Crm: Its Aim Is To Serve You

Sydney Morning Herald

Tuesday November 2, 1999

DAVID BRAUE

You'd think it was obvious but, for many companies, the concept of customer service is a relatively new phenomenon.

Traditionally, for example, many companies would close their phone support lines early in the evening and over the weekend.

Yet, with increased competition due to deregulation, privatisation and the Internet, many industries such as banking, insurance, telecommunications and utilities have suddenly become aware that high levels of customer service such as 24-hour support are now expected.

Phone service hours are being expanded, companies are using the Web to empower customers with self-service capabilities, and personalised mass marketing is slowly gaining acceptance among Australian advertisers.

The latest move in this new push to court the customer is a category of information systems collectively known as customer relationship management, or CRM.

CRM software touches a wide range of disciplines. Among these are salesforce automation (another buzz word relating to the online sharing of sales leads), call centres (which are beginning to integrate customer databases with online customer service), mass marketing and field service.

Many CRM systems are specifically designed to give the customer direct control over their account and service details, increasingly through the Web.

Such self-service applications are fast becoming ubiquitous through applications such as phone banking and online bill payment. Organisations such as Australia Post will soon extend the concept by introducing online invoicing and payment capabilities.

Another growing self-service CRM component is procurement, which allows employees of a company to streamline acquisitions by purchasing supplies online from a customised catalogue of permissible products. Online procurement has proved to be extremely cost-effective, reportedly slashing acquisition costs by up to 90 per cent in some companies.

If empowerment is one of the catch words driving the CRM revolution, the other is personalisation. This no longer simply means inserting the customer's name and address at the top of a mass mail-out (which can be done using quite simple contact management software). Personalisation now implies the ability to monitor and react to each customer's individual tastes.

The overriding goal, many advocates like to say, is to enable personalised mass marketing ``with an audience size of one". The idea is to treat each customer as if they are your only customer, even though you might have millions of customers.

CRM systems allow companies to target specific audiences of customers by interest, then give each customer a personally tailored message or service that increases the chance of take-up by catering to their specific interests. For instance, it could allow a retailer to automatically send out a catalogue of expensive male-oriented gifts to a household the week before father's birthday.

CRM systems, often called ``front-end" systems, usually connect into ``back-end" databases containing millions of files about customers' past purchases and other financial details collected over years and even decades.

Integration with other back-end systems, which handle core business management functions such as financials and manufacturing, allows companies to adjust manufacturing strategies based on up-to-the-minute customer demand.

This, in turn, lets companies minimise marketing expenses and instead focus on improving the areas of their business that most influence customer satisfaction.

Estimates suggest that, as competition increases and customer service becomes a core strategic asset, the CRM market will grow at an average of 58 per cent per year, rising from $US1.2 billion ($1.9 billion) in 1997 to $US11.5 billion in 2002.

To take advantage of this potential cash cow, dozens of computer companies have jumped into the burgeoning CRM market. Long-time CRM leaders such as Siebel Systems, Clarify and Vantive are all pursuing strategies to extend the reach of their products with new modules, as well as tightening their integration with back-end systems.

Major back-end software providers such as Oracle and SAP are busy developing their own CRM solutions, while Peoplesoft recently took a short cut by purchasing Vantive. Even Nortel Networks, a major provider of call centre and other telecommunications equipment, got into the game with its recent purchase of Clarify. Expect such acquisitions to continue as major companies jockey for position in this fast-growing, increasingly important sector of the enterprise IT market.