Customer Relationship Management ­ The Big Picture

Customer relationship management ­ or CRM ­ is the buzzword across dozens of industries today. And with good reason. Deregulation, corporate acquisitions, affinity programs and other market pressures are forcing many organizations to adopt a "customer-focused" approach to the way they do business. But as these organizations begin to examine the ways they can increase, or at least protect, their market share, it quickly becomes apparent that true customer relationship management requires significant changes to traditional methods of conducting business.

The most substantial impacts from CRM transitions fall into three categories: management, organization and business process, and information support. While the products and services offered to customers differ across industries and the nuances of business strategy also differ from one organization to the next, the overall concepts and issues surrounding the customer-focused transition process are similar regardless of industry or organization. Companies that are successful in adopting a CRM strategy have specific customer-oriented goals, understand the characteristics that must be transformed in order to achieve these goals, establish plans at all levels in the organization to communicate direction and manage those plans to transform the enterprise.

While the remainder of this article focuses primarily on information support and the changes typically required when adopting a customer focus, it is important to understand that management, organization and the information support environment are closely related and that integrating these areas is imperative to CRM success. At the very least, organizations implementing CRM information strategies should be developing these strategies with an understanding of how they will impact all areas. Better yet, organizations attempting CRM should develop migration strategies that address key weaknesses in each of the areas that follow, because shortfalls in any one of the integrated parts of a CRM organization can severely impact its success.

Management: A key success factor to CRM is the participation of the executive management team. Because a successful CRM strategy will likely require both organizational and business process changes, it is imperative that executive management fully accept, adopt and support these concepts. In addition to executive level buy in, CRM will require an individual corporate sponsor who can set business direction and gain the cooperation of his or her peer group on CRM issues. The CRM sponsor must also be able to develop and communicate an overall CRM plan, monitor organizational activities to ensure appropriate CRM transformation and provide incentives for milestone successes supporting CRM objectives.

Organization and Business Process: Traditionally organizations are structured along product lines, business functions or some combination of both. In the most extreme cases, marketing, sales and service are performed independently for every product or line of business. In a more customer-focused organization, there may be some attempt to market, sell or service across business lines; however, the degree of integration of these business functions is rarely sufficient to support seamless CRM. Thus, while an organization may want to treat its customers as if they have complete understanding of the customer relationship, this is difficult ­ if not impossible ­ to accomplish. Establishing a structure that integrates across product lines and business functions is key here. Equally important are the development of CRM plans at the business line or functional level and the accountability of the business and functional areas to these CRM plans.

Information Support: Information plays a key role in the fulfillment of any business strategy, and CRM is no exception. However, when implementing a CRM strategy, simply improving the amount of customer information that is available is not enough to ensure success. Instead, there are two factors that an organization should examine closely when adopting a CRM strategy: the scope and breadth of customer-level information and the mechanisms by which the organization conducts its information technology (IT) development activities. Seamlessly integrated customer information which is required to facilitate CRM business processes requires that systems development adopt the same type of CRM planning and coordination required of the business units.

Customer Relationship Management ­ Information Impacts

Customer information and the associated technology tools are the foundation upon which any successful CRM strategy is built. The ideal CRM enterprise supports marketing, sales, service and executive management with high-quality customer information that facilitates the achievement of CRM business objectives. Increasingly, business is demanding that this information be timely, comprehensive and organized in such a fashion that it crosses traditional functional boundaries (e.g., marketing intelligence such as profitability and risk scores delivered to front-line personnel as part of a comprehensive customer profile). In addition, increasing use of the Internet as a distribution channel is forcing organizations to deliver much of this same information directly to its retail customers. Consolidated customer information, common customer identifiers and near-perfect data integrity levels are key when implementing CRM business strategies. Meeting these complex requirements necessitates adoption of new approaches to planning, organizing, developing and managing the technical support environment.

Customer Information Scope

The enterprise must adopt a common definition of "customer" in order to achieve a cross-business area view of the customer from a business as well as an information systems perspective.

