Customer relationship management

Customer relationship managementIntroduction

The better a business can manage the relationships it has with its customers the more successful it will become. Therefore IT systems that help support dealing with customers on a day-to-day basis are growing in popularity.

Customer relationship management (CRM) is not just the application of technology, but is a strategy to learn more about customers' needs and behaviours in order to develop stronger relationships with them. As such, it is more of a business philosophy than a technical solution to assist in dealing with customers effectively and efficiently. Nevertheless, successful CRM relies on the use of technology.

This guide will outline the business benefits and the potential drawbacks of implementing CRM. It will also offer help on the types of solution you could choose and how to implement them.

Why CRM?

In the commercial world the importance of retaining existing customers and expanding business is paramount. The costs associated with finding new customers mean that every existing customer could be important.

The more opportunities that a customer has to conduct business with your company the better, and one way of achieving this is by opening up channels such as direct sales, online sales, franchises, use of agents, etc. However, the more channels you have, the greater the need to manage your interaction with your customer base.

Customer relationship management (CRM) helps businesses to gain an insight into the behaviour of their customers and modify their business operations to ensure that customers are served in the best possible way. In essence, CRM helps a business to recognise the value of its customers and to capitalise on improved customer relations. The better you understand your customers, the more responsive you can be to their needs.

CRM can be achieved by:

finding out about your customers' purchasing habits, opinions and preferences profiling individuals and groups to market more effectively and increase sales

changing the way you operate to improve customer service and marketing

Benefiting from CRM is not just a question of buying the right software. You must also adapt your business to the needs of your customers.

Business benefits of CRM

Implementing a customer relationship management (CRM) solution might involve considerable time and expense. However, there are many potential benefits.

A major benefit can be the development of better relations with your existing customers, which can lead to:

increased sales through better timing by anticipating needs based on historic trends identifying needs more effectively by understanding specific customer requirements

cross-selling of other products by highlighting and suggesting alternatives or enhancements

identifying which of your customers are profitable and which are not

This can lead to better marketing of your products or services by focusing on:

effective targeted marketing communications aimed specifically at customer needs a more personal approach and the development of new or improved products and services in

order to win more business in the future

Ultimately this could lead to:

enhanced customer satisfaction and retention, ensuring that your good reputation in the marketplace continues to grow

increased value from your existing customers and reduced costs associated with supporting and servicing them, increasing your overall efficiency and reducing total cost of sales

improved profitability by focusing on the most profitable customers and dealing with the unprofitable in more cost effective ways

Once your business starts to look after its existing customers effectively, efforts can be concentrated on finding new customers and expanding your market. The more you know about your customers, the easier it is to identify new prospects and increase your customer base.

Even with years of accumulated knowledge, there's always room for improvement. Customer needs change over time, and technology can make it easier to find out more about customers and ensure that everyone in an organisation can exploit this information.

Types of CRM solution

Customer relationship management (CRM) is important in running a successful business. The better the relationship, the easier it is to conduct business and generate revenue. Therefore using technology to improve CRM makes good business sense.

CRM solutions fall into the following four broad categories.

Outsourced solutions

Application service providers can provide web-based CRM solutions for your business. This approach is ideal if you need to implement a solution quickly and your company does not have the in-house skills

necessary to tackle the job from scratch. It is also a good solution if you are already geared towards online e-commerce. For more information see our guide on cloud computing.

Off-the-shelf solutions

Several software companies offer CRM applications that integrate with existing packages. Cut-down versions of such software may be suitable for smaller businesses. This approach is generally the cheapest option as you are investing in standard software components. The downside is that the software may not always do precisely what you want and you may have to trade off functionality for convenience and price. The key to success is to be flexible without compromising too much.

Bespoke software

For the ultimate in tailored CRM solutions, consultants and software engineers will customise or create a CRM system and integrate it with your existing software. However, this can be expensive and time consuming. If you choose this option, make sure you carefully specify exactly what you want. This will usually be the most expensive option and costs will vary depending on what your software designer quotes.

Managed solutions

A half-way house between bespoke and outsourced solutions, this involves renting a customised suite of CRM applications as a bespoke package. This can be cost effective but it may mean that you have to compromise in terms of functionality.

How to implement CRM

The implementation of a customer relationship management (CRM) strategy is best treated as a six-stage process, moving from collecting information about your customers and processing it to using that information to improve your marketing and the customer experience.

Stage 1 - Collecting information

The priority should be to capture the information you need to identify your customers and categorise their behaviour. Those businesses with a website and online customer service have an advantage as customers can enter and maintain their own details when they buy.

Stage 2 - Storing information

The most effective way to store and manage your customer information is in a relational database - a centralised customer database that will allow you to run all your systems from the same source, ensuring that everyone uses up-to-date information.

Stage 3 - Accessing information

With information collected and stored centrally, the next stage is to make this information available to staff in the most useful format.

Stage 4 - Analysing customer behaviour

Using data mining tools in spreadsheet programs, which analyse data to identify patterns or relationships, you can begin to profile customers and develop sales strategies.

Stage 5 - Marketing more effectively

Many businesses find that a small percentage of their customers generate a high percentage of their profits. Using CRM to gain a better understanding of your customers' needs, desires and self-perception, you can reward and target your most valuable customers.

Stage 6 - Enhancing the customer experience

Just as a small group of customers are the most profitable, a small number of complaining customers often take up a disproportionate amount of staff time. If their problems can be identified and resolved quickly, your staff will have more time for other customers.

If you are collecting, using and processing personal information covered by the Data Protection Act you must comply with the data protection principles. See our guide on privacy and data protection in direct marketing.

Potential drawbacks of CRM

There are several reasons why implementing a customer relationship management (CRM) solution might not have the desired results.

There could be a lack of commitment from people within the company to the implementation of a CRM solution. Adapting to a customer-focused approach may require a cultural change. There is a danger that relationships with customers will break down somewhere along the line, unless everyone in the business is committed to viewing their operations from the customers' perspective. The result is customer dissatisfaction and eventual loss of revenue.

Poor communication can prevent buy-in. In order to make CRM work, all the relevant people in your business must know what information you need and how to use it.

Weak leadership could cause problems for any CRM implementation plan. The onus is on management to lead by example and push for a customer focus on every project. If a proposed plan isn't right for your customers, don't do it. Send your teams back to the drawing board to come up with a solution that will work.

Trying to implement CRM as a complete solution in one go is a tempting but risky strategy. It is better to break your CRM project down into manageable pieces by setting up pilot programs and short-term milestones. Consider starting with a pilot project that incorporates all the necessary departments and groups but is small and flexible enough to allow adjustments along the way.

Don't underestimate how much data you will require, and make sure that you can expand your systems if necessary. You need to carefully consider what data is collected and stored to ensure that only useful data is kept.

You must also ensure you comply with the eight principles of the Data Protection Act that govern the processing of information on living, identifiable individuals. For more information, see our guide on how to comply with data protection legislation.

Avoid adopting rigid rules which cannot be changed. Rules should be flexible to allow the needs of individual customers to be met.

Questions for CRM suppliers

For many businesses customer relationship management (CRM) can be a large investment. Therefore it is vital to choose your supplier carefully. Making the wrong choice could be expensive and even jeopardise your business. Before implementing a solution based on CRM technology, you might want to ask any potential suppliers the following questions:

How long has the supplier been established? What are the specific costs associated with the product, ie a one-off purchase price, an annual

renewable license, a charge per user etc?

Does the supplier offer any form of evaluation software so that you can try before you buy?

How much is charged for technical support?

Does the supplier provide consultancy and, if so, at what rates?

Is the system scalable? If your customer base grows will the system expand to cope?

Can the supplier recommend any third-party developers that make use of their core CRM products?

Is there an active independent user group where experience and ideas can be freely exchanged?

Can the supplier provide references for businesses in your industry sector that use their software?

Does it offer training in the CRM solution and, if so, at what typical cost?

Here's how CRM software improved my business

Based in Runcorn, Cheshire, with 60 employees, Chance & Hunt specialises in supply chain management for the international chemical industry. Here managing director Joan Traynor describes the benefits that Customer Relationship Management (CRM) software has brought to the business.

What I did

Define objectives

"Four years ago we began looking at new ways to manage our existing databases, which were largely running in isolation from each other.

"Our key objectives in selecting a solution were to enhance customer relationships, cut costs and grow sales. With the help of a student working with us in a Knowledge Transfer Partnership we researched CRM systems and selected the right software package for us.

"Our decision was partly based on the fact that the new software would work with our existing platform, so we wouldn't have to start completely from scratch."

Implement and monitor the solution

"The software was relatively easy to install, although we were lucky that we had the expertise in-house. The process involved training for all staff, since user buy-in is crucial. If employees aren't motivated to keep records up to date, you won't get anywhere. In that respect, it's important that everyone knows the project has management commitment too.

"We monitored success using key performance indicators, such as the number of customer complaints, and by conducting customer surveys. Complaints are down and customers report improved responsiveness. It's definitely had an impact on sales as well, since our team now has all the customer information they need at the touch of a button. We also monitor employee usage of the system during staff appraisals."

Keep evolving

"One thing we've learnt about CRM software is that it's about evolution rather than revolution. We developed our system in bite-sized chunks, learning as we went along.

