CRM redrawn



Travel agent Thomas Cook has achieved what marketing gurus might trumpet as multi-channel customer relationship nirvana. In the UK, it offers services or takes bookings through more than eight channels: face-to-face, phone and fax interaction at its high street shops; over the phone through its call centre; at its web site; by WAP-enabled mobile phones; through customer information emails; and via Thomas Cook TV, the company's interactive TV channel.

According to Andrew Windsor, managing director of, if customers are to consider using Thomas Cook ahead of its competitors across any of these channels, it needs to be able to provide " a complete and personal one-stop travel service" across all of them. While many customers refer to the company's online or interactive channels during the holiday planning process, almost all prefer to speak to someone before handing over the money to book the holiday.


Eight pointers to CRM success

According to Erin Kinikin, vice president of enterprise applications research at Giga Information Group, good customer relationship management doesn't just ‘happen'. In April 2002, Kinikin and some fellow analysts came up with a CRM Effectiveness Model, offering the following suggestions on best practice in CRM:

  • Start with a clear strategy and well-defined customer processes: Vague goals such as ‘developing a single view of the customer' or ‘increasing customer profitability' will prove difficult to achieve. Which customer in particular? By how much?
  • Align the organisation: Companies cannot hope to present one ‘face' to the customer if their operational structure is not in alignment. Building consensus for common goals and project priorities will also increase corporate buy-in for CRM.
  • Understand the customer: Most organisations still manage customers in three or four simple segments. Those that are generating the best returns understand individual customer interactions and can relate this data to their household/business relationships.
  • Target the right customer with the right offer at the right time: Better customer segmentation and analysis allows organisations to up-sell and cross-sell their products to customers. US bank Wells Fargo, for example, now offers ‘life-stage-specific' banking services depending on individual situations.
  • Deliver customer value: Better customer understanding is wasted if an organisation cannot deliver the right product, service or information to the customer on time. This is an integration issue – for example, if the call centre has access to inventory information, it can better advise a customer when their product is likely to arrive.
  • Respond to threats and opportunities: Customer information is only valuable if its actually put to good use. For example, creating alerts to recognise when a customer has lapsed for a given time. Luring such customers back with a special offer is a good way of averting lost custom.
  • Measure and optimise results: Every organisation will have a different way of measuring the success of their customer initiatives. This means not just defining high-level goals such as improvement in customer satisfaction, but measuring how day-to-day interactions impact these goals.
  • Find the right technology fit: Some of the most successful customer-facing projects have been carried out by organisations with limited technology but very finely tuned business processes. People and processes drive CRM success – enabling technology is a secondary consideration.



Thomas Cook's multi-channel approach to customer relationship management (CRM) is something of an exception. For most organisations, the goal of establishing a ‘360-degree' view of the customer has proved elusive. In fact, according to figures from analyst company Forrester Research, only 6% of companies interact with their customers across four or more channels at present, although 29% hope to do so by 2003. Further research from Forrester indicates that for the majority of Fortune 1,000 executives, gaining a single view of the customer is still the main reason they implemented a CRM system.

But lately, as IT budgets have tightened, organisations have been forced to reassess whether the millions of pounds they have spent on customer-facing systems has been well invested. More and more, customer managers and IT departments are asking themselves whether the expense is, in fact, cost-justifiable or even practical – especially given the formidable task of integrating channels to provide the much sought-after 360 degree view of the customer.

What has changed is their means of achieving that goal. For example, since investment in multi-channel CRM burgeoned in the late 1990s, some channels have failed to gain momentum ( WAP and iTV) or have faded (fax). Others – such as dealing with free-form email or iTV – have simply proved far too expensive. The upshot is that many organisations have had to adopt a more realistic view of how they build multi-channel relationships.

"The real question now is not ‘Should we do CRM?' but ‘How can we do CRM right?'," explains Erin Kinikin, vice president of ebusiness applications and strategies at Giga Information Group. According to Kinikin, a third of the organisations she deals with are now standing back, focusing on CRM systems they have already bought, tuning them to establish a clear return on investment. Another third are continuing to roll out software modules they have already licensed as part of a wider contract, and only the final third are looking at new pilots. The overriding reason for project failure in the past, adds Kinikin, has been that too many organisations set themselves unrealistic goals and thus tried to achieve too many ‘touchpoints' at once.

