are difficult to imitate; spur product and service innovation; and strengthen relationships with customers and partners. Anticipating customer needs early helps improve decision making and reduce time to market; and also provides the basis to better align supply with demand and quickly shape demand in times of constrained supply.

The Path to CRM Success

Today only a few organizations have managed to become truly customer-centric. Most companies still have highly fragmented customer management applications to support specific departmental or divisional needs. CRM implementations range from initial, isolated efforts to improve customer-facing processes (such as simple contact management or spreadsheetbased sales planning) to moresophisticated support of specific customer interaction channels for improving sales effectiveness or call center efficiency. In years to come, more companies will embark on a journey to reach higher ground, aligning channels and departments, to become entirely customer-focused, valuenetwork- enabled organizations, thus allowing them to achieve better and more-tangible results.

This transition isn’t easy. It takes time and calls for a commitment to a customer-centric philosophy across your organization from top to bottom. You need a vision, a strategy and a deliberate execution road map to get there. It requires a holistic view of customers, channels, processes, employees, partners and technology. The key to success of such wideranging CRM implementations is an evolutionary approach where each step in building the ecosystem represents a carefully planned, well-defined advancement of the business strategy (see Figure 2).

Successful companies have taken a very disciplined, sequenced path to implementing CRM, launching highly focused projects first to solve clearly defined problems in areas that can undermine overall performance, such as customer service or order management. In these most critical areas they start with the improvements that will yield the biggest returns. Upon achieving their goals with small projects, they leverage their initial investments to address additional challenges. For example, they may extend their implementations by integrating additional channels like the Web and commence with leveraging customer insight to better target ongoing customer interaction and drive product innovation. Over time they continuously improve their capabilities to not only achieve efficiency gains, but also to increase customer value and maximize the value they get in return.

A Strategic Framework for CRM Without Compromise

To gain a sustainable competitive advantage and make the most of relationships with customers, organizations should consider a basic set of strategic principles that we have identified based on the successful strategies of best-run companies. These principles constitute a strategic framework for the customer-centric enterprise and can help organizations to distance themselves from their competition and secure long-term success (see Figure 3).

Balance Efficiency and Effectiveness
A good CRM strategy needs to balance efficiency and effectiveness. Many organizations tend to focus largely on efficiency and often ignore the impact of their actions on effectiveness. This may alienate customers and erode profits. Improving efficiency doesn’t matter unless you do the right thing in the first place. That’s why effectiveness must take precedence over efficiency – without neglecting to identify critical processes and areas for efficiency gains.

Capitalize on Customer Insight
To stay ahead of the competition, organizations need to develop proprietary information about customers beyond common industry wisdom and embed this customer insight into critical planning and decision-making processes such as sales planning, new product development, marketing investments, and resource alignment and supply chain planning. Successful organizations build a customer intelligence network, make customer insight accessible throughout the organization and translate this knowledge into frontline actions.

Align Marketing, Sales and Service With the Customer in Mind
Operational excellence and consistent customer experience can’t be achieved when departments make independent decisions and take isolated actions to achieve their numbers. Organizations need to give up their internal, departmental views and revise their frontline business processes and information sharing practices across marketing, sales and service. They need to align their customer- facing operations, break the silos, link discrete systems or – even better – create a single instance, so they can frequently share valuable marketing, sales or service information with the right people.

Manage Customer Experience Across Touch Points
Today customers demand multiple channels that they can use to get information, purchase goods, pay their bills, request services or get support based on their specific needs and preferences. They expect convenience, choice and operational reliability, and a consistent experience across all touch points. Companies can differentiate themselves by successfully managing the complexity of customer interactions across multiple channels in a proliferating environment, while synchronizing off-line and online channels and taking advantage of the efficiencies of automation.

Guide Customers to the Right Channel
Many organizations fail to tailor the channels to meet the touch-point needs of their customers and don’t guide them to the most appropriate channel. For example, a common strategy is to simply push as many customers as possible to low-cost self-service channels. This can, in fact, increase costs and churn rates and destroy market share. It’s important to understand the channel economics, strengths and weaknesses of each channel, and carefully evaluate how to reach out to customers. To yield the best results you must optimize your entire channel mix, aligning your channel strategy with customer segments (based on interaction needs and customer value) and business goals.

Beyond the Touch Point: Connect the Front Office and the Back Office
Synchronizing front-office, back-office and supply chain activities is absolutely critical to attract and retain customers, fulfill demand and deliver on service promises. Many organizations are losing revenue simply because they fail to connect their front and back offices. Without seamless, real-time integration, customer satisfaction declines, and customer attrition rises as online transactions fail, products aren’t available at the time and places needed, orders can’t be changed, service technicians don’t have the right spare parts, returns aren’t correctly passed through to accounts payable and customer issues can’t be resolved immediately at the first call.

Create a Customer-driven Value Network
As companies focus increasingly on their core competencies, they will be ever-more dependent on an ecosystem of suppliers and partners to meet customer demand and generate new growth. To be successful, partners need to become an integral part of a value network, providing complementary capabilities to promote the brand, sell products and offer value-added services. It is critical to define the role of these partners, manage the relationships with them and integrate them in a way that enables seamless end-to-end business processes across the entire network.

Adopt a Technology Framework for Adaptability and Integration
As adaptability, collaboration and speed become winning elements of corporate success, organizations need an open and flexible IT architecture providing a platform that seamlessly integrates and processes information from disparate applications, enables intra-enterprise and inter-enterprise collaboration and quickly maps business processes to changing business needs.

Use IT as a Catalyst for Business Transformation

Information technology has become a missioncritical enabler for CRM, not just to understand customer needs but also to determine how to most efficiently and effectively deliver on those needs. But IT can be more than just an enabler – it can serve as a catalyst for business transformation. CRM without compromise is about transforming a business into a customercentric business. It’s about building a synergistic ecosystem with employees, customers and partners that consistently creates and delivers customer value – an ecosystem where customer demand drives the supply chain; customer insight inspires innovation; and employees are empowered to best serve the customer. Organizations that are able to build such an ecosystem which is flexible enough to quickly respond to changing customer needs and business challenges will have a sustainable competitive advantage and enjoy profitable growth for years to come.