Wednesday, July 9, 2008

The next competitive frontier .... again

Some industry analysts are predicting an increase in demand for Customer Relationship Management systems over the next few years. A report by AMR Research concludes that new CRM's will need to be deployed in order to meet the growing expectations of consumers and corporate buyers. These expectations a basically centered on an improved shopping and buying experience, including product research, buying history, and things as mundane as easy-to-use shopping carts. Also fueling this resurgence is the fact supply-chain management and other back-office logistical improvements have already wrung the most dramatic cost savings out of the system. While there are efficiencies yet to be gained, they will become more and more difficult to achieve. That leaves the customer experience as the next competitive differentiator.

If this sounds familiar, it's because we were at this same place not too long ago. Products and, to a lesser extent, services are becoming commoditized (a new word!) with astounding speed. Personalized service using people is terribly expensive to deliver. The solution we have at our disposal today is to apply technology to make our companies easy to do business with.

For a consumer-oriented product, this means managing preferences and maintaining privacy. For business-to-business, the issues are very different. The corporate buyer wants to ship to multiple locations, include accounting information, set up frequently purchased items and track ordering and pricing trends. These are pretty easy for the common CRM systems. And therein lies the potential for the industry.

An important obstacle is, of course, finding the budget in these uncertain times. It will be hard to justify the investment based on an increase in sales, but the risk of customer attrition is very real (if difficult to quantify). Plus, we all know that CRM implementations don't always succeed. But notice that I'm really not referring to sales person use of the system. Rather, the next benefit that CRMs can deliver will be their incorporation into customer-facing applications, with direct order entry and management. Using the CRM to handle this gives the salesman a consolidated view of what the customer is really doing, instead of just a place to tell his boss what he's been doing all month.

Here is a link to the CIO Magazine article: The Future State of the CRM Market

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