Think big, start small
What the industry is experiencing is a shift in attitude towards building a multi-channel view of the customer – the focus now is to continue thinking big, but start small. "Businesses quickly realised that it would be impossible to get a 360-degree view of the customer all in one go – it's a massive integration undertaking – so now they're developing local platforms of CRM capability while keeping an eye on the ultimate goal of a unified system," explains Neil Malpas, a consultant at call centre implementation specialist Parity.

Furthermore, the success of CRM can depend on the size and longevity of the organisation. Although the software performs similar functions at each organisation, different organisations achieve very different results – those with complex interaction chains and longstanding, legacy systems can often obtain only a partial, snapshot view of the customer, thwarted by the immense challenge of integrating the data that flows from multiple customer touch points; others, such as online start-ups or spin offs, have more chance of putting in place an infrastructure that can support new and historical channels and obtain a near real-time view of all customers. "One hundred per cent certainty of having every bit of customer data to hand may be an achievable goal for a start-up, but it is more of an ambition for a company like ours – with legacy systems dotted all over the place," says Kevin Lloyd, chief technology officer of UK high street bank Barclays.

But even if organisations follow a piecemeal approach to deploying multi-channel CRM, integrating disparate systems and dispersed customer data to achieve this single view of the customer remains the chief pain point – regardless of the size of the organisation. Tom Siebel, CEO of CRM market leader Siebel, laboured this point to customers at the company's European user conference in April 2002. "The biggest projects being funded now are integration projects. It's the number one priority for Siebel's installed base, Oracle's installed base, PeopleSoft's installed base. Our main priority as CRM vendors is to lower the cost of integration for customers," he says.

One of the main reasons that integrating customer touchpoints has become such a burden, however, is that organisations have not aligned their customer processes in the first place. In order to do this, many businesses find they must change how they approach building multi-channel customer relationships on a cultural level – a process that has nothing to do with technology.

An influential factor in past project failures, according to a research paper from management consultancy Accenture, is that there has been no organisational structure to support a seamless customer experience. Accenture describes the disjointed but all-too familiar scenario of ‘Company X', where the operations division is responsible for deploying a multi-channel contact centre, the IT department is responsible for the implementation budget, product development designs the product, and sales and marketing sells it.

Tuning customer-facing processes will become more important as organisations look to add new channels and maintain that single view of the customer. More and more CRM vendors are now seeing the potential value of opening up CRM as a web service, where users access various business processes associated with dealing with the customer through the browser, while the underlying systems exchange customer data and transactions using open web services standards such as XML, SOAP, WSDL and UDDI.


Kevin Lloyd, Barclays: “Analysing customer transactions has generated quick returns.”


Siebel, for one, has introduced the Siebel Application Network, which allows organisations to access more than 200 set business processes in this way. Other vendors, including Kana Software and E.piphany, have also now standardised their architectures on open, web-based standards such as Microsoft's .NET and Java 2 Enterprise Edition (J2EE).

"The approach of companies such as Siebel has traditionally been ‘Put everything in our system and we'll solve all your problems'," explains Roger Siboni, CEO of E.piphany. "With that approach you only cover 40% of the customer experience. With our approach, you can have a common customer information backbone on top of which you drive a series of functions that are open and can interface with one another."

Mark Camilleri, international sales and marketing director at UK-based call centre software company Graham Technology, concurs. The company has developed a ‘toolkit' approach to CRM software, where the emphasis is on business process integration, rather than the tightly coded, application-by-application integration of systems that has impeded many companies from seeing any return on CRM investments. "This is truly multi-channel – you develop the processes and deploy them across any channel ," he says.

But investments in CRM will still go askew if they are focused on an organisation's own products and services rather than on customers. "One of the fallacies of early CRM was that businesses could use software to bring efficiency gains in the same way as they did with ERP [enterprise resource planning]," explains Kinikin at Giga, pointing to the hundreds of early contact centre implementations that focused solely on bringing down call centre costs and improving efficiency, often by driving customers to cheaper, Internet-based channels such as web self service. Jason Goodwin, a product manager at business intelligence software company SAS Institute, agrees: "Lots of companies have put in systems that allow them to contact customers more efficiently, but not more effectively."


