Wednesday, June 21, 2006

What exactly is CRM?

I was in a seminar yesterday, and some offline discussions gravitated towards the subject of CRM. The general opinion was that CRM is a very costly software, and is generally overhyped to the point of being considered as a 'fashion statement' in the technology world.

One Vice President of Customer Services was particularly vociferous on the 'glamor' angle, as she had a firm belief that 'someone from IT' convinced the CEO to sign the budget saying 'our contact center MUST have CRM, because our major competitor does'.

She was disillusioned with the 'stuff' because it did not do a single thing to make her job any easier. In fact, she complained, the overly complicated screens, and the slowness of the system was actually impeding the agents' job, increasing their handle time, and generally running a havoc with customer satisfaction!

That was the cue for me to step in and try to bring some sense in the discussions. I asked them what did they mean by CRM? All the answers indicated in only one direction - CRM that is visible to us, CRM that is of the Siebel/Oracle/SAP variety, CRM that resides on the user desktop..

But I did not elicit many responses when I asked my next favorite question - Why do you require CRM? The top reason I left them looking at each other was this - they did not know what exactly is CRM.

As a matter of fact every business requires CRM. Why? All Businesses have customers, they also have relationships with their customers, and I believe they also want to manage those relationships. So by definition, they require a 'Customer Relationship Management'. But I haven't even told you yet what this 'Customer Relationship Management' IS. Which brings me to the core of the debate. Anything - a software, a technology, a tool, a method, an idea, a process - that helps the business to manage the customer relationships better, IS CRM. But then which software, technology or tool is CRM?

Metagroup has put a structure around CRM software, by categorizing CRM into broadly three areas - Collaborative, Operational, and Analytical.

Collaborative CRM is meant to deal with all the interactions you have with your customers. Customers call you through phone, send you an email, send you a fax, launch webchat sessions by clicking the 'live help' on your website, and increasingly they also use SMS (Short Message Service). Systems that allow you to manage these interactions and collaborate with your customers, are 'Collaborative CRM'. Some of the Collaborative CRM providers are - Avaya, Genesys, Nortel etc. However, people in general (and surprisingly, even experts) consider these excellent companies as 'mere' Contact Center providers. In fact, the core foundation of your CRM strategy actually begins with Collaborative CRM. No one agrees with me more vehemently than the above VP of Customer Services.

Operational CRM - the visible CRM that I referred to earlier - helps you deal with customer transactions. Agents create requests on customers' behalf (when they contact through - you guessed right - Collaborative CRM), these requests are passed through workflows so that other departments in the organization fulfill those requests, and appropriately update the system.
If you notice, the Operational CRM does NOT contain (nor tell you) everything about the customer relationship. If a customer contacts the contact center, but this contact does not result in a transaction created in the Operational CRM, then the SAP/Oracle/Siebel/.... does not know anything about this contact, this interaction, because it does not track it, and the agent did not work on it. Example of such a situation:

  • Assume that I call in to my Bank's contact center and get my savings account balance - either through their IVR, or an agent looks it up (maybe from the Operational CRM screen in front of her that automatically populated through CRM-CTI integration, when my call was delivered to her). Then the Collaborative CRM plugs this interaction in its database (Rajas called again today), whereas the Operational CRM does not track this interaction - this facet of the relationship.

Analytical CRM is genearlly and carelessly labeled 'MIS' by most people. Actually this is the CRM that generates the business intelligence for you. It may be part of your Operational CRM package, or the Collaborative CRM platform, or it may be a separate Business Intelligence software suite altogether. It all depends on why do you want to do analytics, what is the information you are looking out for, and what are the actions you will take once you get the information. For example:-

  • If you have SAP as Operational CRM, and wish to generate reports & trends on transactional data captured therein, you would choose SAP Business Warehouse (Analytics as a part of Operational CRM).
  • If you have Avaya Collaborative CRM solution, and need to know details on Customer Interactions and analyze KPIs like Service Level, Agent statistics etc. then your money should go in Avaya Call Management System or Avaya Operational Analyst (Analytics as a part of Collaborative CRM).
  • When you want a more powerful solution that should combine data from multiple sources, generate multi-dimension analysis to understand complexities viz., which Customers are most likely to Churn, then you must know about their transaction details, as well as their interaction details and then do predictive analytics using Business rules that you set - and consequently you will invest in solutions like Cognos, Business Objects etc.

And lastly, but most importantly, CRM is a Strategy, and CRM software just an enabler. The three categories of CRM solutions (as above) in any combination will only help if the Strategy is right. Which means you must know WHY do you need those solutions in the first place. I have seen very efficient and effective businesses, working with minimal 'CRM' (in its popular sense). Sure, these effective businesses can further improve their Customers' Experience multi-fold as they evolve in their CRM journey, by deploying the Operational and Analytical CRM pieces, with full awareness as to WHY they are doing what they are doing.

But a good Customer Experience is NOT guaranteed by merely purchasing the CRM elements. Ask the VP of Customer Service, if you think otherwise.


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This article appeared on the CRM - Customer Relationship Management site - A repository of the latest CRM news, articles and resources.

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