Best practices and Customer Relationship Management (CRM).(Selected Topic)

CRM is a concept that represents the convergence of two somewhat independent thonghts. The idea of treating customers as individuals having unique needs has been attributed to the work of Don Peppers and Martha Rogers, authors of the 1 to 1 Marketing books. A parallel thread comes from the systems technology industry and is based on the idea that customer data should reside in a single database that is accessible to all elements of the organization that touch the customer. This concept of a shared database was quickly followed by a wave of mergers in the industry as the various vendors attempted to integrate sales, marketing, call center, and field service applications into one unified solution that is referred to as C1LM. So the CRM industry was spawned in the late 1990s as the next big idea which ran in close relationship with the dot-corn era.

As with many technology-based initiatives, the concept of CRM tends to be confused with techno babble, hype, and vague terminology such as being customer centric. The implied message is that if you are not customer centric, then you will be doomed to competitive oblivion. On the other side of the equation, there is the 1 to 1 movement, which is presenting case after case of companies successfully leveraging this concept. This energy in the industry has caused many organizations to pursue CRM as some type of competitive silver bullet that merely requires the implementation of the right technology. The result is all too predictable, a long string of failures with everyone blaming the vendor community for over-promising and under-delivering.

Although it is easy to fault the vendor community, the real issue is the failure to comprehend C1LM as an operational strategy. What does CRM imply? What does being customer centric imply? CRM basically challenges the organization to reassess how it operates. At the heart of the concept is the requirement to manage on the basis of customer profitability and customer life cycle management. In simple terms, it challenges the organization to mange customer profitability as a portfolio. This implies:

* Maximizing the potential of existing customers

* Acquiring new customers that are profitable or have the potential to be so

*Retaining customers who are profitable

But within the typical functionally siloed organization, who owns the customer much less customer profitability? Although no one will say that they are anti-customer, just consider fi)r a moment how organizations operate. The underlying assumption is that if the functions achieve their goals, then the results will be profitable growth; although this may be true, is this the real driver (cause and effect) of performance? To achieve profitable growth, there must be a positive change in the behavior of the customer portfolio. The stock market recognizes this by dinging companies that achieve profit through cost reduction because investors know that this is a short-term and perhaps destructive strategy. Now consider the performance of the functions: