In the future customers, not companies, will manage
the relationship
Customer relationship management, known as CRM systems have been
at the heart of sales and customer service for two decades but are struggling
to fulfil the needs of organisations in today's new customer-centric
world.
That’s the view of Catriona Wallace, chief executive of Fifth
Quadrant, an Australian strategy and research company, who is about
to launch her own start-up in an attempt to upend such business
practices.
Dr Wallace believes traditional customer relationship management
systems are ill-suited to handling the new breed of tech-savvy customers who
use digital technology to interact with organisations and causing a radical
shift in the balance of power between customer and supplier - including
business-to-business and government-to-citizen relationships.
“We would argue that CRM has been only moderately successful
with regard to the customer experience, although it has been able to drive
efficiencies and cost savings internally,” she said. “Now, with the rise of
customer experience and with organisations trying to be customer-centric that
traditional CRM system is going to be of limited use.”
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She sees CRM being turned on its head by a new category of
business software: the vendor relationship management system (VRM). Here
customers control their presence in the system - their personal details, the
needs they want fulfilled - and invite suppliers to propose offers that meet
those needs.
Dr Wallace's start-up, Flamingo Ventures, is about to launch such
a product, a ''co-creation platform'' which , she says, ''allows
customers and organisations together to create the experience the customer
wants,” and will integrate with existing systems rather than supersede
them.
Two recent surveys of top ranking executives - from IBM and from Forrester Research
- identified a shift of power to customers as an important topic for
organisations.
Chief executives responding to IBM’s global survey identified
customers as second only to top executives in terms of their influence on
company strategy. Forrester concluded from its survey of chief information
officers that giving customers what they want, where they want it and in the
way they want it would become a key focus for IT.
IBM ANZ’s interactive experience lead, Ian Wong, said CRM
systems did not now fully meet the needs of organisations striving to provide
good customer experience, because their view of the customer did not span both
digital and physical interactions.
“What organisations need is a single view of the customer, and
this is where CRM comes in, but not traditional CRM. It needs to provide a
master record for every customer and that master record needs to link up to
every interaction the organisation has with that customer. For example [US
department store] Nordstrom has tablets in the hands of all the salespeople to
get that information.”
Next-generation CRM, Mr Wong said, ensured that every
interaction with a customer, whether physical or digital, was coloured by that
single view of the customer, and would include both structured data from the
company’s own systems and unstructured data gathered from what the customer was
saying about the company on social media, or in the shop.
CIOs responding to IBM’s survey, Wong said, “believe that in the
next three to five years they will spend 15 per cent more of their time into
customer experience management. And customer experience management begins with
CRM.”
However, Dr Wallace said, CRM systems would not allow companies
to do the segmentation needed to create the optimal customer experience and,
more importantly, were designed to put the supplier in full control of the
relationship. VRM systems turn this around, giving control to the customer.
“CRM has been successful in taking organisations into models of
mass segmentation and mass customisation but CRM has not been successful in
moving to true personalisation of customised experiences, with a segment of
one,” she said.
“When you look at the billions of dollars that has been invested
into CRM in the last 10 to 20 years, the results delivered in terms of
having engaged satisfied customers who have a good experience have been very
low.”
“Within two years, three at the outside, I would expect there to
be significant numbers of VRM applications that consumers are using to put
pressure on their organisations. These will completely change the CRM world,”
Dr Wallace said.
She also expects established players to rapidly transform their
offerings to better serve new customer needs.
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