  • Identification of which of the parties involved in the external acquisition and use of the organization's products/services are considered "customer." Issues to be resolved in defining customer include: customer type (organization, person); customer state (current, former, prospective); customer groups (e.g., households, organization hierarchies, affinity groups); roles of constituents considered "customer" (e.g., user, owner, referrer, agent).
  • Customer data attributes of interest must be agreed upon in order to ensure consistent data collection and availability. In addition to identification data (i.e., name, address), this may also include contact notes, history, scoring/tiering, demographics and other enrichment data.
  • Identification of the relationships of interest across the enterprise. This includes relationships between the enterprise and the "customer" (e.g., buyer, user, agent) and also the relationships between "customers" (e.g., employer/employee, parent/child).

It is important to note that the customer information scope should be tempered by the "will and means" test for feasibility. Also, development and documentation of the customer information scope is a collaborative effort between the business areas and information technology areas.

CRM Technical Support Plan

There are a number of aspects to the planning effort required to support CRM systems development. The first is the development of an overall CRM technical support plan. The high-level directive for this plan comes from the enterprise CRM plan. As described earlier, the enterprise CRM plan is translated by the business lines or functional areas into tactical CRM plans, each supporting one or more of the objectives of the enterprise-wide strategy. Examination of these tactical plans uncovers requirements for data, information structures and access mechanisms to support customer-focused business processes. The challenge is to derive from this array of business information requirements those that are common or shared and those that are unique. With this in hand, an assessment of the existing technical environment should reveal gaps in the ability of the existing environment to satisfy those CRM support requirements. These gaps will need to be filled by internal development, software/hardware acquisition or both. Once identified, the initiatives to fill the gaps can be prioritized according to the business readiness implicit in the business line or functional area CRM plans.

CRM Project Initiation and Justification

The enterprise-wide nature of CRM challenges the basic organizational structure of IT and the mechanisms for allocating resources for development. Typically, IT development projects are linked entirely to a specific business area: requirements are defined by the business area, benefits accrue to the business area and project funding is provided by the business area.

In the case of CRM systems development, there will be a need for systems that gather and maintain data collected from multiple business areas across the enterprise. Likewise, these systems will be deployed to multiple business functions spanning the enterprise. Under this new venue, the classic approach to defining, justifying and funding projects fails. For example, the first business area requiring access to a complete view of "customer" cannot be given the authority to define data requirements. All other business areas, being potential users of the data, are stakeholders in the development of this database. In addition, because of the size and complexity of developing an enterprise view of customer, often the benefits that would be realized by the first user business area do not justify the initial cost of development.

Because of the breadth of stakeholders and the resources required to develop systems providing an enterprise customer view, it is critical to identify CRM "infrastructure" projects, or "infrastructure components" of CRM projects. These development efforts must be justified based on the contribution to broader CRM objectives, not specific line area tactics. The development approach must also be modified to incorporate a broader view of business requirements, taking into consideration requirements from all stakeholders in the infrastructure component.

Coordination of CRM Development

When an organization is developing systems to an overall CRM plan, it is quite likely that there will be numerous gaps that require systems initiatives to be conducted. It is not unusual to find several CRM initiatives running concurrently in an organization that is focused on the CRM transition. Under this condition, it is imperative that the organization adopt standards for customer data and customer processes in order to achieve a cross-business area view of customer and support consolidation of business processes across product areas.

  • The data model leverages the common definition of "customer" and the identified relationships of interest to the enterprise, providing a view of customer information that enables independent systems development while ensuring consistency, enabling consolidation and providing opportunities for re-use of components developed (e.g., extract transformation, retrieval transactions).
  • The process model identifies the customer-oriented business functions that interact with customer information, independent of product line area. As the CRM technical support plan is developed, prospective projects are mapped to the process model. This assists in the identification of overlapping initiatives, facilitating coordination and teaming across projects.

CRM offers organizations the opportunity to distinguish themselves from competitors by managing and leveraging a most valuable asset ­ customers. However, the complexity of adopting a CRM strategy and the impact on management, organization and business process, and information support are significant. Success substantially depends on the ability of the business areas and IT to collaborate in their planning and focus their efforts on the achievement of common goals.

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