Tom Siebel, Siebel: “The main priority is to lower the cost of integration for customers.”


This is where many organisations are seeing the benefits of using analytics software to determine which channels work best for which customers, and why. "Much of the focus is swinging away from automating customer transactions to ‘What is this information actually telling us?'," explains Tim Burfoot of UK-based CRM consultancy Detica.

Lloyd of Barclays, for one, says that analysing customer transactions has generated quick returns for his company. "Getting a behavioural and transactional understanding of customers means you can make meaningful propositions… If you know a customer is moving house, they'll be more prepared to take a phone call from a home insurance sales person."

Overwhelmingly, the attitude towards multi-channel customer relationships has become more realistic. Organisations realise that by having as much information available about customers as possible, they are more likely to fulfil their needs. But building the necessary systems is going to take more time and have more false starts than first envisaged.


In practice: Abbey National

UK financial services company Abbey National's marketing slogan ‘Because life's complicated enough' is all about making the customer experience as simple as possible.

On a practical level, this means having an integrated view of each customer, so that if they call into a branch and want to talk further about a matter they have discussed with a call centre agent, the bank clerk will be fully aware of the status of their enquiry. "We want customers to only have to tell us once and we remember what they've said," says Ambrose McGinn, ecommerce and strategic development director at Abbey National.

McGinn is now in the process of rolling out Siebel's eFinance customer relationship management application to 12,000 employees within the organisation, and plans to use the system to unite some 15 million customer records. The investment in Siebel was sizeable – running into millions of pounds – and one that McGinn spent 12 months making a business case for to Abbey National's board of directors.

McGinn plans to learn from the mistakes other organisations have made in CRM implementations – many of them Siebel-related. In terms of integrating customer channels, for example, McGinn plans to drive integration between branch and call centre systems in the first phase of the project, and then add the ‘e-channels' – email, Internet, and digital television – in the next phase.

Before Abbey National could even contemplate implementing the Siebel application, it had to ensure its underlying customer data was in a fit state. To do this the company deployed a data cleansing application called Discovery from UK-based Avellino, which ensured there was no omission, duplication or incorrect information in the customer data fields. "You can't possibly have a single view of the customer with poor quality data," argues Jean Knight, Abbey National's head of data quality.

Both McGinn and Knight are very clear about their goals for these projects. McGinn says the projected return on investment for implementing the Siebel system will run to a net present value of £100 million, while Knight says that using the Avellino product saves 90% of the time that manual data cleansing, maintenance and extraction would take. "We have to show month by month that this is bringing money to the bottom line. It must work, it's not optional," says McGinn.




In practice: Virgin Wines

Unlike a long-established organisation with multiple divisions and hordes of legacy systems, start-up online wine retailer Virgin Wines was at a considerable advantage when it chose to implement a customer relationship management (CRM) system.

Any new information about a customer could simply be routed into the appropriate field of Virgin Wines' Blue Martini CRM system. "We're lucky because we haven't had to spend time integrating subsidiary systems," explains Virgin Wines' CEO Rowan Gormley. "All that our employees need to know is the wine and the system."

Customers can interact with Virgin Wines across only two channels – telephone and web-based channels (email, online transactions, web self-service), but it is still crucial that each channel is operating from the same customer database if the company is not to lose out to competitors, says Gormley. He adds: a great proportion of visitors to Virgin's site are what he terms ‘inertia' customers, who are not really sure what they're looking for and need to be enticed by special offers.

Using the Blue Martini software, Virgin tracks customers' evolution through the service – from being casual browsers to loyal customers – and are alerted to appropriate offers that might be suitable at various points. In addition, the system calculates how receptive customers are likely to be to offers and how they can be tailored accordingly.

The greatest challenge in deploying the Blue Martini system, says Gormley, has been constructing the logic behind it. One of the key elements of the site is a self-service application known as ‘Wine Wizard', which asks customers a series of questions about their tastes so it knows which wines to recommend. Establishing the logic behind this, as well as determining the inter-relationships between different segments of customers based on what they buy, and how that influences what they are likely to buy in the future, is a complex and ongoing process.

Gormley says there are no plans at this point to introduce additional customer channels, preferring to focus on improving execution in the existing ones. "We want to focus on continually optimising every link in the chain," he concludes.



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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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