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CRM'S ROLE INCREASES IN MARKETERS' PLANS
June 2003
Editor's Note: Customer relationship management, or CRM, is a buzzword that seems to have caught on in agriculture marketing circles, despite a tough economy. Agri Marketing recently spoke to three CRM providers about the relationship trends they are seeing in this industry. Those interviewed are:
Mike Ames, vice president of marketing and new business development for Comprehensive Marketing Inc. (CMI), Ewing, N.J.;
Norm Cosand, CEO of The Jackson Group, Indianapolis; and
Rob Sproule, CEO of The Kenna Group, Winnipeg, Manitoba.
What CRM trends are you seeing in 2003?
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| Mike Ames, Comprehensive Marketing Inc. |
Ames: We see three key, interrelated trends. First, one of the biggest changes is the definition of "customer." When most CRM systems were built, they tracked data to the channel purchaser level instead of to the true end-use customer. Today, more agrimarketers see the need to track or trace their products to the end user. In some cases, changing regulations precipitates this, and in others, the ability to better market their products drives the change. Regardless, the challenge is to build an expedient, scalable system linking value chain partners to identify the true end user. We pioneered this with the development of RetailRemote® in 2000, and we see increasing interest in this skill.
Once you capture the transaction, the second trend is an increasing need for data quality. As agrimarketers integrate data from many sources, they need to pay more attention to standardizing and transforming data to eliminate duplicates and inaccuracies that cloud the picture the data presents. The trend to integrate more data sources will continue because marketers realize they need to collect more complex data to achieve operational efficiencies and measure ROI.
The third trend is an increasing need for speed. Companies need to implement systems faster to avoid missing a purchase cycle. The ability to acquire, integrate and interpret data faster on an ongoing basis helps ensure they don't lose an opportunity to their competitors.
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| Norm Cosand, The Jackson Group |
Cosand: Over the past several years, I have noticed that the original intent of CRM has been obscured by the focus on large-scale software installations. The promise of these systems appears to be that, once installed, a user will immediately have a wealth of customer information at his or her fingertips, thus leading to improved loyalty and increased sales.
Along the way, many organizations are discovering the expensive truth. These multimillion dollar systems can't always deliver on that promise. Critical customer information is not available. Operational procedures don't align with the new approach. Staff (and management) are unable or unwilling to adapt to change. And, once the system is permanently in place, the software designed for a "typical" business does not enhance the relationship or support the expectations of the company's unique customer base.
This search for a magical cure is not significantly different from the late '80s and early '90s practice of building large marketing databases. Numerous companies went down that primrose path only to realize they sank most of their budget to build and maintain the system with little funding left to actually communicate with their customers. The truth, then and now, is that software alone will not help you grow strong customer relationships.
Successful implementation of CRM requires significant philosophical, cultural and operational changes within most business organizations. To embrace relationship management within an organization, companies must learn how to:
- interact with each customer as an individual
- encourage two-way dialogue
- learn the customer's individual preferences and needs
- personalize the communications, product offering and incentives to each customer
- calculate the ROI of each customer and allocate resources proportionally.
CRM must start with thorough analysis of your marketing objectives and the development of a comprehensive communications strategy. Then, and only then, should you invest in systems to support your strategy.
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| Rob Sproule, The Kenna Group |
Sproule: Companies are beginning to recognize CRM not merely as a technology tool but as a strategy that transforms the way they do business. As a result, there is a growing realization that simply installing an "off-the-shelf" CRM software package won't provide the results and competitive advantage they are looking for.
At the same time, many companies are moving toward what's been called a "guerrilla" approach to CRM. Rather than transforming their organizations in a single, large-scale effort, these companies are implementing CRM piecemeal as a series of tactical projects that address an individual and specific business objective or that meet the needs of a single department of the organization. Over time, these individual tactics coalesce into a more formal and comprehensive CRM strategy. One of the advantages of this approach is that it is capable of delivering quick results in selected areas of the business with less overall demand on resources. These "quick wins" are often used as justification for a more extensive CRM investment.
