Since the introduction of the term Customer Relationship Management (CRM) businesses have wrestled with a number of questions: Is it purely a technology or is it a business strategy? Is it a process that can be imposed on a business or does it necessitate a change of culture? Is it contact management or is it sales force automation? Does it belong in the IT department or is it a marketing function?

Most exponents of CRM agree on a strategy that has implications on and which can benefit all areas of the business. It relies on a culture that puts the customer at the heart of all processes, communications and policies and is normally supported by technology.

Whilst these tenets sound very laudable and make for a worthy goal, businesses are still running headlong into what they believe CRM to be without fully assessing the consequences or even truly understanding the approach and whether they are fully prepared.

The concept of customer-centricity is one that is extensively evangelised alongside CRM and so companies feel it behoves them to adopt the principle whether or not it is appropriate for their businesses. The senior management agonise on how they are going to make this momentous change from being product-centric to being customer-centric. From experience, it can be stated that some businesses – in fact, some sectors of business – will always require an element of product centricity.

It is finding the balance point that is important. There can be a significant difference between being customer-centric and being product-oriented but customer-service driven. Some will say that CRM is dead and that it is the customer experience that is central these days, usually meaning the outcome of the customer’s experience of the website or the call centre or, in the case of retailers, the face-to-face encounter with the store staff. But doesn’t this also entail the customer’s experience with the product? Sure, they will tell their friends if they had great service or encountered an intuitive website, but just as a well-managed complaint or timely offer can promote loyalty, it is important to understand where dissatisfaction with the product has overshadowed the whole relationship.

Similar is the need to understand how the customer wants the relationship to be managed. What channels of communication are preferred; what kind of proposition is welcomed. Here again we have a balance point that has to be identified and acted upon. There are those who, unless they receive every offer going, feel unloved and at the other end of the spectrum those that want to be left to their own devices. Either could be your most loyal customer and that loyalty will be reinforced if you understand how they want to be dealt with.

When considering the strategy other elements that are missed concern the fact that a similar approach should be applied to all aspects of relationship management, whether it is between company and customers, suppliers or employees.

The solution is to build a Management Framework that will, through a relationship management system (RMS), integrate the commercial objectives with current and planned technology, the skill sets of the human resources, business and market intelligence and the dialogue between company, customer and supplier.

The starting point is to understand whether the business is ready for a management strategy and the framework will provide an initial view, a process for achieving the required initial status, thereafter evaluating the position of the business at every stage to keep them on the roadmap to success.

We will consider the concept of relationships with customers. An objective of most organisations may be described as developing profitable, longer lasting customer relationships.

A Customer Management Framework, within which the whole business operates, can help identify the valuable customers and those the business can do without, deliver retention strategies based on customer insight and incorporate tools for the sales force to enable them to run their accounts more efficiently.

With the focus on profitable business, one can understand customer and product performance, with cost and income drivers down to individual customer which can be aggregated to different levels - product, division, geography, time period or process and used at all stages from product development to prospecting.

The framework depicted in the diagram demonstrates the interaction between the various participants in the programme. Whereas the standard model for CRM tends to restrict itself to the operational and analytical elements (shown here as Operational CRM and Analysis & Planning), this expanded model incorporates the development of tailored propositions and channels to personalise the up-sell/cross sell activity at the next customer touch point, the fusion of research and other tacit data to help understand and drive the customer experience to fine-tune the relationship and measurement so that the business can dynamically learn from the impact and effect of its activity.

With technology underpinning the model, it is important to both leverage the human resource, identifying where skills exist and where they are lacking to drive recruitment or training and to maximise the organisational structure to best serve the framework. Inherent within this area are specific roles – operational, analytical, administrative and managerial, each with its own skill set requirement. Drilling down to the next level of the model will expose each of these so that they can be matched to current staff skills and the training or skills transfer requirements identified; this is all part of the readiness assessment and the ongoing evaluation and the true manifestation of adopting the corporate relationship management culture.

So, rather than look at the elements of CRM – both operational and analytical – in isolation the UK subsidiary of a global business services business approached the issue by implementing a complete customer management framework that addressed the interaction between the various participants in the programme.

The framework Database Marketing Counsel implemented for them helped differentiate the value of customers, deliver acquisition and retention strategies and introduce such initiatives as behaviour-driven segmentation for account management – ensuring the right level of sales effort is matched to the greatest potential for business, achieving the greatest efficiency.

They could understand performance of customers and products, but most importantly, everything has become integrated and inter-dependent; with measures and reports tailored to the various disciplines and departmental requirements, everyone in the business has their view of what interests them or what they need in order to do their job. Near real time management information is provided in reporting portals and dashboards facilitating the ability to optimise the business processes.

The marketers can now control best spend of their budget, generate greater efficiency and maximise opportunities while the CEO has an overall view of how the business is being run – how well the managers manage – whilst maintaining a view of the voices and minds of customers and empowering both employees and customers, optimising the demand chain.

The finance department tracks where budget is being spent and where it is effective, gaining greater understanding of supplier relationships, optimising cost controls and leveraging investments so that cash flow can be planned more accurately and even individual customer risk managed.

The framework model has permitted the company to incorporate new strategic sales and marketing elements:

• The development of tailored propositions and channels to personalise the upsell/cross sell activity at the next customer touch point

• The fusion of research and other tacit data to help understand and drive the customer experience and build a knowledge bank for sales and marketing

• Fine-tuning of the relationships

•  Measurement so that the business can dynamically learn from the impact and effect of its activity.

Whilst technology underpins the model, the business has leveraged the human resource, identifying where skills exist and where they are lacking to drive recruitment or training and to maximise the organisational structure to best serve the framework. Inherent within this area are specific roles – operational, analytical, administrative and managerial, each with its own skill set requirement. Understanding where the company stood and the requirement to get it to where it needed to be were all part of the readiness assessment and the ongoing evaluation and adoption of the corporate relationship management culture.

We at Database Marketing Counsel see such a framework as the company’s blueprint for the strategy, controlling resources and budget whilst assisting in the transfer from project to business-as-usual process. It has also works as a means to manage expectations of both the Board and the staff and help dispel fears of the perceived costs associated with implementing a CRM strategy, as they were able to restrict selection of technology to the level of investment deemed appropriate, whilst still delivering the best value.

Michael Collins is managing consultant at Database Marketing Counsel (www.dmcounsel.co.uk), a specialist data strategy and CRM consultancy in London. He is a chartered marketer, a Fellow of the Institute of Direct Marketing and an internationally acknowledged consultant, trainer and author on database marketing and CRM. He has more 25 years experience in providing actionable strategy and direction on gaining customer insight and building customer relationships for more than 120 companies in the United Kingdom, Europe and North America in most B2C and B2B sectors. He lectures in database and CRM in a number of UK university business schools and is a regular contributor to numerous CRM-oriented web sites and journals. His lectures and workshops have been delivered in the United Kingdom, France, Scandinavia, North America and the Far East.

©Michael Collins 2008-9: all rights reserved