"When we started, we captured fairly basic information like customer details, buying history and sales visits. The system has since been adapted to include a range of additional functions. For example, we are now able to access the system from a handheld PDA or call up a list of customers located en-route to a sales call.

"The great thing is that most of the improvements have been suggested by users. Because they can see the advantages of the system and that it's easy to use, they're keen to take ownership."

What I'd do differently

Structure the data

"Early on, we were mostly searching for individual customer records, so it didn't seem to matter how records were grouped. As things developed we wanted to be able to search a variety of indexes, for example by product name, location and so on. Structuring data by defined 'headings' from the start would have helped us when we came to refine the system later."

Return On InvestmentReturn on investment (ROI) is a financial calculation that indicates the degree to which benefits exceed the investment for a given project or initiative. ROI is applied to initiatives that utilize capital resources because unlike expenses, capital is used to acquire assets that have a longer term impact that will either help or hinder the organization as it operates in the future. The calculation of ROI is in the form of a ratio where benefits are in the numerator (top) and investment/costs are in the denominator (bottom). By itself, ROI is just a number.

By Glen Peterson For the rest of the June 2002 issue of CRM magazine please click here

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Return on investment (ROI) is a financial calculation that indicates the degree to which benefits exceed the investment for a given project or initiative. ROI is applied to initiatives that utilize capital resources because unlike expenses, capital is used to acquire assets that have a longer term impact that will either help or hinder the organization as it operates in the future. The calculation of ROI is in the form of a ratio where benefits are in the numerator (top) and investment/costs are in the denominator (bottom). By itself, ROI is just a number.

Within most organizations, capital is a limited resource; therefore projects and initiatives that require capital must compete for allocation and approval. Historically, manufacturing and facilities were the prime users of capital but increasingly, IT is moving to a very prominent level (30 percent is not unusual) and therefore must compete for limited resources. Larger corporations typically have a capital budget that identifies the potential recognized projects and then when a project is ready to start, a detailed plan and ROI analysis are submitted to actually release resources to the project. So the first hurdle for a project is to be included in the capital budget; the next step is to gain release of the actual funds, which requires the details and justification. The decision to proceed with a project is commonly handled by the most senior level of management and at certain thresholds in investment. It may require board approval.

Although the tools of ROI can provide rank order analysis, risk assessment, etc., it is still a political decision that is subject to all of the foibles of human judgment. For example, it is not uncommon for members of senior management to mentally benchmark the level of funds requested to equivalent investments that have a relatively known return; for example, a production line, warehouse space, R&D, etc. This mental benchmarking is very important because if the ROI appears weak or marginal as compared to the mental standard, it could be in trouble. Obviously the political influence of the individual backing the initiative is also important. Certainly it is possible to get approval for an initiative with little more than an emotional appeal from the right person, but is that what it is all about?

Clearly ROI is a key component of the right of passage of initiatives to get initiated. If ROI is viewed as simply a number that is placed in an approval box, it may gain access to the funds but all bets are off in terms of success. Consider this real life example. Not too many years ago, a major manufacturer rolled out an extensive CRM system based on essentially the political emotion of a senior vice president. The project alluded to an ROI but it was vague and certainly not tied to specific strategies or metrics. Though the project team attempted to do a conscientious job of implementing the system, it was never the less the impetus of the VP driving the timing and commitment. The result was all to predictable, the organization resisted the imposition of the system and the VP left the company leaving a legacy and project team with a high cost system, little organizational support, and questionable benefits. Yet more road kill on the highway to competitive advantage.

This example reinforces that it is possible to use pure emotion to get a CRM initiative through the approval process but what has been gained? In today's economic climate, all organizations are emphasizing the ROI component of the submission and to that end; many CRM vendors are offering ROI calculators. These calculators represent a positive sign in that they reflect the vendor's recognition that these applications must add economic value to the user organization. The calculators also help user organizations think about the potential for their organizations to improve performance. However, merely generating a number that meets the ROI level required as a right of passage is likely to set the stage for failure. Why is this so? In Lewis Carroll's book, Alice In Wonderland, Alice asks for direction from the Cheshire cat. When the cat inquires about Alice's destination, Alice confides that she does not know. The cat then observes that any road will take her there. To achieve success means that success must be defined and a road map used to get

there.

ROI as a Road Map

ROI is just a number but a properly developed and articulated ROI is based on a set of assumptions relative to cause and effect relationships. These cause and effect relationships are tied to a set of metrics that measure performance and the degree to which the cause and effect relationships are working as predicted. The ROI road map describes how the organization is going to leverage these relationships and how the effect is going to be measured (metrics). Lastly, a senior executive signs on as the sponsor to ensure that it all happens.

In the past, most organizations have dealt with capital appropriations on a cost reduction and/or avoidance basis. What makes CRM initiatives seem peculiar or somewhat less solid is the inclusion of top line results that are hard to isolate or prove one way or another. Part of the difficulty is that most organizations go from tactic or strategy directly to top line results such as revenue and margins. Though this may have intuitive appeal it smacks as a very big leap of faith. What is missing in many cases is the use of customer performance metrics. Customer performance metrics link customer behavior to the top line financial drivers (revenue and margins). Examples of customer performance metrics include new customer acquisition cost, share of customer, customer profitability, etc. It must be realized that unless the organization improves these key metrics, it is unlikely to experience competitive improvement. The customer performance metrics become pivotal to the linkage of cause/effect relationships to the ROI. Through the creation of appropriate metrics, senior management will gain confidence that it will be able to track what is working and what is not. The size of the chasm becomes visible and the leap of faith more reasonable a business proposition.

This approach provides a clear road map and defines success. Lacking such a definition, how will you know you arrived? More importantly, lacking this definition, how committed will senior management be if problems arise (and they usually do at some level)? CRM is littered with failed and abandoned projects. One can only believe that the organizations did not adequately assess the cost and/or define (or believe) what was truly at stake. ROI is certainly no silver bullet but investing the effort to make it a road map radically improves one's probability of being on the winning side to the success statistics.

[Glen Peterson is senior vice president of One Inc.'s consulting practice. He is also the author of E-Success: A Leadership/Alignment Model, High-Impact Sales Force Automation: A Strategic Perspective, and Customer Relationship Management Systems: ROI & Results Measurements.]

To contact the editors, please email [email protected]

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.

We present this year’s class of winners and leaders. Each leader is graded on three criteria—customer satisfaction, depth of functionality, and company direction—in seven categories of support and service. Each winner is joined by three other leaders to complete our choices.

CRM magazine made one significant change from last year. We combined Web self-service with Web interaction management in a new category called Web support. All the other categories remain the same: contact center infrastructure, contact center search, interactive voice response, workforce optimization suite, enterprise feedback management, and outsourcing.

The leaders were chosen based on a rigorous analysis. However, an award is no substitute for a customer’s direct experience with a vendor. So, if you have a story to tell and if a company has not met your needs, we would like to hear about it. Email us at [email protected]. After all, this special issue does not presume to be the final word. In the era of social CRM, this conversation is just beginning.

CONTACT CENTER INFRASTRUCTURE

The Market

The contact center infrastructure market used to be simple. A user would install a basic call router and he would be done. Next-generation platforms, however, go far beyond that. They are unified multimedia suites that need to support both inbound and outbound contacts as well as multiple media types, including voice, text, video, and social media.

While many next-generation platforms are being offered as stand-alone applications, it is becoming more common for systems to be deployed as fully integrated suites of contact center applications that feed information into and draw information out of other systems. According to Drew Kraus, a vice president at Gartner, the market has seen a decline during the past two years after five years of growth. In a recent Gartner Magic Quadrant report, Kraus notes that during the downturn, many companies focused their contact center infrastructure decisions on reducing technology and operational costs. Now, as the economy rebounds, he expects vendors to search for innovative revenue streams.

The Leaders

Within the contact center infrastructure space, telecommunications giant Avaya, following its late 2009 acquisition of Nortel Networks, now lays claim to half of the market’s revenue. However, the acquisition, while giving Avaya tremendous market share, came with a price beyond the more than $900 million that Avaya paid in the deal. The company, which some analysts contend is still the king of the contact center, topped all of its competitors in depth of functionality with a 4.0 score but took a huge hit in company direction.

“There are plenty of pieces for which [Avaya] is unrivaled, but the Nortel deal is still hanging over them as they’re trying to keep customers from both companies happy,” comments Ian Jacobs, a senior analyst of customer interaction technologies at Ovum. Other analysts observe that the company is so mired in product rationalization issues that other vendors now have overtaken Avaya in terms of innovation.

Interactive Intelligence, a market leader in 2010, finished just a tenth of a point behind this year’s winner. Interactive Intelligence was propelled by an industry-leading score (4.2) in customer satisfaction and a 4.0 in company direction.

“If you’re talking about execution, they have been the standout during the past 12 months,” comments Jacobs. “And they’ve been growing faster than any other company in the space.”

“Interactive Intelligence has the wind at its back,” says Sheila McGee–Smith, the president and principal analyst at McGee–Smith Analytics. “Consistent R&D development has given them an enviable suite that they are now leveraging successfully with a communications-as-a-service offering.”

LiveOps was viewed by many industry analysts as having gained traction, as demonstrated by the company’s high marks in company direction. The focus of LiveOps has been on middle-market customers, which is a segment that Jacobs believes the company has served very well. “They’re doing everything they need to for [the customers] they are targeting,” he points out. “They are constantly working with their customers to improve what they are doing.”

