Gartner: CRM should be about earning customers for life

A recent survey of 119 end-user organisations in Europe conducted by Gartner found that 48 per cent will increase their budget for customer relationship management (CRM) initiatives in 2013.

Only five per cent will decrease their CRM budget this year, down from nine per cent in 2012, confirming organisations' commitment to improving the management of their customer relationships despite the volatile economic environment in the region.

At the same time, the ways in which customers wish to engage with an organisation are evolving. New channels, elevated expectations and a shift in power are forcing organisations to rethink how they manage customer relationships. Organisations must work hard to understand their customers via a single holistic view, stimulate engagement through appropriate communications, and continually deliver rewarding and differentiated experiences.

It sounds simple in theory, but the reality is complex and many organisations struggle to:

  • Develop CRM initiatives that pay equal attention to vision, strategy, customer experience, organisational collaboration, processes, information, metrics and technology.
  • Obtain a single view of the customer that encompasses all aspects of their relationships from a bewildering multitude of data sources.
  • Maximise the potential of social, mobile and online channels whilst ensuring cross-channel consistency.
  • Increase customer satisfaction, loyalty and advocacy when IT budgets are under increasing pressure.
  • Evaluate and select the right providers for their unique business requirements.

Above all, CRM initiatives require a proven framework to ensure that projects are approached on a balanced, integrated and strategic basis. Applying a framework, such as Gartner's "Eight Building Blocks of CRM," will help CRM project and programme leaders maximise the benefits of a company's CRM initiatives.

The Eight Building Blocks of CRM

Source: Gartner (February 2013)

This framework is designed to help organisations see the "big picture," make their business cases and plan their implementations. It also can be used as a checklist for departmental CRM projects, even though it was designed to help improve enterprisewide CRM initiatives. The framework can be used for internal education and to foster debate about the development of a CRM vision and strategy. It can then be used as the basis for an assessment of an enterprise's current and required CRM capabilities to help analyse its position and future strategies.

The eight building blocks in the model are the fundamental components of an effective CRM initiative. Behind each component are a variety of interlinked capabilities. A key feature of this framework is its emphasis on the need to create and maintain a balance between the requirements of the company and the customer. Far too many CRM initiatives suffer from an inward focus on the organisation. The goal of CRM is to achieve a balance between value to shareholders and value to customers for mutually beneficial relationships.

Many CRM projects, however, neglect to focus sufficiently on the customer experience, because they are too focused on the benefits to the organisation. It's foolish to pretend that an organisation understands its customers without talking to them. Leading organisations are creating positions that formalise the need for the customer viewpoint and are ensuring that it's heard at the highest levels in the enterprise through voice of the customer programmes.

To ultimately succeed in becoming more customer-centric, enterprises need to tell customers about developments, routinely monitor their satisfaction levels and ensure that the customer experience is consistent with brand values and is well-known across the business.

Customer information and insight is critical to CRM. It is the basis of customer knowledge and effective cross-channel interaction. Most organisations' CRM information capabilities are poor, because they have numerous fragmented databases and systems, and they lack an ongoing master data management strategy.

A common debate is whether to focus first on customer data quality and create a single view, or define the processes first and then map the information required to support the process. The recent additional challenge is the need to incorporate large volumes of rapidly changing externally sourced unstructured data from social media and mobile devices, for example, as part of a big data approach.

A key foundation for this blood supply will be to ensure high-quality, accurate and complete customer data by setting up data ownership, governance, and quality management structures and processes. It will also require the creation and maintenance of a single view of the customer for operational and analytical purposes.

At the Gartner Customer Strategies & Technologies Summit 2013, Gartner analysts will explore how social, mobile, data, and cloud will reshape the way organisations manage customer relationships. They will also help delegates plan for, build and improve the customer experience with the goal of creating lifelong customer relationships.

The Summit will be held from 5 to 6 June 2013 in London. More information on the agenda is available on the Gartner Customer Strategies & Technologies Summit 2013 Agenda Page.

Posted byJim Davies, research director at Gartner,

Twitter: #GartnerCRM

Copyright © 2013 IDG Communications, Inc.

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