customer centria

The Customer Engagement & Experience Company

The Evolution and growth of CRM

Date: 14/02/2012

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Summary
Progressive customer relationships define the world for today's organisations. Companies in the current state of affairs operate in a tightly knit world of conversations in the form of feedback and criticism coming from every corner - offline and online through various channels. How do we streamline all this data and make it more organisation-friendly to yield the maximum benefits! These answers are what we aspire to achieve from this Thought Paper. The purpose of this Paper is to highlight the need for a Multi-Channel Marketing Framework and Response Tracking mechanism, all seamlessly tied up, given the current scenario of Marketing Automation, in whatever avatar, being the norm, not the exception. It is essential to have a single customer view, resulting in effective oneto-one marketing dialog with today's tech savvy customers via multiple channels. This Thought paper is divided into 3 parts

The Evolution and growth of CRM Multi-channel Integration, and Customer Response Management
The Evolution and growth of CRM, provides a line of sight into the journey of the relationship between customer and organisation. The document aims to explain the change, which has taken place not only in terms of technology and marketing, but also in terms of lateral thinking on the part of the modern organisation. Destination CRM was not easy to attain due to various challenges, which started from quality of information to the way in which information was stored. The second paper, Multi-Channel Integration, provides an in-depth account on the approach to a Multi-Channel marketing framework, the challenges organisations typically face during implementation and the organisation wide they would reap once its implemented. And in conclusion, Customer Response Management, the last in the series, emphasises on the criticality of implementing and integrating Customer Response Management, and the role that Customer Centria can play, in delivering an end-to-end response management solution in a well-integrated Multi-Channel environment.

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CRM: The Evolution

The present is incomplete without the past and that stands true for technology as well. To understand the significance and existence of the current marketing strategies and channels, it is imperative to look at the entire evolution of customer-organisation relationship as a tale, contemplating on vital junctures to understand the route. Lets start with the Evolution of CRM

Organisation-Customer Relationship: As perceived historically

Once upon a time, customers needed organisations, but then competition struck, and consumers got empowered with the power of choice. Today, businesses depend on people-to-people and business-to-business interaction and the game has changed for many from B2C to C2C. There is no room for obsolete communication channels and out-dated customer management technologies, because the consumers have moved on and it is time for marketers to wake up and smell the coffee. In todays customer oriented market where strong relationships with the customer is the cornerstone for building loyalty and thus ROI, any company, organisation or an institution has to be geared towards a strong framework supporting integration of disparate data sources and marketing channels with preferred Customer Relationship Management (CRM) solution. Integration in todays context is now inextricably linked to the entire marketing operation framework, which would include marketing channels, transaction systems, data warehouses/data marts etc. And so, when it comes to leveraging customer data across many disparate sources and opportunities, seamlessly aggregated marketing machinery is essential for an effectual marketing dialog with customer. In the early 90s, organisations were apprehensive about Data Warehouse implementations because of common myths like

The merging of current customer data with secondary sources ultimately hurts the customer Customer profiling may lead to more customised service and hence reduced consumer value Data warehouses reduce organisational productivity and hurts organisational image Data warehouse increases waste and harm the environment Its difficult to find ROI on the Data warehouse Data warehouse requires an engineering approach and hence is resource and time intensive

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Similarly marketers earlier were apprehensive about using multiple channels when it came to targeted campaigning because of common myths like

Most loyal customers prefer interacting via one channel Most people buy and shop via one channel Most people do not like direct mails Online marketing cannibalises offline efforts 55 plus audience is not web savvy Becoming a multi-channel company does not require restructuring Each channel is a separate user experience
Apparently with ever growing transactional data, organisations felt the need to adhere to a solution, which will provide clean, transformed and catalogued data for use by managers and other business professionals for data mining, online analytical processing, market research and decision support. Data warehouse was one such solution, which when implemented would provide holistic view of the historical data and this is where the evolution of CRM commenced. As organisations started turning towards data warehousing solutions to get a centralised view of historical data combined from various sources, organisations started to realise that just doing BI and OLAP reporting was not going to be enough to achieve what was required to build a marketing dialog with customers build a strong customer relationship. This was the time when organisations started feeling the need for establishing a framework, which could leverage the data warehouse to build strong customer relationship model as OLAP reports analyses resulted in confirming a fact that 'All customers are not equal', which spurred an evolution of 'Customer Relationship Management'.

Why the Evolution?

Customer Relationship Management (CRM) is a broadly recognised, widely implemented strategy for managing a companys interactions with customers, clients and sales prospects. It involves using technology to organise, automate, and synchronise business processes principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. CRM denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology all work together to increase profitability, and reduce operational costs.

CRM and the Data Warehouse

The key challenge for business today is implementing an information infrastructure that enables rapid responses to competitive pressures and the capability to survive into the future. Corporate strategies that impact customer relationships, and the management and application of customer data to business operation - CRM for short - are dependent on an information superstructure comprised of various technologies that enable organisations to store, access, analyse, and manipulate vast amounts of customer data. Most organisations with large numbers of customers to manage, frequently in the thousands or millions, require a combination of sophisticated technologies to implement CRM. One of the major contributing technology areas to CRM is Data Warehouse, which facilitate handling of a range of CRM-oriented functions like

Data storage Database queries Value analysis Mathematical models for predictive analysis Analytics
Thus for a CRM to evolve, data warehouse have become core component of doing business, as well as building block for a corporate CRM strategy. This technology is a prerequisite for the level of one-on-one customer relationships that can turn information into a company's most important resource.