The Winner

Cisco Systems finished the year atop the field in company direction with a score of 4.2. The company, which climbed from its spot on the leaderboard last year, was considered by Paul Stockford, an analyst at Saddletree Research, the industry’s “thought leader” in many respects.

“Cisco is focusing its efforts on the Web 2.0 infrastructure, which I think is brilliant,” Stockford says, adding that the company has “a strong product portfolio and a sharp vision for the future.”

One to Watch

Genesys Telecommunications Laboratories, last year’s winner, was dragged down this year by its company direction score. Analysts believe that the moves by Genesys’ parent company, Alcatel-Lucent, to tighten control over the Genesys sales and marketing functions might hamper its innovation efforts. The company also took a hit in customer satisfaction, with many analysts pointing out that Genesys’ solutions often come with a high price tag. But Genesys is not out yet. “In their niche, Genesys continues to shine,” says McGee–Smith. “2011 will be the year when the market will be able to judge whether Genesys’ Compact Edition will help broaden their addressable market beyond complex, multisite implementations.”

INTERACTIVE VOICE RESPONSE

The Market

The struggling global economy put a squeeze on sales of interactive voice response (IVR) systems, decelerating growth during the past two years. But the market is expected to regain some of its strength in the medium to long term, as frozen funds begin to thaw. Global Industry Analysts (GIA) predicts that growth will be especially strong in financial services, where many companies are being forced to deal with restructuring, consolidation, mergers, and acquisitions as a follow-up to the recession.

GIA expects growth will not be driven by large enterprises, which it says have reached the saturation point with IVR technologies. While many larger companies might be looking to replace first-generation systems with newer technologies, the real new business generator will be small and midsize companies, according to a recent GIA forecast that shows the overall IVR market reaching $1.9 billion by 2015. Also steering that change will be a focus on benchmarking customer experiences; the use of more-sophisticated voice portals; advanced speech, touchtone, and multimodal interfaces; and a push toward IVR optimization that will lead to system replacements and upgrades.

The bottom line, analysts say, is that the sluggish economy has not changed the fact that IVRs continue to offer cost efficiencies and superior customer experiences. And with the momentum shift from proprietary hardware and software toward open-source platforms, making those changes will be easier.

The Leaders

Avaya finished strongly this year, posting high marks in depth of functionality (4.7) and customer satisfaction (4.3). According to analysts, Avaya’s users, especially large contact center customers, are pleased with the company’s IVR products despite the high prices. The company’s acquisition of some Nortel Networks assets, while helping the company, could also work against it. On the positive side, “the combination of the Avaya and Nortel product and professional services teams and the customer base gives Avaya a solid leadership position,” comments Sheila McGee–Smith, the president and principal analyst at McGee–Smith Analytics. But, on the negative side, some customers might be left out in the cold when Avaya discontinues some products and services.

IVR has not been a strong suit for Interactive Intelligence, but it made great strides this year, impressing analysts (4.5) with its direction. “They do have great integrated functionality and interesting speech analytics capabilities coming in the next release,” McGee–Smith says.

Voxeo continues to reap the rewards from its VoiceObjects acquisition in 2008, leveraging the powerful and versatile VoiceObjects platform into just about everything it does. It also continues to advance the notion of unified self-service and incorporating VoiceXML to build a single application that works via voice, Web, text messaging, email, and video. According to analysts, the company continually scores high in customer satisfaction, with users viewing the solutions as low-cost, scalable, and well-suited to their needs. The one knock, they said, is that the company has limited visibility outside the United States. But with several new office openings in Europe and Asia, the company does seem to be moving toward expanding internationally.

The Winner

Genesys Telecommunications Laboratories continues to impress and dominate the IVR space. The vendor, which takes the top spot for a seventh straight year, garnered the highest scores in all categories, including a 4.7 in depth of functionality, 4.7 in company direction, and a 4.5 in customer satisfaction. Of particular interest this year was the launch of the Conversation Manager, a key component of Genesys’ Intelligent Customer Front Door (iCFD) and Genesys 8 platform, considered one of the most tightly integrated multichannel platforms in the industry. Genesys 8 with Conversation Manager helps to create a unified view of customer interactions across multiple channels, including contact centers, the Web, mobile phones, fax, chat, and social media. What could hurt the company over time, though, is a move by parent Alcatel-Lucent to roll Genesys’ sales and marketing functions into the larger corporate Enterprise Services division.

One to Watch

Microsoft/Tellme, another newcomer to this year’s rankings, garnered scores of 4.3 in depth of functionality, company direction, and customer satisfaction. Its lack of new customer signings, though, kept the company off the leaderboard. “Existing customers continue to be happy, but Microsoft/Tellme doesn’t seem to be making great progress expanding their customer base,” McGee–Smith says.

WEB SUPPORT

The Market

Although CRM magazine has distinguished between Web Self-Service and Web Interaction Management in the past, the editors think it’s now appropriate to merge the two categories into one simply called Web Support. More than anything, this marriage reflects how we expect the industry to evolve. With Web Self-Service nearly functioning as a “fold in” with Web Interaction Management, this year brought some companies head to head in new spaces. When considering

the overall industry, Ian Jacobs, customer interactions analyst at Ovum, comments, “The reputation for customer satisfaction is particularly high overall. All of these vendors are getting significantly more aggressive in what they want to accomplish.” He adds that many customers have been buying solutions to solve specific problems.

The Leaders

eGain, a first in the Web Interaction Management category, came on strong with a 4.2 for depth of functionality. John Ragsdale, vice president of technology research for TSIA, observes that eGain’s recent announcement of an intelligent search platform has made the company a contender and has given it best of breed status within knowledge management, incident tracking, multichannel management, and enterprise search.

“You will see a lot more of eGain in 2011—they have the right product at the right time,” Ragsdale says. However, the company middled with a 3.3 in company direction. Kate Leggett, senior analyst of customer service at Forrester, says, “eGain’s product strategy has been to evolve their solution based on customer demand.”

InQuira fell quite a bit from last year’s score in depth of functionality, receiving a 3.3 after last year’s 4.2. To account for the decline in this new space, Leggett explains, “InQuira has a very strong knowledge offering. However, they lack the electronic channels, such as email and chat, to escalate from Web self-service to assisted service.”

The company remained relatively steady in its other scores, though, sustaining a mere 0.1 drop in company direction from 2010. InQuira’s customer satisfaction score remained the same. “InQuira’s expertise for intelligent search has been echoed by big customers, such as Symantec and Yahoo,” Ragsdale says. “They have addressed critics asking for more incident management and multichannel capabilities by forming strategic relationships with the biggest names in CRM [such as] Oracle/Siebel and SAP.”

Parature was named a Rising Star in 2009 and then a leader in last year’s awards. The company’s scores have slipped ever so slightly in customer satisfaction, from 3.7 to 3.6, and from 3.4 to 3.3 in company direction. Depth of functionality saw the hardest hit, falling from 3.7 to 3.0. Nevertheless, Parature held its spot on the leaderboard. As Ragsdale notes, Parature overall is “a good combination of community and multichannel customer service, with expertise in some key industry segments, like gaming.”

The Winner

RightNow Technologies grabbed the highest score in customer satisfaction, as the only company to receive a solid 4.0. The company’s depth of functionality rose from last year’s 4.1 to 4.4, an increase that seems to sit well with Ragsdale.

“[RightNow is] the recognized leader for customer service in the cloud,” he says. “RightNow’s attention to social media integration, online communities, and other trends has kept them on the bleeding edge of functionality—a rare commodity for such a large, established vendor.” Jacobs comments that RightNow’s initiative to bring Web service to the contact center may be getting too complicated for some customers, which could account for the company’s dip in company direction from a 4.6 the previous year to a 3.5. Leggett adds, “RightNow has a strong, well-rounded product offering. This vendor will need to focus on crisply differentiating themselves from the unified communication vendors entering this space, as well as from Salesforce, Oracle, and Microsoft.

One to Watch

Moxie Software (formerly nGenera) was one of our leaders last year but tailed behind this year’s leaders by a mere 0.8. The company saw a slight increase in depth of functionality, from 3.7 to 3.8, but dropped in company direction, to 3.3 from 3.4. “They are trying to move into the community market,” observes Leggett. “Their strategy is exciting. However, their core business is still multichannel customer service. Their messaging needs to be aligned to their business model.” Ragsdale spoke highly of the company’s customer satisfaction, describing customers as “highly reference-able,” and “represent[ing] very large, complex implementations.” He also found that Moxie’s new focus on enterprise collaboration is harnessing the strongest aspects of social media for real ROI.

WORKFORCE OPTIMIZATION SUITE

The Market

Workforce optimization (WFO) took a financial hit during 2010 because of the sluggish economy. Still, many companies saw double-digit growth, as end users realize the personnel savings that these solutions could bring. To speed up those savings, however, the industry has seen growing demand for more sophisticated and real-time analysis. WFO products, available as suites that include analytics, coaching, e-learning, performance management, quality assurance, scheduling, and staffing management, continue to see traction outside the contact center. In addition, the shift has brought new competitors to the space, with Microsoft, SugarCRM, CSG Systems, VoicePrint International, CallCopy, and several other relative newcomers all claiming to offer WFO solutions.

