On 2009 - the year of sustainability

The new year is approaching, 2008 is ending with some of us feeling the consequences of the credit crunch. It's time to look towards the future. Every new day and new year opens a wealth of new opportunities,  even in a crisis. 2008 ends with a starting recession, many business are facing tough times. I do not have a crystal ball and am not much of a fortune teller either, nonetheless I would like to offer my views on 2009, from a CRM perspective that is.

2009 - the year of sustainability
In 2007 and 2008 we've been able to see a new trend rise, sustainability and environmental awareness. We've come to realise that we need to use the earth scarce resources wisely. Sustainability can also be applied as an economic and not environment term however. Wikipedia lists the following for the term sustainability:

Sustainability, in a general sense, is the capacity to maintain a certain process or state indefinitely.

(src: http://en.wikipedia.org/wiki/Sustainability)

So sustainability can also be applied to your business as the capacity to remain operating and to remain in business. How could one survice the current economic crisis and what does sustainability in crisis mean?

1. Sustainable operating model


2. Sustainable customer base


3. Sustainable investments

A sustainable operating model
The first thing companies focus on in a crisis is operational excellence. Reducing expenditure and increasing efficiency. Cut out unnecessary costs and focus on the core of your companies operation. This could mean divesting or closing retail outlets and changing your channel partner strategy. Perhaps others are better at selling and marketing your products than you are. Operation Excellence also marks a path to lower cost channels, such a self service internet channels as opposed to contact centers or an on-site repair man. In other words, I believe that 2009 will lead to companies employing self service more and more, as a means to both improve customer service (24/7 access) and reduce cost.

Sustainable customer base
During a boom companies typicall focus on Sales & Marketing when it comes to their CRM investments, trying to get a piece of an ever increasing pie. In a crisis the pie usually stays the same size or gets a bit smaller. Unless you provide an innovative product or service for which a whole new pie exists, you will try to have to make do with getting a bigger piece of the existing pie. The focus, in my view, should be to focus on preserving your existing customer base through excellent service, and gaining new market share through word-of-mouth marketing. Spending heavily on marketing campaigns for a .05 percent marketshare increase is nonsense if your existing customers are leaving. So keep your current customers, provide excellent service, preferably better than your competitors, and gain marketshare that way. After all, the cost of acquiring a new customer is 5 times higher than keeping your existing customers and convincing them to spend a bit more with your company.

Sustainable investments
Due to the credit crunch most companies are no longer able to draw unlimited financing from either the stock market, or the credit market, one has to invest wisely. Invest in improving your current products or services, products or services that are complimentary to your current portfolio and invest in customer service. Secondly make sure you invest in a way that is environmentally sustainable and use that as a marketing tool.


Sustainability and CRM?
So what does this mean for your CRM efforts. I feel that 2009 will see an increase in spending on improved customer service, through more possibilities for self service, increased spending on cost-efficient call centers (through products such as Oracle Contact Centre Anywhere) and increased spending on loyalty management applications. Loyalty management spending will be directed at keeping existing market share and growing the existing customer base through word-of-mouth marketing.

I'm looking forward to another interesting year in CRM, CRM Applications and IT.

On solving the customer service puzzle (or CRM is a business strategy, NOT software!)

Or atleast, one view on how the pieces of the puzzle can be made to fit. Drew stevens recently wrote an article on the customer service puzzle, which was brought to my attention
by Jim Berkowitz . The focal points of Drew's article are ensuring the whole company focusses on providing an excellent service or product to your customer and ensuring you regularly interact with your customers. Something we can all agree with.

Drew also outlines one point I disagree with: 'refrain from CRM'. Like many others Drew mistakenly views CRM as 'software systems'. CRM is not a piece of software or a system, but a business strategy. The business strategy that should force companies to focus on providing added value to customers. In other words, CRM is the 'focus on the customer throughout the whole company' that Drew is referring to. Paul Greenberg's definition of CRM systems says it best:

"CRM is a philosophy & a business strategy, supported by a system and a
technology, designed to improve human interactions in a business environment".

CRM systems, like Oracle's Siebel CRM, SAP CRM and salesforce.com are valuable enablers to help companies achieve their customer focussed business goals, if implemented in the right manner. CRM and CRM software implementation should be about your business goals,
and not because some IT guy wants to try out a new piece of fancy software. So Drew, I agree with your points, but I think that implementing a CRM application with your other points in mind will only help a company to solve the customer service puzzle.

On Gartner's 7 initiatives to improve the customer experience

Jim Berkowitz has created a post that summarizes / outlines a number of recent Gartner publications on Customer Experience Management. Check it out.

On predictions for 2008

Much like the end of the year, everyone seems to be publishing predictions, trends and the future as a year begins. A little bit later than I had anticipated, I'd like to put in my two cents as well, from a European, or perhaps more specifically, from a Dutch perspective.

