HANDBOOK OF CRM: Achieving Excellence in Customer Management Part 5

Chapter 5 The information management process The strategy framework for CRM Strategy development process: Business strategy • Business vision • Industry and competitive characteristics Customer strategy • Customer choice and customer characteristics • Segment granularity Value creation process: Value customer receives • Value proposition • Value assessment Value organization receives • Acquisition economics • Retention economics IT systems Multi-channel integration process: Sales force Outlets Telephony Direct marketing Electronic commerce Mobile commerce Data repository Analysis Front-office tools applications Information management process Performance assessment process: Shareholder results • Employee value • Customer value • Shareholder value • Cost reduction Performance monitoring • Standards • Satisfaction measurement • Results and KPIs Back-office applications The information management process is concerned with two key activities: the collection and collation of customer information from all customer contact points and the utilization of this information to construct complete and current customer profiles which can be used to enhance the quality of the customer experience, thus contributing The information management process 227 to the value creation process. As companies grow and interact with an increasing number of customers through an increasing diversity of channels, the need for a systematic approach to organizing and employing information becomes ever greater. Two questions are of special importance in the information management process: 1. How should we organize information on customers? 2. How can we ‘replicate’ the mind of customers and use this information to improve our CRM activities? Where customer information is spread across disparate functions and departments, interactions with the customer are based on par-tial or no knowledge of the customer, even though the customer may have been with the organization for years. This fragmentation of cus-tomer knowledge creates two major problems for the company. First, the customer is treated in an impersonal way, which may lead to dis-satisfaction and defection. Second, there is no single unified view of the customer upon which to act and to plan. In an effort to keep pace with escalating volumes of data, the ten-dency has been for organizations to create more or bigger databases within functions or departments, leading to a wealth of disparate silos of customer information. Companies are thus left with a frag-mented and often unwieldy body of information upon which to make crucial management decisions. The elevation of CRM from the level of a specific application such as a call centre, to the level of a pan-company strategy requires the integration of customer interac-tions across all communication channels, front-office and back-office applications and business functions. What is required to manage this integration on an ongoing basis is a purposefully designed system that brings together data, computers, procedure and people – or what is termed an integrated CRM solution. This is the output of the information management process. The information management process can usefully be thought of as the engine that drives CRM activities. It consists of several elements that need to work closely together. Information should be used to fuel, formulate and facilitate strategic and tactical CRM actions. As the figure above shows, the other processes that make up the strategic framework for CRM all depend on the information man-agement process. The strategy development process involves analysing customer data in different ways to provide insights that could yield competitive advantage. The value creation process utilizes customer 228 Handbook of CRM: Achieving Excellence in Customer Management information to develop superior value propositions and to determine how more value can be created for the organization. The multi-channel integration process is highly dependent on the systems that capture, store and disseminate customer information. The per-formance assessment process requires financial, sales, customer, opera-tional and other information to be made available to evaluate the success of CRM and identify areas for improvement. To appreciate fully the significance of the information manage-ment process within strategic CRM, it is important first to be clear about the role of information, information technology and informa-tion management in CRM. The role of information,IT and information management Information CRM is founded on the premise that relationships with customers can be forged and managed to the mutual advantage of those in the relationship, or all relevant stakeholders. However, suppliers and their value chain partners cannot interact and nurture relationships with customers they know nothing or very little about. While having information about customers is therefore essential to relationship building, it is not alone sufficient. Of much greater importance is being informed and making informed decisions. In other words, the real value of information lies in its use, not in its mere existence. This simple truth is evident in the fact that many companies possess vast amounts of information on their customers, but few fully exploit this treasure trove for greatest benefit. IT Many equate CRM with IT. For instance, the bigger your database, the more advanced you are in CRM. This notion of a direct correlation between the two is misleading for CRM is a management approach and IT is a management tool. Further, in the terms in which we define CRM, it is possible to have highly sophisticated CRM without having The information management process 229 highly sophisticated IT. For example, the traditional corner shop proprietor built intimate relationships with his regular customers by recognizing their individual needs and circumstances and tailoring his service accordingly. Historically, he did not log their buying habits and preferences in an electronic database as no such thing existed, but he referred to his own memory of customers and applied it conscien-tiously. The shopkeeper knew which customers were most valuable and how to retain them by delivering appropriate value. Businesses today compete in a much more complex environment and potentially with millions of customers they have never actually met, so IT has become a vital feature of managing customer relation-ships. However, the corner shop principle still applies, in that a working ‘memory’ of customers, supported by two-way dialogue, is what enables effective customer relationship management. Thus it is important to keep the technological aspect of CRM in the correct per-spective: as the means to an end and not the end itself. Information management Information management is about achieving an acceptable balance between operating intelligently and operating idealistically. Consider the following scenario. The heart surgeon may have all the latest equipment, superlative training and a genuine commitment to sav-ing the life of his patient, but if he operates on the basis that he is replacing a valve in a serious but routine procedure, rather than working to rectify the multiple complications he finds once the patient’s chest is opened, he will probably fail in his efforts to help and possibly with fatal consequences. So who will be to blame? The surgeon for not knowing enough about his patient’s unique needs and condition and not being prepared for the unexpected, or the patient for not forwarding more information about the patterns or progression of her illness? Often we do not know what it is we need to know to address a problem, or by the same token, what we really do not need to know. Clearly, neither the undersupply nor oversup-ply of information is satisfactory. The quest is therefore to find the right information and at the right time. Learning that the patient has a family history of a rare coronary disease after she has fallen into a coma on the operating table is of little comfort or benefit. This analogy serves to emphasize the constituent dimensions of information: quality, quantity, relevance, timing, ownership and 230 Handbook of CRM: Achieving Excellence in Customer Management application. The function of information management in the CRM context is to transform information into usable knowledge and to apply this knowledge effectively and ethically in the creation of cus-tomer value. The right information in the wrong hands or at the wrong time has little constructive value. Further, the ‘perishable’ quality of information demands that it needs constant updating and replenishing. The management of information therefore encom-passes the organization (capture, storage, dissemination), utilization (analysis, interpretation, application) and regulation (monitoring, control and security) of information. The information management process The information management process should be considered in two stages. First, the CRM strategy (or the relevant component of it) needs to be reviewed in the context of the organization’s information management needs. Second, the technological options needed to implement the agreed strategy have to be determined. The first stage will involve a strategic review of the current condition, capability and capacity of the information management infrastructure, in rela-tion to the customer, channel and product strategies defined in the preceding CRM processes. We discussed in Chapter 2 how each organization, depending on the core business and a number of related strategic issues, needs to consider precisely which CRM strategy is appropriate now and in the future. Figure 5.1 reintroduces the CRM Strategy Matrix, dis-cussed in that chapter, which identified four broad strategic options facing organizations – product-based selling, customer-based mar-keting, managed service and support and individualized CRM (or what Peppers and Rogers term ’1 to 1 Marketing’1). The latter is the most sophisticated – it requires collection and analysis of extensive information about customers and also the desire and ability to give customers individualized service. Here the strategic issues to be reviewed will include: Is customer information extracted from each interaction or transaction regard-less of the channel the customer uses? Is this information centralized and leveraged and exploited across all functions and channels? Is the information technology platform deemed appropriate for the pres-ent and for the future? The results of such a review will highlight the ... - tailieumienphi.vn