The Leaders

Aspect Software, which analysts credit with having a clear and well-articulated company direction, several strong partnerships, a broad WFO product line, and a reputation for exceptional customer care, keeps its spot on the leaderboard for the fourth straight year. The company collected strong scores in its reputation for depth of functionality (4.0) and its reputation for customer satisfaction (4.0) but was bumped down a notch for having what some called weak speech analytics and recording applications.

Aspect is seen as a “solid performer with a clear vision of where it wants to take WFO,” says Paul Stockford, of Saddletree Research. But its WFO technology “is mature, yet evolving at the same time,” adds Ian Jacobs, a senior analyst of customer interaction technologies at Ovum.

Analysts agree that Calabrio is rising quickly. Though it finished even with Nice Systems in just about all categories, Calabrio did outpace the Israeli firm in one area: customer satisfaction, for which Calabrio received a 4.0. It also scored high in company direction, particularly for the company’s efforts to simplify and personalize the user interface connected to its Calabrio One suite.“These guys are doing a fantastic job with Web 2.0 infrastructure,” Stockford says. “They have established themselves as thought leaders and are releasing products that back up that thought leadership.”

Nice Systems, also a perennial member of the leaderboard, performed strongly in all categories. The company’s high marks in depth of functionality served as a double-edged sword, however, ultimately hurting the vendor’s customer satisfaction score (it garnered just a 3.4). “Its customers are sometimes overwhelmed because of all of its depth of functionality,” Jacobs explains. He points

out, however, that Nice’s strong position and reputation in the security space should propel it in the WFO market for many years to come.

The Winner

There was no doubt among analysts that Verint Witness Actionable Solutions is the clear leader in WFO. The vendor received a combined score of 4.6, more than seven-tenths ahead of its nearest competitor. Verint again took the leadership position in all categories. The company’s Impact 360 solution is seen by analysts as the gold standard by which all other WFO solutions are evaluated. “Verint is the pinnacle of the WFO market,” Jacobs says. “They do everything there is to do. They do everything you could possibly want. They are the most well-situated of all vendors.”

Stockford agrees. “On the WFO side, nobody can touch Verint,” he says. They are “an established leader with a clear vision for the future and the proven ability to execute on that vision.”

However, despite taking the title in each of the past four years, Verint has not been resting on its laurels. “Verint (then Witness) produced the first fully integrated WFO solution in 2005 with the launch of Impact 360,” says Dick Bucci, senior consultant at Pelorus Associates. “Over the years, the company has continued to make improvements, particularly in the areas of analytics and ease of use. Verint serves all market segments and has a solid reputation for innovation and customer care.”

One to Watch

Autonomy as been known more for its speech analytics than for its WFO products, but the company still earned better-than-average scores in depth of functionality and company direction around its Workflow Manager solution. While limited in its capabilities compared with other vendors in the space, Autonomy offers more of a process automation engine with visual tools, rule-based routing, electronic forms, real-time business activity monitoring, and capabilities for modeling business processes.

CONTACT CENTER SEARCH

The Market

Among the judges tapped for this year’s contact center search (CCS) sector, not many changes were noted from the previous year. Information continues to become even more complex, as many vendors turn away from their own search engines to embrace the “Google-ization” of the world.

In 2009, Donna Fluss, founder of DMG Consulting, predicted that many system enhancements would pop up in contact centers the following year, specifically predictive analytics, speech and real-time analytics, and customer experience analytics. “Contact center managers all over the world are demanding solutions that are easy to implement and use, applications that are actionable and deliver rapid results,” writes Fluss. “Some of the vendors are actually listening and delivering.”

Fluss foresaw that 2010 would be a tough year for many contact center search vendors because many contact centers are being asked to do more. Although most contact centers are constructed, ideally, to interact proficiently with customers and identify selling opportunities, Fluss notes that a contact center is only as powerful as its senior management, marketing departments, and sales organizations.

>“The contact center will be instrumental in creating and managing a repository of transactions that provides a holistic view of each customer, regardless of the channel used (including social networks),” Fluss writes. “Very importantly, the contact center will not demand that all inquiries be routed to its organization—this approach has always failed.”

In the coming years, Fluss envisions contact centers evolving into the hub of customer analytics, serving as a foundation for all internal and external departments that deal with data. Nevertheless, she saw 2010 “represent[ing] a new beginning for the mission and culture of contact centers.”

The Leaders

Autonomy Etalk saw a decline in depth of functionality, going from 4.2 in 2010 to 3.3. However, the company retained more or less the same scores in customer satisfaction and company direction (3.5 in each). Last year, Autonomy was praised for “playing in new areas of support and new verticals” by John Ragsdale, vice president of technology research for the Technology Services Industry Association (TSIA). In 2010, the company was recognized as one of the “Top Performing Tech Companies” by Bloomberg’s BusinessWeek.

Coveo Solutions scored a 4.0 in customer satisfaction as well as company direction, mirroring the company’s scores for 2010. However, Coveo took a hit in depth of functionality, falling from 3.8 in 2010 to a flat 2.0 this year. Although the company was praised in 2010 for having a social media search component in its contact center-focused product, Coveo functionality was not enough to wow every judge. In 2010, the company was named on EContent’s list of 100 “Companies That Matter Most” for the fifth year in a row. In addition, Coveo was ranked one of the fastest-growing companies in the Deloitte Fast 50.

InQuira was deemed “small” in last year’s roundup of CCS but also “one of the best-performing search platforms available to contact centers.” In 2010, InQuira was recognized with a spot on KMWorld magazine’s 2010 trend-setting product list for the sixth consecutive year. The company also achieved Oracle Validated Integration. InQuira remained steady with a slightly higher score of 4, up from last year’s 3.8, in customer satisfaction. Depth of functionality also saw an increase, to 4.0 from 3.8, and the company jumped 1.3 points, from 3.5 to 4.8, in company direction. Sheila McGee–Smith, of McGee-Smith Analytics, says, “InQuira’s partnership with Alcatel-Lucent/Genesys gives them access to a broad base of customers looking to coordinate assisted service and eServices.”

The Winner

RightNow Technologies assumes the crown for the second year in a row, setting a record with solid 5.0s in customer satisfaction, depth of functionality, and company direction.  Rebecca Wetteman, vice president of Nucleus Research, says, “RightNow continues to deliver consistent value to its customers and continues to focus not just on developing software but also on thought leadership to help its customers get more value from their software investments.” McGee–Smith noted that RightNow has widened its search capabilities to include newer, even more proficient options. “RightNow has the broadest set of media that work with their search tools,” McGee–Smith says. “The recent addition of Q-Go will expand their reach in this category beyond just support to home page searching.”

ENTERPRISE FEEDBACK MANAGEMENT

The Market

The enterprise feedback management (EFM) category was characterized as “young” in 2010 after interactive voice response (IVR) was determined to be a critical component. Conducting surveys specifically through the telephone is a time-tested methodology.

However, many of the top vendors this past year are best known for strength across the channels, especially when it comes to leveraging social media. Bruce Temkin, managing partner of the Temkin Group, believes that, overall, the space has “taken off.”

“I think most vendors had really good years,” Temkin points out. “There is certainly a shift to becoming much more operational with data in terms of putting it to use and people actually acting on the data.” Temkin also notes the increasing use of unstructured data within text analytics—a trend that is expected to gain even more traction over time.

The Leaders

Mindshare, which is an addition to this category, received a whopping 4.5 score in customer satisfaction. Temkin describes the CRM Market Awards newcomer as “[a] really good company at supporting its customers [that] has a strong focus on multilevel franchise as well as retail environments.”

Mindshare’s strong score of a 4.0 in the depth of functionality category was supported by Andrew McInnes, customer experience analyst at Forrester Research, who comments, “One thing in the depth of functionality category that stands out is that they offer a feature where companies actually input standard operating procedures into the system and when a certain type of feedback comes in, it might link to standard operating procedures.”

McInnes explains that this feature highlights the trend in voice of the customer (VOC) programs or enterprise feedback management platforms of not simply collecting customer feedback, but, instead, actually driving action at the ground level.

RightNow Technologies saw a considerable decline in its scores this year compared with last year’s highly esteemed triple 4.0s. The company’s customer satisfaction dipped only slightly, to 3.8, but depth of functionality came in at 2.3 and company direction at 2.6. This marked the second year in a row in which RightNow’s scores have seen a decline in this sector (the company scored a 4.7 in customer satisfaction in 2009).

Nevertheless, Temkin observes that RightNow is “probably the most thoughtful company when it comes to understanding SaaS [software as a service] and their dedication to an entire operating model when it comes to customer service.”

McInnes observes that RightNow’s EFM strength is that the company’s platform is fully integrated into its entire product suite. Having this type of platform positions RightNow to collect customer feedback from a variety of channels, such as the Web, social media, and contact center, without compromising the ability to look at transactional data or the individual customer.

Vovici was named a One to Watch in 2010. Esteban Kolsky, principal and founder of ThinkJar, comments, “Vovici represents EFM.” The company scored a middling score in all categories, with a 3.3 in customer satisfaction as well as depth of functionality, and a 3.1 in company direction.

