Businesses Can’t Ignore Customer Relationships

"It doesn’t matter whether you want to use CRM or not, or whether the acronym is dead," says CSC’s Patrick Molineux, author of the book Exploiting CRM: Connecting With Customers. "The bottom line is that you have to think about customer relationships. CRM is something that companies need to do as opposed to something that they need to buy." Whether businesses are interested in CRM software or not, they can’t ignore their relationships with their customers, he says. In economically difficult times, finding and retaining profitable customers can make the difference between surviving and not surviving. This ensures that CRM will be a concept that should resonate with businesses regardless of trends in CRM technology.

Customer relationship management refers to the strategies, processes and enabling technologies that allow an organization to acquire and retain its best customers. CRM can give a business a picture of all of its interactions with customers, including ad campaigns, customer purchases and support requests. When CRM came into popularity in the late 1990s, however, it primarily referred to "operational CRM" software packages that automated sales, service and marketing functions — and many of those packages did not provide the increased sales and customer retention that vendors promised. "The technology industry hijacked customer relationship management," Molineux says.

Molineux, now part of CSC’s Financial Services Group, based his book on practices developed in CSC’s various customer relationship management units in the United States and Europe. Exploiting CRM focuses on a return to the "soft" issues that drive customer relationship management, such as the human side of CRM projects. Not addressing the human component is the most common reason that CRM projects fail. "IS departments may have well-understood methodologies to implement new software, but few companies have such clearly understood methodologies to change how their people think, act and do their work with customers," he writes in the book.

Weakness made strong

CSC’s customer solutions practice closely examines a company’s overall business needs and develops a CRM strategy that encompasses changes in both people and technology. It uses return-on-investment (ROI) tools to determine what solutions could bring the greatest financial benefits. It focuses especially on process analysis and change management. Analyst firm Gartner Group placed CSC in its 2003 leadership quadrant for CRM service providers. [Gartner Note, "CRM Service Providers 2003 Americas Magic Quadrant," Beth Eisenfeld, 29 January 2003]

CSC’s customer solutions practice tries to identify potential trouble spots of CRM and improve upon them. "We’re taking advantage of CRM having a black eye in the marketplace," says Paul Thompson, director of customer solutions for CSC’s Consulting Group. "We’ve been focusing on areas where they haven’t been delivering."

One area where CRM efforts tend to bog down, Thompson says, is in an overreliance on operational software packages. Such systems, while important, primarily address the automation of the customer workforce — helping salespeople track their sales contacts, for example, or helping customer service representatives answer a call more quickly. They don’t, however, necessarily make it possible for businesses to understand customers’ actions.

In order to understand customers, businesses are turning to analytical CRM. "Customer intelligence means gaining a single view of the customer by consolidating all of your customer information, and then performing analytics to find insights," says Alex Black, a partner in CSC’s customer solutions practice. "You can use those insights to grow your business with customer acquisition, or retain the customers you have." CSC is partnering with software vendor @Risk, for example, to analyze customer transaction history to determine which customers are most likely to "defect," or leave a business. CSC can then advise businesses about possible intervention strategies.

Because the operational CRM market is maturing and the need for analytics is great, customer intelligence is a promising area for CSC. Black says that 70 percent of CSC’s customer solutions business is currently operational and 30 percent is analytical. In two years, CSC expects the inverse, with analytical CRM comprising 70 percent of the CRM business. CSC has partnered with data mining companies such as SAS to be able to offer strong analytical capabilities.

CSC is able to capitalize on its heritage as an outsourcer and systems integrator to create CRM solutions. The customer solutions practice analyzes clients’ needs and may determine that the best choice for a particular client is to outsource its call centers to CSC rather than creating a new system. But if the client needs a new call center, CSC has developed a new offering called High Performance Contact Center that combines CSC technology and best practices.

Thompson says that CSC’s history makes it particularly well suited for handling contact centers and complex data integration issues, singling out customer engagements at the IRS, NASA and the National Security Agency. "We’re known for managing data hairballs," he says.

Removing CRM from isolation

While CRM is often treated as an isolated technology, CSC’s customer solutions practice holds that customer-facing systems should also connect with other parts of the business. The customer solutions practice works closely with other CSC consulting practices, such as supply chain and enterprise applications, to create broader solutions. Those solutions are starting to find customers.

For instance, the CRM practice joined with the supply chain practice to make a proposal to Flowserve, a $2.6 billion Dallas, Texas, manufacturer of valves, pumps and seals for markets such as the petrochemical and chemical industries. Flowserve wanted to present a consistent face to its customers, regardless of whether clients were buying goods from the pump, valve or seal division. "We’re trying to mirror the way many of our customers want to see Flowserve. Today, it’s difficult for customers and Flowserve to look across the organization and understand how the key customer requirements and satisfaction are affected across the divisions," says John Jacko, Flowserve’s vice president of marketing and communication.

"CSC did the best job at articulating a holistic vision," Jacko says. "They reminded us that CRM is not a system that exists out there on its own." Flowserve wanted to integrate the various legacy systems that run its separate divisions and link those systems to a CRM package. CSC’s CRM bid on the deal included supply chain technology, with the idea that a CRM package should include the systems that drive the orders.

Jacko says that by integrating supply chain planning and customer relationship management, Flowserve will be able to conduct more accurate sales and operations planning. Having CRM connect to the supply chain will give the business segment management knowledge about the demand for products and how that demand affects manufacturing and engineering. For example, the supply chain system could initiate requests for the supplies necessary to create a finished product the moment a customer places an order.

CRM is not focused just on a narrow band of customer activity, which is why Molineux says many projects fail. CRM needs to include all of the processes that touch a customer, whether they’re on the front end like sales or on the back end like supply chain. CRM needs to encompass not just technology but also the larger strategy that handles customer relations. "CRM is not a fad, but a corporate strategy that executives ignore at their peril," Molineux says in Exploiting CRM. "The bloodied corpses of failed projects that litter boardrooms are the result of misunderstanding what CRM is and what it can do."

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