CRM and Marketing Automation

Once CRM took shape post evolution, the next challenge was to have a framework, which will use CRM to provide the automation and analytical insight to move more prospect relationships into customer relationships and retain existing customer relationships.

A typical CRM roadmap will have following milestones 1 2 3 4 Analysis of the current state of customer interactions Predicting the future course of customer interactions Developing the plan of action to meet the predicted future course Building and presenting the business case to secure CRM project funding

To attain the above roadmap, need for a 'Marketing Automation System' was felt to provide the following benefit Increased marketing effectiveness Deliver more sales ready-leads to sales teams Nurture prospects so they move through the channel faster Measure the marketing influence on opportunities in the focus Provide marketing accountability and ROI Ensure that marketing only adds validated, standardised data into the CRM

All this can be achieved via focussed 'Marketing Campaigns' that are measurable, leverage cleaner, richer data and produce predictably great results. Marketing automation not only brings efficiency through automation and effectiveness through better execution, it also brings a new level of measurability to marketing. Marketing Automation solution brings the unprecedented ability to define business rules to connect marketing campaigns and programs to sales opportunities, so the precise impact of marketing on the business results can be measured. With the costs entered into the campaign definition, one can even measure the ROI and cost per lead/contact. Marketing Automation software is a powerful tool that can help an organisation to become more efficient, conduct successful marketing campaigns, reach the most profitable customers, build long-lasting relationships, better understand product and market dynamics, and measure the productivity of marketing operations. Marketing Automation at its most fundamental level was developed to help marketers' better target and execute one-to-one communication with key prospects within the context of demand generation efforts, simultaneously orchestrating and tracking marketing resources against this activity. CRM consolidates a great deal of information about prospects and customers; however, it provides virtually no framework or tools for true nurturing of earlier-stage prospects, and it definitely is not a communication platform. Marketing automation leverages CRM and addresses these gaps, but it then presents new capabilities for marketers that enable them to take their demand generation programs to the next level.

Marketing automation software's unique design helps manage relationships with the past, present and future clients, consultants, contractors, and even competitors, to ensure that no opportunity for acquiring a new project is overlooked. There are five core areas of functionality that are essential for any good marketing automation system. All the five are listed below

Contact Data Integration 4

Response Management 5

Lead Management

Campaign Automation

Marketing Business Intelligence

Marketing Automation and Marketing Channels

Now that marketing automation gained prominence and campaign management became inevitable, the challenge for organisations was identifying the best way of communicating with the customers so that they get the right offers at the right time and that would have happened without reaching customers via predominant medium called 'Channel'. With the advent of technology and ease of using it, today there are various channels to reach customers based on their preference and liking for a particular channel.

Some of the most commonly used channels today include Email, SMS, Call Centre (Inbound and Outbound), Direct Mailers, Print Media, TV, Radio, Billing Systems, POS, and ATM etc. All channels are not applicable to all verticals, but most of them would have some channels in common for e.g. an Email, SMS or Call Centre. Leveraging the potential of existing channels to their maximum capacity and ability was the next challenge organisations faced, as the modern customer was very particular about the communication and its mode as well. Selecting the most preferred channel for the target customers was top priority, as a varied choice of communication channels also meant intelligent decision-making on part of the marketers. This is where the Campaign Management component of Marketing Automation plays an important role, running campaigns that result in data enrichment and address the right customers.

The evolution of marketing channels enabled personalised communication in various ways for e.g. Promotions, Personalised offers, Anniversary/Birthday Wishes, Loyalty related updates and lots more. The idea was to keep in touch with the customer, and at the same time encourage him to buy what he likes and also what he/she 'might' like. This approach led to a communication revolution, as organisations adopted Channel Marketing Strategies that allowed organisations to make choice of channels based on following factors:

For organisations, channels have became the next big medium to reach their consumers a tool with the power to motivate and inspire their existing customers to buy their products and prospective customers to consider their brands. Channel strategy includes recommendations for both identifying and managing channel partners. Channel marketing is a dynamic and complex arena where mistakes can prove costly and extremely difficult to correct.

To formulate and execute a channel strategy, organisations must follow these steps: 1 2 Understand the channels that are available. Identify the need, based on organisation's objectives and the preferences of customers. 3 4 5 Generate a list of likely channel partners. Recruit channel partners to work with. Manage the channel partners on an on-going basis.

Bottomline:
We saw the evolution of CRM from a Data Warehouse to its smart utilisation for implementing Marketing Automation. With the growing acceptance of CRM and Marketing Automation, organisations opted for MultiChannel Campaigns, and some obvious questions popped up:

Are you engaging your audience with targeted, relevant and personalised content? Are you delivering your message through your customers preferred media?
In the next paper, we will dig deeper into the dynamics of a Multi-channel integration, and explore the elements that help define a strong multi-channel framework.