Integration is also on the rise. Companies are extending CRM principles to sales and marketing functions that fall outside CRM's traditional scope with the goal of fully integrating their customer-facing activities with their back-end applications and systems.
Are your clients planning to increase or decrease spending for CRM in the midterm?
Ames: In some sectors of agriculture, the regulatory environment will necessitate an increase in CRM spending. In others, as margin pressures continue, clients' need for efficiency will lead to an increase in CRM spending. By capturing transactional data, they can evaluate the true impact of their efforts. This will allow them to identify adjustments that can enhance profitability. And it can help them move faster. But executives need to understand how CRM can help them achieve their business goals before they will make the investment. Companies that view this spending as an investment in their future are the ones likely to come out on top. For example, one of our CRM solutions more than paid for itself based on the interest saved by allowing a client to bill tens of millions of dollars months sooner than they could have otherwise.
Cosand: I've observed that a significant number of our clients are stepping back from investment in large "systems" and focusing more of their resources on communication campaigns and/or relationship building processes to enable a learning dialogue with their customers. This is reflected in an increase in expenditure in smaller Web-based applications that support the ability of a customer to do business with a company.
Sproule: Market factors have forced many companies to scale back their marketing budgets. However, CRM-related activities are taking up a greater percentage of those budgets, which means CRM providers have an opportunity to capture a bigger piece of a smaller pie.
How has technology improved CRM efforts?
Ames: Technology has made your imagination the limit to what we can accomplish with CRM. Just as the Internet has improved speed and efficiency, increasing adoption of technologies like ERP systems that support integration from independent systems, wireless Internet and handheld data collection devices will continue to expand the possibilities. And as technology evolves, we get closer to the ideal of one-to-one marketing.
But it's important to remember that the key to successful CRM for our clients isn't technology itself - technology merely enables us to design systems that get customers the information they need, when they need it, in order to make better decisions. In fact, our technology is almost too good because it creates the impression that it will fix everything.
The key is innovative use of technology and the information it can provide. That's why we see use of more analytical tools to transform the data into information and allow agrimarketers to be more proactive.
Cosand: It is not only the development of technology that has enhanced CRM but also the willingness of customers to utilize the technology. It wasn't too many years ago when only a handful of customers had Web access and even fewer were comfortable transacting business over the Web.
Sproule: First and foremost, CRM technology has evolved to the point where it is adding real business value. The best CRM providers are able to employ a Rapid Application Development process to address current year tactical business needs in a fraction of the time normally associated with information technology projects. As a result, providers are better able to adapt CRM technology to their clients' business needs in the time frames that marketers require, delivering solutions that are ideally configured and fully customized.
Secondly, CRM technology is becoming increasingly mobile and - in many cases - wireless. Companies enjoy a greater ability to share knowledge and information with employees and customers "where they work," transcending geographic, organizational and technical boundaries. This combination of technology and mobility boosts productivity both in the office and in the field.
Do you think the relationship management mentality has changed in recent years? Do your clients understand the benefits of CRM?
Ames: The mentality has most definitely changed, and we see the results of that in the broadening definition of CRM. It isn't just another word for sales force automation anymore. It has become a broader business management tool we use to help clients be more profitable. While it can still help you provide customers what they want, when they want it, in the way they want it, we've also used it to improve cash flow, inventory management and resource allocation decisions. In its infancy, it was difficult to measure if CRM was making companies more profitable. Now with the advent of transactional data, we can track direct effects, and CRM has become a profit-driver.
Sproule: The majority of clients, but not all of them, have internalized the underlying theory and fundamentals of CRM. Overall, the CRM knowledge bar has been raised. Yet, while clients more clearly understand the benefits and fundamentals of CRM, some of them are struggling with execution. Some companies have made the mistake of trying to implement a CRM strategy without the help of an experienced partner. We all understand how a car works and the benefits it brings to our lives, but that doesn't mean we have the expertise and experience it takes to make one work. The same can be said of CRM implementations; companies can save themselves a great deal of time, money and aggravation by consulting an expert at the outset. AM
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