The Winner

Allegiance takes the top spot for the third year in a row with a solid 4.5 in each category, having seen a 0.1 increase in depth of functionality from 2009.

McInnes says that Allegiance stands out the most in the company direction category because of a new focus on voice of the customer.“What’s interesting and right about that is that their focus is not only on customer feedback as primary data but also on more traditional business data and transactional data,” McInnes points out. “They are really moving toward tying those several pieces of customer insight together.”

One to Watch

This year we have a three-way tie: MarketTools, Medallia, and Confirmit all fell just short of the leaderboard, Confirmit having slipped from its leader position in 2009. Medallia is a new addition to the CRM Market Awards, while MarketTools was named a One to Watch last year. Despite Confirmit’s slip, Temkin notes that the company is “building up its platform and becoming much more of a contender.”

OUTSOURCING

The Market

There’s no arguing that more customers are using social media both to seek support and to support others. Therefore, it would behoove outsourcers to bring their expertise in customer service to the Web. Unfortunately, that’s not what’s happening. “It’s a social media world,” says Elizabeth Herrell, principal at Communication Initiatives. However, she adds that outsourcers are “not innovative in supporting new end users and thinking about how customers are contacting companies.”

Effective customer service is not only about putting an agent in a seat with a headset and a script, according to Herrell. It requires “total customer engagement,” she says. As a result, analysts were more critical of outsourcers this year, which is why their scores are lower, on average, than they have been in previous years.

The Leaders

After the recent recession, last year’s category winner, Convergys, made organizational changes to improve the company’s focus and revenue. In February 2010, Convergys named Jeff Fox president and chief executive officer. Fox has been a Convergys board member since February 2009 and was previously chief operating officer of Alltel. The following month, Convergys sold its human resources outsourcing business to NorthgateArinso, a British outsourcer, so that Convergys could focus on its more profitable customer management and information management businesses.

Often, moves like those hurt company direction scores—and Convergys is no different, sliding from 4.1 last year to 3.5. Convergys is “not a standout in terms of what it offers, but it has a good core and does it quite well,” says Peter Ryan, a principal analyst at Ovum. He adds that the company’s decision to scale back its business process outsourcing services and “retrench to its CRM background is a good plan.”

Sitel, which appeared on last year’s Ones to Watch list, edges its way back onto the leaderboard this year, thanks to its high score of 4.0 in depth of services, which ties the category winner. In October 2010, Sitel took an innovative approach to improving customer interactions by partnering

with artificial intelligence engine provider SATMAP to match callers to agents based on personality traits.

Last year, Frost & Sullivan recognized Sitel with the 2010 EMEA Customer Value Enhancement Award in Contact Centre Outsourcing, citing responsiveness to customer needs, operational excellence, and added-value technology and services as the company’s strong points.

“There’s a lot of respect among analysts for Sitel in terms of how they do business and what they do,” Ryan says.Similar to Sitel, West also moved from last year’s Ones to Watch to this year’s leaderboard. West made up for its merely adequate analyst score of 3.0 in depth of services and company direction by tying for the highest customer satisfaction score of 4.0.

The company received the 2010 Frost & Sullivan North American Contact Center Outsourcing Company of the Year Award, which considers growth strategy and implementation, degree of innovation in business processes, products and/or technologies, and leadership in customer value and market penetration.

The Winner

Teleperformance repeats its 2009 feat as the winner of the outsourcing category. The company is the only one to score 4.0 or better in the three main criteria—one of which is an impressive 4.5 for company direction. During the past 12 months, Teleperformance has had a steady eye on innovation and growth. In May 2010, Teleperformance announced a partnership with RightNow Technologies to provide a Contact Center on Demand hosted contact center offering.

In addition, the outsourcer has expanded its reach by acquiring or building contact centers in Brazil, Turkey, the Philippines, and Costa Rica. Teleperformance has a “fairly obvious and strategic vision, good in terms of reacting to new market realities. It did well in the recession and didn’t slow down innovation, which is very important,” Ryan says.

Another analyst adds, “Teleperformance has a good reputation for quality. They do things right in the traditional sense.”

One to Watch

Sykes fell off the leaderboard to become this year’s One to Watch. The company closed on the purchase of outsourcer and competitor ICT in February 2010 for $263 million—the largest acquisition in Sykes’ history. However, the revenue boost from the company’s acquisition of ICT Group last year couldn’t improve the bottom line for Sykes Enterprises. And, as with many acquisitions, analysts tend to lower their company direction scores until the organizations are fully integrated. Despite that, Ryan maintains that Sykes has a “fairly good portfolio and is responding well to the marketplace.”

To contact the editors, please email [email protected]

A great deal of discussion is taking place regarding customer relationship management (CRM) system initiatives and their financial viability or ROI. There seems to be widespread confusion about the financial impact of these projects on revenue and operating costs.

Most companies that purchase CRM software and embark on these enterprise initiatives lack

internal resources that understand enough about the industry, software and the companies' businesses to do the ROI analysis, so the job of completing this critical management function falls to the CRM vendors themselves, or their consultant partners.

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The results are more wishful thinking and hopeful romanticism than business justification. Of course, software vendors and the consultants who implement these projects want to make a compelling case for action, but the inaccuracy of their ROI models is due to their remoteness and unfamiliarity with the client's business, operations and finances.

The real financial impact from CRM initiatives and the basis of every ROI model are increases in sales revenue and reduced costs based on increased operational efficiency, and staff productivity based on new business processes, technology tools and automation.

The fly in this ointment is predicting how much revenue will increase and by how much costs will be reduced, and what factors shape the business dynamics of the ROI analysis and how close the real world will resemble the ROI model. What many companies do at this point is skip a critical step, which is determining when and how post-implementation financial impact will be calculated. This is the step that holds the planners feet to the fire and makes the CRM owners and stakeholders responsible and accountable for actual results and delivery of business benefits. It's no small surprise that this step is often overlooked and swept under corporate carpets. It leaves results unmeasured and business benefit resting on amorphous perceptions and anecdotal information.

CRM Across The Enterprise

CRM has the potential to revitalize and transform all customer-facing activities that have become know as the "front-office." The front office is characterized by three broad functions that are focused on customers. Three primary functions related to customers that every organization must perform are:

• Acquiring,• Selling, and• Servicing.

Historically, very specific and standalone systems were used by diverse functional groups within an organization to find, sell and serve customers. These applications typically have unique quality and performance issues.

CRM initiatives break down these silo systems and replace them with a system that incorporates customer knowledge and product or service knowledge at the point of customer/company interaction. CRM systems at a high-level are only very finely focused knowledge management systems that deliver very specific customer information to sales or service staff, while combining deep knowledge regarding a company's product and service offerings.

As the number of products and service offerings increase across organizations, the value of a system that delivers detailed knowledge regarding them to front-office staff increases. Figure 1 illustrates this relationship of the complexity of product/service environment to the value derived from a CRM system across a simple 10-point scale.

Figure 1

As the number and complexity of customers increase across organizations, the value of a system that delivers detailed knowledge regarding them to front-office staff also increases. Figure 2 illustrates this relationship of the complexity of customer/ account environment to the value derived from a CRM system across a simple 10-point scale.

Figure 2

The functional groups within an organization that comprise the front office and focus on customers are:• Marketing,• Field sales,• Customer contact centers (sales/service), and• Field service.

The Internet has proved an effective means of delivering self-service applications to customers that automate many sales and service functions. Customer self-service is becoming a more integral

component of many CRM initiatives.

The Factors That Drive ROI

Unfortunately, there is no cookie-cutter approach to calculating CRM return-on-investment (ROI) in an organization. It is not that simple, and while certain mechanisms always work in the same way, the extent that they impact revenue differ greatly, even between companies in the same industry.

Just as in the laws of economics, certain things must be done to achieve a specific outcome. Increased productivity creates capacity in any workforce. In a sales organization, it means that less staff is required to achieve a constant level of revenue. In a marketing environment, increased lead quality will improve the close rate, which leads to sales revenue increases per campaign. It is no different in contact centers or field service organizations - increased productivity means increased revenue and/or reduced cost per employee.The impact CRM has on an enterprise is directly related to the scope or reach of the initiative. A CRM effort can be implemented in some or all of the front-office organizations: marketing, field sales, customer contact centers and field service.

Marketing. CRM marketing analytical tools automate common marketing functions and allow increased tracking and other management functions. It traces the source of leads and allows complex evaluation of leads by source. Historical data can be accumulated over time for in-depth trending and analysis. This knowledge is critical for reducing cost and maximizing revenue of campaigns.The customer information in the CRM system itself eventually becomes the richest source of customer information for marketing analysis, as the marketing department can also specify what customer profile data should be collected.

The automation inherent in the tools deployed in marketing increases staff productivity as well as the tracking of advertising effectiveness. Reporting and analytic tools improve campaign lead quality and execution to increase revenue.

Marketing cost reduction is driven by productivity improvements such as decreased training time for new staff, increased automation, increased advertising effectiveness, increased management reporting, improved historical and real-time campaign data, reduced campaign planning timeframes and increased campaign consistency and quality. Marketing revenue increases are attained by improvements such as increased lead quality, increased advertising effectiveness, increased closed percentage per campaign and higher revenue per sale.