CRM Process
Service instead of sales Increasing focus is being put on improving service and ensuring customer service meets the expectations of customers. It seems however that most companies now use optimal sales processes and support these processes with an up to date crm system. Companies are starting to realise that making a sale is only one interaction, whereas service interactions occur more frequently and have a significant impact on the probability a customer will renew their contract. 2008 will see an increased focus on Customer Experience Management and Word of Mouth Marketing. The Net Promoter Score will remain an important metric for companies, even though it has been receiving some bad press.

Making your customer his own service representative
A second trend in CRM in 2008 is derived from increased pressure on cost efficient customer service. Not all products are sold at such a price that warrants service representatives making a service visit, or a call centre that provides simple services such as adjusting a cellphone price plan. Customers aren't stupid and aren't willing to pay a premium for activities they can perform themselves through a web based or voice response system. I expect that self service applications found within the Internet domain and are used by Internet Service Providers, will quickly make their way to cell phone, SaaS and other subscription based services in 2008.

Citizen Relationship Management
In other countries, like the UK, local and national governments have already hopped on the CRM train. Increasingly Dutch National and Local Governmental institutions are seeing the benefits of standardized CRM solutions for case management and customer interaction management. By gathering dispersed information in a single system, local governments are able to provide better service to it's citizens or inhabitants by providing a single point of contact that is used to answer a multitude of questions in an efficient way, reducing frustration and the feeling of being caught in a bureaucratic trap. Larger municipalities like Amsterdam, Rotterdam and Almere have implemented typical customer or citizen relationship management processes and systems and other cities and national government institutions will probably follow suit in 2008.

CRM Solutions
Continuing rise of analytical CRM Within the Netherlands the CRM boom of the end of the last century has been followed by a rise in analytical CRM applications starting in 2004. Most companies are using analytical CRM applications to make the most out of their operational CRM data and leverage that data within their marketing efforts. Some companies are lagging behind in utilising effective data warehouses and analysis tools that provide a better insight into customer value, and these companies will continue to invest in implementing analytical CRM systems. In other words, a lot of effort has been spent in gathering customer interaction data and customer profile data, let's use that data to sell more and provide better service! Replacing early CRM boom systems ('90's-'04) with new ones
Companies are continuously in the process of upgrading their CRM systems to new versions. With the Rise of SOA, Web 2.0 and CRM 2.0, I expect that companies will take a more radical move, by replacing their CRM systems with new systems and rethinking their existing CRM functionality, and revamping their CRM processes. As indicated earlier in this post, the focus will be on improving the customer experience. Social Customer Networks / Media

An excellent example of a company utilising social media to improve it's reputation is UPC, a large cable TV operator active all over Europe. UPC had (and for the most part still is) been suffering from a bad reputation, as a company that provides below average service, and started a number of initiatives to turn that image around. Beside revamping their service desk, UPC also created a webcare team, dealing with search engine reputation management, or responding to negative customer stories on the web, taking action and trying to resolve the issue as quickly as possible. The UPC Webcare team uses TechnoRati, Google, and monitors several forums to find negative customer reactions or issues. A number of companies have already started with Webcare teams themselves and I trust more companies in the B2C field that are struggling with their reputation, such as Energy and Utility Companies, TelCo's and other Cable companies will follow suit. Check this story (in Dutch) for more information on UPC's Webcare teams.

On Dutch telecommunication industry predictions

Every once in a while I feel I need to plug my employer, Deloitte Consulting. In February the global practices of Deloitte will publish their yearly report on predictions for developments in the telecom, media and high tech industries. If you happen to be in the Netherlands on February 13th, and happen to speak Dutch, register for the briefing here

On outsourcing your services

A consistent brand experience and high quality service usually leads to a significant decrease in customer churn, after all, a happy customer remains a customer. Some companies are finding benefits in outsourcing customer service to achieve a more consistent brand experience, which sounds somewhat contradictory. An article on Destination CRM provides some more insight into what to look for when wanting to outsource your services.

On seeing the financial benefits of an improved customer experience

An article on CRM daily, written by Natalie L. Petouhoff and Brian R. Johnson from Hitachi Consulting in the US, provides interesting insights into the quantifiable benefits of an enhanced customer experience. All too often CRM applications are implemented just to replace a legacy system, because of a management hype, or due to an intangible need for a new and consistent customer experience. Natalie and Brian provide interesting insights into how to tie the customer experience to financial long and short term objectives of a company and ensure accountability and commitment from senior management through a tie-in with financial reporting standards. Read the article up to page 4, as it turns to a bit of a sales pitch after that.

On customer service lessons from a shopping survey

Marketwatch posted the results of a Wharton survey into the way women and men shop (US Based). The overall results indicate that men are more focussed on buying whereas women tend to shop around. The article also contains some interesting pointers on service within a store, such as a man's tendency to never return to a shop once the item they need has been out of stock once, whereas women tend to not return if they do not get enough attention from shop assistants. Perhaps something to look at when optimizing / revitalizing your storefront / service concept.