Over the past two decades, Customer Relationship Management (CRM) has been defined differently by almost every industry that has invested in it. Ultimately its meaning is evolving today as technology and the global marketplace changes.

Taking a closer look at the true meaning of CRM

But the roots of CRM are fundamentally about continuous relationship management. Historically, CRM has been about gaining an end-to-end perspective of the customer including their habits and the cumulative (“lifecycle”) revenue that customers, as individuals, contribute to the business. CRM systems aimed to provide this holistic picture by providing as much information about a customer as possible on a single screen.

But how far do they succeed in supporting management to make good business decisions today?

A critical problem statement that almost all industries now articulate is their inability to find that holistic view of the customer and piece information together in a way that yields practical applications.

Today’s Fortune 500 companies are an amalgamation of many companies integrated through mergers and acquisitions. As such, technologies and platforms differ from one line of business to the next. While systems may be parsed together, very rarely is there a “one-stop-shop”.

The US is working through a worst case economic scenario. While no one can predict what will happen, we do know that it’s a buyers’ market with no end in sight. Companies need to be able to deal with customers in the right way and most of them are not “ready”. The businesses that succeed in getting more and better customers will be the ones who know their customer best and can utilize CRM technology to paint an end-to-end picture (e.g., How many times did the customer buy? What did they like? How many times did they call? What did they say? Which of our various products do they hold? How much revenue did this customer contribute to the business in a given year?, etc.).

In the case of banks, they often have difficulty discerning exactly what kind of revenue they’ve earned from a customer so they make the mistake of treating all customers the same. For example, consider Customer A, who provides no real revenue to the bank. This customer pays credit card balances off entirely every month, thereby making no interest payments and no finance charges. Meanwhile, Customer B has paid $50,000 in interest charges in one year. When Customer B complains about a $10 service charge resulting from an honest mistake, the bank may mistakenly treat that high revenue customer the same way it treats all customers including the low revenue Customer A. In reality, the high value customers may (and oftentimes do) demand more and it’s in the bank’s best interest to treat these customers differently in order to retain them.

Making CRM even more challenging are privacy/risk issues. In the banking industry, customers have to give permission for certain areas of a bank to view data derived from other areas. For example, a derivative wealth management product is typically managed in a different part of the bank’s portfolio and as such is subject to different privacy criteria. For a bank to bring that information in line with a generic CRM platform that includes all of that customer’s “other” data (checking, savings, credit card accounts, etc.) requires their express written permission. Such issues need to be anticipated up front so that system architects can ensure that the data that appears in a consolidated format meets regulatory requirements.

While a large mainframe infrastructure project to integrate not only customer service, but other departments such as finance and accounting is ideal, the budgeting process in large organizations makes gaining funding for big projects next to impossible. When setting annual budgets, 30% of resources and funds will typically be allocated to regulatory projects. Business development projects will be second at 25%. After allotting for the mandatory business projects, there’s typically little money left to accommodate an initiative of the size and scale required to overhaul a company’s CRM platform.

So, how does big business move forward? One way is to create small sub projects and CRM systems across parts of the company. By creating a modular back-end system in stages, after 36 months companies will find that they have a more effective way to structure their customer data.

The end goal of a multi-phased CRM project may be to consolidate information pertaining to multiple account holders through merged screens. Once you have a “one-stop” view of the data, you can better envision the next step.

In the case of a credit card company, the next step may be to look at how much revenue the customer had contributed to the business by viewing their interest charge/fee history. Gaining this intelligence can lay the foundation for adding a sales component because now agents can begin generating a more specific individualized profile of each customer, thereby treating them differently.

The project can become more sophisticated and nuanced by integrating customer credit reports and ratings into the list of products each customer did and did not have. From there, the business can gain a better understanding of which financial products customers qualify for.

The final stage of the CRM platform could begin to integrate customer service with customer satisfaction scores to provide a robust, value-generating system.

Whether it’s a multi-year, phased approach or a full-scale enterprise transformation, any CRM project must be quantifiable. Spend more time up front quantifying the expected revenue benefits to help you make the project a success.

To gain a realistic picture of the outcomes, implement simple pilot programs. For example, you could start a pilot program to track calls related to a specific pain point or problem area such as the number of calls related to waiving fees. Parse out an assumption based on a small subset of calls and extrapolate how much the company could have saved/made with a more robust CRM platform. By extrapolating from small data sets, you don’t need to deploy a full system to understand what you’re going to gain.

In today’s market, we tend to think of CRM as bringing customers into one profile to identify commonalities. However, if we look at the traditional definition of CRM, it’s about giving companies a sense of each customer individually, their servicing history, warranty work, etc. and creating a profile from there.

Unfortunately, most companies don’t have the intellectual capital, technology or time to do this. Customer satisfaction cannot exist without “Continuous” CRM!. The challenges in getting the data necessary for an effective CRM program are many, but by taking a step back, we can develop a strategy that will work in achieving both short- and long-term goals.

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