Field sales. Most CRM systems incorporate a sales methodology that follows the typical sales cycle and follows the process to move a customer from lead to prospect to opportunity to customer. Simply deploying a standard sales methodology will have a positive effect on results.

Throughout the sales process, sales staff input customer information so detailed knowledge of new customers is captured. This approach to filling-in-the-blank fact-finding allows the creation of complete and accurate customer profiles.

In the case of existing customers, sales staff have access to complete customer information and contact history across an organization.

What drives field sales cost reductions are productivity improvements such as decreased training

time for new staff, increased automation, improved sales management and forecasting, a reduction in staff required, improved sales reporting, increased sales order accuracy, increased sales management reporting, reduced sales cycle time and better customer data quality.

What field sales should see in terms of increased revenue can be attributed to increased volume of opportunities, higher close rates, increased revenue per sale, increased revenue from new staff, improved customer information and improved product/service information.

Customer contact center. The area in which CRM ROI is most easily measured is the contact center environment. The one thing that all contact center technology has in common is that it is report intensive. It is also an area that is contained with all the staff in large concentrations. This makes CRM management and implementation a bit easier, and it also simplifies ROI projections and measurement.

Contact center cost reductions are driven by productivity improvements such as reduced contact handling times, increased contact volumes handled, increased sales order or service request accuracy, increased automation of manual tasks, lower staff requirements, decreased training time for new staff, reduced telecommunications costs and improved data quality.

The productivity improvements apply to both sales- and service-oriented contact centers. Service-oriented call centers are usually cost-intensive, or their revenue is derived from maintenance contracts sold; as a result, they are usually not seen as a revenue-generating function.

Contact center revenue increases drive improvements such as an increased volume of opportunities, increased close rates, increased revenue per sale, increased revenue from new staff, improved customer information, improved product/service information and improved sales scripting.

Field service. Field service organizations are typically a cost to a business; so in call centers, small increases in productivity have a dramatic effect on costs. CRM systems focus on entitlements or service level agreements, but can be the result of product quality issues.

Factors that drive field service cost reductions are productivity improvements such as decreased training time for new staff, increased automation, improved management and forecasting, a reduction of staff required, improved reporting, increased service request accuracy, more accurate customer records, increased technical/product information, shorter issue resolution time, reduced repeat visits, less false or erroneous visits and increased customer data quality.

What field sales should see in terms of increase revenue improvements can be attributed to improved entitlement information, better service level agreement (SLA) performance and increased customer retention.

Ensuring Success

What is required is a methodical approach to ensure success and meet ROI objectives by techniques to minimize risk, increase management control and meet business and financial objectives.

Most clients who embark on CRM initiatives do not have the required skills in-house to adequately assess the ROI, as this is a highly specialized area that requires unique management and

operational skills. The unfortunate result is that this critical first step is often assigned to CRM vendors themselves or to their consulting partners. This is a bit like turning the fox loose in the hen house.

No wonder most CRM implementations are marked by flying feathers and frantic clucking. The groups that are most often charged with completing CRM ROI analyses are anything but objective. When the final project ROI is measured after the fact, they are long gone. This leaves the business stakeholders within a client organization holding the ROI bag, and the most likely outcome is that ROI is never measured. The logic is that you can't fail if you are never graded.

CRM ROI analysis is a critical management function that cannot be delegated to vendors or consultants. If an organization doesn't have the required skills to complete it, it must develop its current staff or hire new staff with the requisite skills. After all, if you don't have the sophistication in-house to do the ROI, it foreshadows what will happen after implementation when the vendor or consultant leaves and you must maintain and manage the CRM application on your own.

In truth, this is when most failures occur. Many companies do not have the sophistication or resources internally to maintain, manage and enhance the application going forward. They must simply learn by doing. This approach leads to highly visible and costly failures.

CRM ROI should be tied to a technology plan for the system. All the system functionality cannot be delivered day one of implementation, but must be deployed or rolled out over time. Implementing system functionality in phases minimizes risk and increases management control. Tying CRM ROI to specific functionality in system releases in a technology plan leads to a more accurate ROI model.

A post-implementation ROI measurement should be made in all cases. This is the time to ensure accountability. The company spent millions of dollars across some or all the front-office organizations, so what ROI benefit has been realized? This is a question guaranteed to put fear into the hearts of CIOs and CEOs alike. It takes a great deal of management courage to honestly answer this question.

The problem with most CRM ROI analyses is the organization lacks experience implementing and maintaining these systems. Due to this lack of operational sophistication, the complexity is often underestimated.

Another often underestimated item is the simple cost of ownership of CRM systems, which includes factors such as:• System development and implementation,• Initial and ongoing end user and IT staff training,• Ongoing system administration,• System updates and enhancements,• Ongoing maintenance and updates of system knowledge base,• Ongoing updates of product, pricing and end user scripts,• System change management,• Hardware and related support costs, and• Help desk and user support.

As in all business planning, especially ROI, the details down to the lowest level will determine the difference between success and failure.

Counting The Dollars

CRM implementations in an enterprise-class client cost many millions of dollars and the decisions related to these initiatives are often made at the CEO level. This makes upfront CRM ROI analysis extremely important, but it also makes post-implementation ROI measurement just as critical.

There is no cook book or cookie-cutter approach to the hard work of estimating financial impact and then measuring it after the fact. Staff that has in-depth knowledge of the company's business and operations must perform a unique analysis. It is too critical and strategic a management function to be delegated to CRM system vendors or their consultant partners.

CRM ROI estimates and analyses must be solidly grounded in business operational realities, not in vendor marketing collateral or in the presentations of hopelessly optimistic consultants.

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Abstract: The sales performance management/incentive compensation market continues to evolve. In the past year, Centive sold its on-premise division to focus on its software-as-a-service (SaaS) product line, and Callidus Software and SAP entered into a strategic partnership. On-demand sales continued to be hot in the space, driven by SaaS specialists Centive and Xactly as well as on-demand plays from Callidus and, more recently, Varicent Software. To help firms select the most appropriate sales performance management solution, Forrester spoke with leading sales performance management (SPM) vendors, vendor-provided customer references, and Forrester clients inquiring about SPM solutions. To get the most value, customers should take the time to determine which core questions to go deep on like vendor stability, product architecture, and industry fit.

Bad Economy = Bad CRM?Before the markets hit the skids, companies had just begun to target customer experience.

By Ian Jacobs For the rest of the December 2008 issue of CRM magazine please click here

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As an industry analyst who talks to technology vendors for a living, I have lately been hearing abundant and frequent variations on the message “A down economy is good news for us.” Obviously, companies in any industry would like for this somewhat paradoxical statement to be true, and there are some clear examples where specific niches do actually thrive while the rest of the economy falls apart. Have you tried to rent a storage space in cities with plummeting home prices lately? Do you know anyone in the collections business? Both of those businesses boomed in 2008, a somewhat depressing thought if one looks at the underlying reasons.

But do bad economic times make for boom conditions in CRM? I am not referring to sales of CRM applications by technology vendors—I mean the core concept of CRM, the notion that should undergird basic business processes. CRM vendors definitely make the argument that their wares are boom- and bust-proof: In good times, CRM helps attract new customers; in poor economic conditions, CRM can dramatically assist in the all-important customer-retention efforts that help companies survive dry periods. But that message has clear self-serving intentions. Even if it proves true, the sales of technology do not accurately reflect enterprises’ level of customer centricity. So what’s the reality?

Before the economy really seemed to hit the skids, companies began to increasingly talk up the concepts of customer experience, customer intimacy, and personalization of service. In many organizations, those messages were popping out of the mouths of C-level executives, a somewhat

startling change from the past. While it could be argued that this was just a superficial change—a token and patronizing “Year of the Customer,” as it were—the changes did seem to go deeper.

New director or C-level positions were popping up with a mandate to incorporate concern for “The Customer” into processes and decisions, for example. Those changes seemed to portend a new era, where the voice of the customer (another favorite buzzword of late 2007 and early 2008) would be not only heard, but integrated into key processes, such as product and service design, marketing approaches, and sales channels.

Now, call me a pessimist—go ahead, I’ll wait—but I’m nowhere near convinced that these messages had sufficient time to worm their way deep enough into many companies’ DNA that they’ll survive serious economic turmoil. When economic conditions get dire, companies tend to turn inwardly focused like a turtle retracting its head into its safe and cozy shell. This means looking for ways to survive, including the ever-popular cost-cutting and “focusing on core competencies,” which all too often do not include relationships with customers.

This may impact the sales and marketing units, but will probably manifest itself most directly in the realm of customer service and support. Firms will likely look to reduce the use of expensive live agents in contact centers, preferring some hastily deployed self-service options instead.

Although I have long made the argument that self-service can actually be a boon to customer satisfaction, it takes careful consideration to create such a positive outcome. In some cases, enterprises may not have enough time to create a coherent and deliberate plan for shifting the optimal segments of their customer service to self-service channels, or to even determine what the most appropriate self-service channels are.

In other cases, the opportunity to improve the customer experience will succumb to the expediency of falling back to familiar ways of doing things.

Gethuman—the organization born out of the ashes of too many poorly deployed phone self-service systems—has fallen off the radar screens of the mainstream media in the past two years. (See “Gethuman? Get Real,” Customer Centricity, March 2007.) In the coming months, you should expect a return to prominence for Gethuman, or some new organization created to help focus consumer wrath born of poor service. I certainly do.

