You’ve all heard the hype regarding CRM initiatives that help companies retain valued customers and attract new ones. A major focus of this popular strategic process is for corporations to identify purchasing and response patterns of all types of customers and provide goods and services that fulfill their perceived needs. Industries including retail, finance, telecom, insurance, to name a few, have invested noteworthy sums in IT systems that help augment CRM initiatives with the sole purpose of increasing productivity and profitability for their organizations.
Productivity can be enhanced with CRM by achieving a more efficient allocation of resources in providing goods and services that consumers actually value. In other words, by having a better idea of what customers want, companies can allocate resources toward meeting those needs rather than waste time, capital and labor on initiatives that provide little value to the marketplace and, therefore, little benefit for the company’s bottom line. Profitability logically follows this process. More efficient allocation of resources implies that companies are generating more revenue with the same amount of productive costs or at least maintaining revenue targets with a lower cost base.
Stagnating Capital Spending Budgets and the Need for B2B CRM
Following the high-growth technology bubble years of 1998 through 2000, many companies have reigned in their free- spending attitudes (i.e., hiring fewer workers and spending less on capital and complementary services). Even as the U.S. economy has showed slight signs of an economic rebound, organizations have continued to be trigger-shy in significantly increasing their expansionary budgets. This has been a difficult time for companies across industry sectors that depend on selling products and services to other companies. How does the CRM productivity initiative fit into this stagnant spending dilemma? Simple, CRM refers to customer relationship management. Customers are not limited to private, individual consumers, but they also include major organizations that purchase goods and services from other companies.
A Closer Look at B2B CRM
Many IT vendors have jumped on the CRM bandwagon, producing hardware and software that enable organizations to store, retrieve, analyze and communicate data and information to help them better understand and serve their client base. CRM systems help users prosper during healthy economic growth periods along with surviving the lean periods of economic downturns. In other words, the increased efficiency of effective CRM helps preserve or increase market share and revenue, and enables firms to compete and prosper over the long term.
Recent economic uncertainty has caused corporations to increase their scrutiny over new spending initiatives. This requires the providers of products and services to these organizations to increase their understanding of the needs and interests of their business clients which is the purpose of business-to-business (B2B) customer relationship management (CRM). This process entails gathering information on client needs and requirements by those companies looking to provide these clients with corresponding products and services. It also involves identifying the initiatives that led to successful deals in the past.
The process does not end with information gathering but involves the incorporation of technology that can store, retrieve, analyze and communicate the information which ultimately enables users to fine-tune strategic initiatives that will better satisfy business clients’ needs in the future. The answer lies in the ability of those companies that provide products and services to businesses to better understand who their valued clients are, how to attract new ones and how to keep them by providing them with goods and services that offer significant value.
Business Customers’ Needs: A Focus on the IT Sector
The prosperous IT boom years from 1995 to 2000, saw many innovations in IT. Breakthroughs in processing speed, storage capacity, telecomm infrastructure and the general evolution of the Internet enabled IT vendors to continually offer significant enhancements from previous product offerings. Business clients were often faced with the option of investing in new offerings or being passed by competitors implementing new technologies. There continues to be innovative progress in some IT sectors today (e.g., processing speed, storage capacity, telecomm infrastructure), but this has not been viewed by the marketplace as a hot new innovative application.
In order to cope with this, along with other issues plaguing corporate America right now (e.g., Enron fallout), providers of IT must adopt CRM strategic initiatives to prosper or survive. They must analyze information about their existing clients and provide products and services that they value as well as attract new clients. The process of identifying the needs of the marketplace requires leveraging existing databases for relevant business information, potentially collecting new information, analyzing it via various software applications (e.g., data mining and reporting) and devising and acting on productivity and profitability enhancing strategies.
The positive side to this B2B CRM focus is that B2B users won’t require complex, real-time call centers so the focus can be placed on in- depth, non-real-time strategic initiatives. The latter half of the 1990s could be considered the time of the "seller’s market" in IT; however, the new millennium is shaping up as a buyer’s market. The use of business-to-business relationship management will develop strong workplace ties that will withstand the test of time.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access