Bond with Customers, Lower Costs

Just how important the subject of CRM has become for many SMBs could be observed in the small-business focus groups at the world’s largest IT trade show CeBIT 2003. And also at Cologne’s CRM-Expo 2002, a leading European fair for CRM, more than 65 percent of around 4,000 attendees came from companies with no more than 500 employees.
Nevertheless, awareness alone is not enough. For CRM to succeed, it will take a supporting concept and a deliberate strategy which centers on the customer. For, only those who really know their customers can serve them properly and keep them.
This is also the finding of corporate consultant Schwetz Consulting, Karlsruhe (Germany). In the study „Customer Management in Small and Midsize Business,“ conducted in February 2003, Wolfgang Schwetz gave as reasons for the introduction of CRM systems mainly the structural changes in stagnating markets and a general decline in brand loyalty among customers. It was first of all the deteriorating market and rising customer requirements, the Schwetz study said, which caused SMBs to install CRM systems. A similar conclusion was also drawn by the department of business information technology of Catholic University of Eichstätt in a study conducted with the business periodical „Absatzwirtschaft.“ The authors of the study, titled „CRM 2003 – The way to keep your customers,“ stressed that CRM has become unthinkable without the use of modern information and communication technologies.

More than software

Information technology plays the leading role in the introduction of CRM, but it alone isn’t the definitive factor. Let’s review the bidding. The U.S. consultant Gartner shocked the experts in 2001 with a report that around 65 percent of CRM projects fail. Accenture, however, put the failure rate at „only“ 50 percent. The consultants blamed the failure of CRM projects on nebulous objectives, such as „raising customers‘ satisfaction,“ in lieu of concrete goals, such as „raising the pretax result by 5 percent.“ Also assigned responsibility for failure was that the subject of CRM was treated primarily as a matter of information technology.
Second thoughts have surfaced since then. Gartner analyst Ed Thompson even detects a „trend reversal.“ The times in which CRM was regarded as a purely IT project are over. CRM is increasingly perceived as a „holistic approach to company management“ in which „all customer-related processes in marketing, distribution, customer service, research and development“ are integrated across functions and streamlined, says a definition from CRM Forum. Dr. Peter Winkelmann, a professor of Landshut Technical College, added this criticism: „Many CRM providers advertise with the slogan of binding customers, but that isn’t really the issue for SMBs.“ CRM suppliers must communicate better that they also offer solutions for optimizing costs. That’s important for SMBs, says Winkelmann, but they are still forced to find the balance between customer orientation and optimizing costs.
So, is the outlook dim for CRM in small and mid-size business? Quite the contrary: According to the Schwetz study, 38.2 percent of the more than 570 respondents are now using a CRM system and 21.8 percent plan to deploy CRM software. Forty percent currently still use no such software. The respondents also said that they want to take better care of their customers and optimize access to data on customers with the installation of a CRM system.

Embracing e-CRM

The principles of CRM also apply to the management of electronic-based customer relationships. Even in electronic business, customers are still customers. Relationships with them must also be forged, developed and cultivated. The processes of customer management accelerate enormously, however, through the medium of Internet, and business activity becomes transparent. The customer can therefore obtain and process quickly and smoothly all information which he requires from competing suppliers.
The idea of a holistic and individual approach to the customer can be realized especially well through electronic CRM systems with small transaction costs because these systems hold possibilities for a personal touch that could only be achieved otherwise through personal contacts. At the same time, customers leave a data trail when they shop or window-shop virtually in the web. And these traces deliver a basis for personalizing the offer (catchwords: data mining, analytical CRM).
The core function of an electronic CRM system in this context is to personalize offers of information, products and services in Internet. In the end it is up to the suppliers of CRM software to offer the customer the software package that is right for him. Schwetz Consulting says that SMBs value great flexibility, dedicated screen displays, easy integration in existing systems and short installment times.
SAP has started a SMB offensive with the product lines SAP Business One and mySAP-All-in-One. SAP also offers an all-around and scalable CRM product with mySAP CRM. Reliance on adaptable software offerings, says CRM expert Winkelmann, is advisable because the companies can retain with them their typical advantages in agility.

Dynamic duo

Internet is the central medium for steering manifold, complex and intensive customer relationships. The goal must be to employ the possibilities of Internet with such sharp focus that both customers and the company will profit from it. With the fusion of CRM and electronic business technologies, companies will be able to tap completely new communications possibilities in the future.
With e-CRM a field of application can emerge from a closed CRM circuit which goes beyond the company’s boundaries and encompasses customers, business partners and suppliers. CRM Forum derives from this fact the following requisite: „CRM systems as Internet, intranet or extranet applications must actively involve customers and business partners in relationship management.“ The long road to King Customer will then perhaps become shorter than had been supposed.

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