Ian Jacobs ([email protected]) is a senior analyst at Datamonitor.

Four CRM Strategies for Adapting to the Changing EconomyIT leaders' top priorities are to grow customer loyalty and to increase profitability, says a CRM magazine/A.T. Kearney survey. Here's how to achieve those goals in uncertain times.

By Mike Gorsage, Bob Haas, and Eddie Barker For the rest of the November 2002 issue of CRM magazine please click here

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The business imperative for 2003 is top-line growth initiatives that increase customer profitability. According to a new CRM magazine/ A.T. Kearney survey, the two leading factors driving companies' CRM strategies are increasing customer loyalty and retention, and maximizing customer profitability.

How do companies achieve these goals in an uncertain market? The pending economic recovery will have different effects on companies that have tailored their CRM programs to the new economic realities. Winners will be those that capitalized on the downturn and prepared for increasing the value of customer relationships.

Companies that want to lock in customer loyalty and maximize profitability need to employ four CRM tactics: 1) build a customer growth strategy upon a CRM foundation of strategic intent and cost management; 2) avoid the CRM whipsaw effect; 3) don't buy into the technology silver bullet; and 4) measure satisfaction with CRM. These tactics will ensure that CRM programs can successfully adapt to the pending changes in the economy.

Build a Customer Growth StrategyBusinesses must build top-line growth strategies upon the foundation of their CRM programs by ensuring that strategic intent and cost management measures are institutionalized. Many companies have not determined strategic intent or have not focused on developing clear metrics to measure performance. Yet many have done some cost-cutting within customer-facing functions and lowered their cost-to-serve just to reduce the overall cost of sales. These cost-structure changes should be modified to invest in these fields of CRM so that growth strategies gain some early wins, no matter what state the economy is in.

As the economy turns into recovery, the winners are likely to be those who have not only stabilized their customer service and sales costs, but those who are improving the effectiveness of customer retention and loyalty programs. Improved customer segmentation, customer satisfaction, and service strategies should be tailored in downturns and expanded in upswings, but need to remain long-term goals of any successful CRM program.

Avoid the Whipsaw Effect Senior management commitment is critical to the success of any major corporate initiative. CRM is certainly no exception. In fact according to the CRM magazine/A.T. Kearney survey results, IT decision-makers ranked executive sponsorship as the most important factor for maximizing the return on their CRM investments. If CRM initiatives are not in the CEO's agenda, then investments in these initiatives have a much lower probability of success.

Additionally, because CRM is a fundamental shift in the way a company does business with its customers, rather than just a one-time e-business initiative, it requires continuous leadership support over multiple years. This type of long-term senior management support can only be achieved and maintained if a long-term strategic plan is developed. The time frame also requires the strategic plan to have built-in contingencies for the ups and downs of the business cycle. Without this type of flexible strategy, companies get caught in a CRM whipsaw: overinvesting in

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one year and then cutting to the bone in the next. The result is unrealized investments, squandered opportunities, and a loss of employment for the CRM champion. The whipsaw may affect users as well. Employees whose new customer-centric behaviors enable CRM success can get caught in the whipsaw if communications about customer strategy and CRM processes are not clear or consistent throughout changes in the business cycle.

Don't Buy in to the Technology Magic Bullet The CRM vendor landscape is changing rapidly. Placing all bets on a single vendor or technology can prove disastrous. The unstable economy has caused a vendor shakeout. It has reduced the number of CRM vendors, but also has enabled the strongest companies to survive with the best integrated offerings. Strong vendors, after acquiring or merging with smaller niche vendors, still have to refine the resulting integrated offerings. Even so, research indicates software functionality is not the prime factor in selecting a CRM vendor. Financial viability and ROI remain the most important factors in selecting a vendor, and reflect the fact that the best-of-breed approach in recent years has left a number of companies holding the bag of unsupported applications.

The focus on vertical expertise has also been increasing. Companies stung by the challenges and high costs of customizing standard applications are demanding that the major vendors of the CRM world ensure that vertical customizations are prebuilt into the application they install. Customers are focusing on implementing the best vertical application available. This shift has also been pressuring vendors that have not caught up with the verticalization wave or have poorly packaged and standardized their industry experience within applications.

Measure Satisfaction With CRMMeasuring CRM success has often been elusive, but it is possible to measure satisfaction with CRM. Companies have often measured success either by ROI or by changes in customer satisfaction to justify CRM benefits. Although capturing ROI and preventing CRM budget expansion is important, the CRM magazine/A.T. Kearney research indicates that 60 percent of companies claim their CRM initiatives met or exceeded expectations. Of the rest, 25 percent did not set expectations. So for the moment, there appears to be more satisfaction with CRM projects than not.

However, ROI generally measures the internal return of a technology/ process or organization improvement project. In the survey, external measures like customer satisfaction, retention, and profitability--often the best indicators of how well customers view their overall relationship with companies--were selected by only 37 percent, 33 percent, and 22 percent respectively. This leads to two possible conclusions: 1) given the challenges of deploying CRM initiatives and effecting customer change, companies may be assigning lower levels of expected success without engaging their customers; or 2) companies are embarking on expensive CRM initiatives without understanding the drivers of their customer satisfaction, retention, and resulting profitability. In either scenario, companies are shortchanging themselves by reducing the future value of their customer relationships and placing the long-term success of those relationships at risk.

From an internal perspective, ROI was the dominant metric used to measure returns, though notably 21 percent of respondents didn't know how their companies measured return. As for time-to-return after project completion, most of those surveyed were split between the six- to 12-month time frame and more than one year. This is on average longer than most e-business initiatives, and reflects the fact that CRM often involves multiple channels and functions undergoing organizational, process, and technology changes.

Given the complexity and level of investment in CRM, companies need to ensure they understand the drivers of value in their customer relationships before they embark on major initiatives, as well as build robust business cases for internal measures of CRM success.

Plan for GrowthUp to 44 percent of companies do not have a strategic plan in place, although many respondents are planning or implementing CRM initiatives. Those that do not have one in place are likely to be out of position to reap benefits from CRM. As benefits from CRM take longer on average than benefits from e-business, there will be a lag between the companies that have a plan that can execute and those that will need to start a strategic plan. Developing a CRM strategic plan takes one to two quarters, which is about the duration of catch-up that companies without a current plan will face. While cost reductions will provide a sound CRM foundation, the real benefits come from top-line growth--and these gains should be pursued within a CRM program no matter which way the economic pendulum is swinging.

Those companies that don't have a sound CRM strategy should use the current economic downturn to begin developing their strategy to include both short- and long-term scenarios with ranges of ROI for different CRM initiatives. Then, depending on how and where the economy improves, their focus will be on executing against the best scenario. Those with plans should prepare their customer-facing units for the economic recovery ahead and ensure that the organization is aligned with incentives for growth. Those companies with initiatives on hold should have implementation plans drafted so they may ramp up quickly when CRM budgets are restored.

It is this advanced planning--along with building a customer growth strategy, avoiding the CRM whipsaw effect, avoiding the technology silver bullet, and measuring satisfaction with CRM--that will increase customer loyalty and retention and maximize customer profitability.

Don’t Let a Weak Economy Go to Waste Boost sales while recovering from the recession.

By Mark S. A. Smith Posted Feb 8, 2010

The official recession may be over, but predictions of a slow economic recovery are tempting some technology vendors, distributors, and their channel partners to say, "Wake me up when it's over." However, successful companies know that you don't let a weak economy go to waste. 

Now is the time to re-evaluate pricing strategies, target the companies that are buying technology now, and invest in relationships with future buyers.

Let's look at pricing first. Many technology vendors and their channel partners cope with a downturn by slashing prices. For companies that need cash right now, that may be their only hope. However, cutting prices will create a longterm problem. Unless companies position their price cuts just right, customers will expect these lower prices next time they want to buy. It may be a challenge to raise them again when companies really need to.

That is why vendors and channel partners may be way better off raising prices instead of slashing them.

Imagine for a moment that a vendor's channel partner is making a 20 percent margin. If either the vendor or the channel partner cuts the price by 10 percent — all other things being equal-that price reduction comes directly out of profits.

The partner will have to double sales to bring in the same amount of profit. However, how likely is it that anyone in the technology industry will be able to double sales with just a 10 percent decrease? Not very.

Now consider this: If channel partners increase their price by 10 percent — all other things being equal — that additional profit goes directly to the bottom line. One third of their sales can disappear before they lose the same amount of profit dollars compared to the lower price. And then vendors can make up the margin on the back end.

Will channel partners lose 33 percent of their customers with a 10 percent price increase? Probably not. Instead, they will establish value leadership in the market, critical for a profitable recovery.

Second is knowing who is either buying technology today or will be soon. Within companies, there are always departments that have budgets they must use.

Mission-critical systems for manufacturing, sales and customers service are required to maintain the business. In fact, service organizations often see an increase in demand because customers have time to follow up on open issues, choose to repair versus replace, and may not have in-house expertise because of staff reductions.

Aging infrastructure is another area. When system reliability is causing downtime, or products are at end-of-support life, vendors and their channel partners will find motivated buyers.

Look into data storage and archiving and disaster recovery requirements. After all, with disaster recovery, there's a highly motivated management staff and an insurance check to spend.

Opportunities also exist with departments facing government-, industry-, or customer-mandated regulations. For these groups, waiting until tomorrow is rarely an option.

Certain industries also tend to continue buying throughout a weak economy. Healthcare is one of the strongest markets. People will always need health services, and it continues to be a growth industry with deep pockets. Other areas include the pharmaceutical industry, which takes a long-range view, and market sectors that provide the basic infrastructure services others need to run their businesses-such as legal firms, telecommunications (particularly wireless providers), and transportation companies.

Other markets are getting ready to spend funds as the economic turnaround begins to build steam. First are those taking advantage of government economic incentives, such as state and local education initiatives and civil engineering projects for road repairs, bridges, and other infrastructure.

Companies providing customer "must-haves" in green technology and services, entertainment, and cutting-edge communication are likely to invest in new technology soon as are start-up companies and entrepreneurs.

The third important component is cultivating long-term customers — after all, how can you be viewed as a trusted advisor if the customer hasn't seen you for months? 

If a customer says, "I don't have any money to spend," then ask, "When do you expect this to turn around?" If customers respond with an answer of less than six months, they have strong hope and are probably working out their next plans.

The follow-up question is one of the most powerful in sales. By asking "How can I help?," companies open up opportunities to discuss options such as advantageous financing, trade-in towards purchase, manufacture refurbished items at lower cost, services contract consolidation, and off-season deals.

The magic of this response is that vendors and their channel partners can frequently find immediate sales opportunities during the plan review that the customer wasn't even aware of.

The return to rapid market growth may be slow. However, through pricing strategies that strengthen value leadership, a strategic focus on markets current and emerging sales opportunities, and a commitment to cultivating long-term customers today, vendors and their channel partners can position themselves as leaders of tomorrow.

About the Author

Mark S.A. Smith ([email protected]) is the cofounder of Outsource Channel Executives, Inc., the premier partner in channel enablement. An electrical engineer, computer programmer, hardware salesman, and software marketer, Mark delivers innovative, unconventional strategies to help technology providers get more business out of their distribution channels. He is the author of more than 350 articles on sales and marketing. 

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. You may leave a public comment regarding this article by clicking on "Comments" at the top.

cost reduction

The Advantages of Integrating CRM Software to Reduce Ongoing Costs

Friday, June 25, 2010 by Sidney Angelos

Customer relationship management (CRM) is a concept that predates computers. For as long as businesses have been around, they have

needed to interact with customers and obtain their feedback. Traditional business logic says that it is more costly to win a new customer than to retain an existing one, and far less expensive to retain a customer than to win back a dissatisfied one. Continue Reading: ‘The Advantages of Integrating CRM Software to Reduce Ongoing Costs’

New Crm Presentation - Presentation Transcript

1. Presentation on Customer Relationship Management System By- Atul Chaudhary UG Software Technologies

2.o CRM introduction

o Functioning targets and roles

o Aspects of CRM

o Architecture

o Strategies

o Pitfalls

What I am going to discuss?

3. WHAT IS CRM? 4.o The process of managing the detailed information about individual customers and carefully

managing all the customers ‘touch point’ with the aim of maximizing customer loyalty .

5. People Process Technology Customer acquisition Value Relationship Retention Loyalty CRM

6. Why CRM is required ?

7. Delight Primary Concern of any business Revenue generation Satisfaction Experience Customer focus

8. High acquisition cost Low retention cost Long term gains Relationship building

9. Satisfaction Measure and manage Customer profitabilityProduct delivery Customer-centric Management

10. Other element - Communication component

11. Communication channel Customer Company Mobile Web Call center Fax Email Face to face CUSTOMER INTERACTION

12. FUNCTIONING TARGET AND ROLES

13. C R M Functioning targets

14.o Relationship building

o Customer service and support

o Built loyalty in customers

o Personalization

o Management and quality related service.

o Customer-focused organization

o Identifying high value customers

Role of CRM system

15.o Still, why to spend on Customer-retention rather than customer acquisition ???

16. Acquisition or Retention Acquisition of Customer Retention of Customer 3% increase in profits 17% increase in profits Cost is very high Cost is very low Life cycle is short Life cycle is long Short term profit Long term profit Unpredictable value chain building Value chain building

17. ASPECTS OF CRM

18.  

19.o Front office business support

o Contact history is recorded

o No communication gap

o E.g.- call centers, BPO

20.o Direct communication

o Cost reduction

o Service improvement

o E.g.- mail, internet

21.o Analysis of customer data

o Design and target marketing campaigns

o Product and service decision making

o Management decisions

22. ARCHITECTURE

23. Building blocks of CRM Lead Management Campaign Management Customer profiling Call center Field service Web service Activity management Opportunity management Contact management

24. Project management Support view PIM ROI Sales Forecasting Opportunity Management Automation CRM SYSTEM Manager view Service view Support view Marketing view Sales view Web Windows Wireless C R M software Web/intranet/extranet ERP/back office Legacy applications Other applications Customer database Customer touch points

25. CRM STRATEGIES

26.o Acquisition

o Retention

o Loyalty

o Evangelism

o Cost Reduction

CRM strategies

27. ACQUISITION Profiling Buying pattern Communication Search 28. RETENTION Improving customer satisfaction Need analysis 1to 1 communication Updating

29. LOYALTY Increase Search Capture

30. EVANGELISM brand promoter sales promoter

31. Cost REDUCTION Lower inventory Speedier delivery Marketing cost reduction

32.o Change Management

o Poor communication

o Weak Leadership

o No strategic focus on business value.

o Sloppiness to ‘Process and People issue’.

o Information handling

Pitfalls of CRM system

33.o CRM helps in

o Customer life cycle

o Customer life-time value

o By implementing a right CRM system, you can improve your customer interaction and retain the customer for long, thus increasing your market share both in terms of capital and customer.

Concluding in the end…..

34.o We can analyze your requirements and can develop and implement a CRM system catering

to your needs.

o Better fit customized CRM system.

o Lower cost and more flexibility than other consultancy offering proprietary solutions.

o Experienced staff and management.

UG Software Technologies can help you….

35.o Lower cost

o High ROI

o Stability

o Security

o Higher customization

Adding advantage with open source software solutions

36.o Reliable, implemented and tested

o More visible and ease of control

o Fast and flexible service

o Reasonable prices and quick payback

o High customer satisfaction

Why to choose us?

37.o Gain Competitive advantage by acquiring our customized CRM SYSTEM and become a

LEADER in your Industry .

COMPETITIVE EDGE……

38.o Contact us -

o UG Software Technologies Pvt Ltd

o Address - 142, F.I.E Patparganj

o New Delhi-110092

o India

o Website- www.ugsoftware.com

o Contact- (+91) 011-22160569

o Fax - (+91) 011-22162768

39.o Any Questions?

o Thank you

Atul Chaudhary + Follow 1611 views, 1 fav, 1 embed more

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Is CRM Recession-Proof?As budgets tighten, all technology spending comes under scrutiny. A new survey, however, indicates that strategic CRM projects are more likely to be spared.

By Phillip Britt Posted Feb 22, 2008

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Whether or not the worldwide economy is in a recession -- defined by two straight negative quarters -- is a subject of debate that typically won't be settled until Gross Domestic Product figures are available in future months, but most analysts agree that the economy is certainly weaker than it was last year or the year before. With that in mind, most businesses may be tempted to put off any long-term technology projects, but will still continue to increase spending on projects expected to produce positive return on investment within a year, according to Gartner principal analyst Chris Pang.

A new Gartner survey has found that 44 percent of respondents expect their budget for CRM initiatives to increase this year, with another 30 percent expecting their budgets to remain the same. License and maintenance revenue in the European CRM software market was an estimated $2.5 billion in 2007, according to Gartner. That figure is expected to grow to $2.8 billion in 2008.

The survey -- involving more than 250 business and technology leaders who influence CRM strategy in their enterprises across Europe, the Middle East, and Africa -- reveals that though some technology spending may be postponed during a slowdown, the industry won't see a sharp technology-spending downturn like the one that followed the burst of the dotcom/tech bubble at the beginning of the decade.

CRM initiatives tend to have a high priority among technology projects, survey respondents said. The key business issue driving CRM is the need to move toward or improve a customer-centric strategy. The main challenge for most companies is how to integrate CRM systems with other business applications and with customer-interaction channels.

An economic slowdown will mean that companies will be more likely to put any large, far-reaching initiatives -- CRM and otherwise -- on the back burner, according to Pang. "CRM is a large market," he says. "In terms of a downturn, anything considered a discretionary project will likely be delayed. But some projects are strategic, like customer service or projects that enable better self-service. Those projects will be fine in an economic downturn because they play to a company's strategic needs of reducing costs."

Quick-to-implement analytic and business intelligence projects as well as technologies that will aid customer retention will be among those that companies will continue to pursue, he adds.

Therefore, line-of-business users trying to build a business case for CRM initiatives -- and CRM vendors looking to cater to those needs -- should focus on projects that are strategic rather than transformational in nature, the kind that will provide quick, measurable returns, Pang recommends. Vendors, he adds, "should target customers that are likely to spend [on CRM projects] within a year's time. They should mine their customer base to look for [CRM spending] patterns or trends rather than [pursuing] a massive, broad marketing campaign."