The workings of CRM

Moving ahead on his series on CRM, Khalid Sheikh has more on how customer relationship management can help enterprises

Traditionally, any customer who had a problem would talk to specialists in service departments that were responsible for providing support for a particular range of products. These specialists worked exclusively with complex technical installations and demanding software programs.

Today, every service agent has to be a specialist for all questions. Hence today’s CRM solutions include an enterprise intelligence component that enables agents—and also customers via the Internet—to have authorised access to precise, consistent, and tried and tested solutions for all complex problems. The enterprise intelligence component not only manages knowledge, but also increases it with well-directed collection and classification of relevant information. As an example, we look at the enterprise intelligence component of mySAP CRM, which includes the following tools:

* Solution Database

This acts as a long-term memory in the service area—all known problem descriptions are stored in it. They are entered as user-defined text with attributes (such as description of type) and/or with defined codes that describe a problem or any defects that have arisen. One or more solutions are assigned to each problem description. Each solution may include user-defined text, codes, detail displays, video clips, or websites.

* Interactive Intelligent Agent (IIA)

This is an interactive search engine that optimises the search by minimising redundant or repeated search operations. In addition, it keeps track of problem descriptions (symptoms) and the solutions found for them that have been rated as helpful by the user. This learning process (called adaptive learning) results in:

* Continuous optimisation of the solution database through incorporation of statistical reports, such as a report that tells the users which of the solutions to a problem have most frequently been deemed useful by the previous users.

* Capability to make concrete solution recommendations for a whole range of problem descriptions.

Any combination of user-defined text, attributes, or problem-specific codes can be entered as problem descriptions in the IIA entry field for the solution search. In case IIA is unable to find a solution for the problem description, it suggests terms or codes that are suitable for narrowing down the solution search. The solution that is finally found can be printed or sent by e-mail. To facilitate sending of the e-mail, the customer’s e-mail address, if available in the customer master data, is automatically displayed. To avoid similar or repeated search operations, IIA displays a list of solutions that were shown as search results in the recent past, or have been regarded as a frequently used solution to the problem description being entered. IIA can also search for the stem of a word, for a word contained in another word, or for words with phonetic agreement with the entered words.

* Components are used by the Interactive Intelligent Agent (IIA) to enhance quality and precision of solution searches. Following are the two components that are used by IIA:

Learning Engine: The learning engine analyses the accuracy of a search result and immediately improves the quality and precision of subsequent search operations by evaluating the relevance and significance of the solution to the problem. This information (for example, ‘better than previous solutions’) is then passed on from the learning engine to the optimisation engine (described next).

Optimisation Engine: The optimisation engine provides statistical data about user responses, reports that throw light on the search processes from different points of view, and automatically generated suggestions. This assists the specialists responsible for the content of the solution database to continuously improve the content of the solution database and the quality of searches.

Frequently Asked Questions (FAQs)

The list of FAQs are the concentrated version of all the enterprise intelligence stored in the solution database and represents an important source of information for customers and also for the employees of a company (Buck-Emden 2002).

Customer interaction cycle

CRM provides customer-oriented services for planning, developing, and maintaining customer relationships with special attention paid to the new possibilities offered by the Internet, mobile devices, and multi-channel interaction. CRM supports customer interaction through all phases of the customer interaction cycle—from the initial contact through contract conclusion, sales order processing, and back-end services. CRM is seamlessly integrated with the enterprise data warehouse.

One of the central tasks of CRM is to mange interactions with customers so as to optimise the value of the customer relationships. The essential aspects of managing customer interactions are:

* Efficient and automated management of all customer interactions.

* Continuous analysis of customer interactions to predict customer behaviour. The companies need to analyse the performance of their customer relationships by analysing customer behaviour as represented by their interactions with the company through multiple channels and touch-points. The more a company knows about its customers, the more easily it can provide the goods and services they are looking for. Successful companies anticipate customer needs and, ideally, shape those needs through promotions. The predictions derived through analysis about customer behaviour can be used to maximise the value of the relationship.

* Personalised communication strategies. Businesses must turn every transaction into a highly personalised, meaningful customer interaction and then forge these interactions into a firm relationship that induces customers to make more purchases. Personalisation entails knowing customers by name, knowing their normal buying routine, and also the ability to forecast their needs for variety.

The customer life cycle encompasses following four continuous phases in which businesses interact with customers across multiple channels and touch-points:

* Engage: Recognise potential customers and convert them into (first-time) buyers.

* Transact: Get the customers to make a purchase.

* Fulfil: Provide the product and/or service.

* Service: Provide care and service to the customer across all channels.

The diagram shows the component activities incorporated in these phases. CRM brings employees, business partners, business processes and technologies together in an optimal customer relationship management. The process of managing customer relationships involves activities that take place through all the four phases of customer interaction cycle. CRM enables businesses to respond quickly to customer needs and provides a consistent view of customer information at every point of contact. CRM allows businesses to build demand-driven supply chains in which sales and service personnel become more active in anticipating and meeting customer demands. CRM helps companies to achieve a more customer-centric organisation and build long-term customer satisfaction, leading to increased customer retention.

Most of the activities described in the diagram are self-explanatory. Two of them—lead and opportunity management—are briefly described next.

Lead Management

Lead Management in CRM supports tracking of market opportunities as requirements of existing and potential customers change over time. Lead management enables an enterprise to keep an eye on existing customers, to gain new customers, and to qualify their interest in a product or service. As soon as a customer comes into contact with the enterprise via a channel of communication (dealers, telephone, fax, or the Internet), they can be identified as a lead. Before a lead becomes an opportunity, that is, a concrete sales prospect, a qualifying process is carried out, during which the lead is assigned different statuses: lost, in-progress, or won. This classification can be made on the basis of indices, by direct questioning, or right at the time of creation of a lead. CRM can help provide sales representatives with a mechanism to prioritise and manage leads.

Opportunity Management

An opportunity is a qualified sales prospect, that is, it is a validated possibility for a company to sell products or services. Opportunities can come from leads or can be directly created by a sales employee, for example through a conversation at a trade fair, an advertising action, or a bid invitation.

CRM provides capabilities to fully document opportunities. The following details can be included:

• A description of the interested buyer.
• A description of the required product or service.
• Prospective customer’s budget.
• Expected sales volume.
• An estimate of the probability of getting the order.

Over the course of the sales cycle, the above information can be modified, confirmed, completed and finally passed on to Business Intelligence (BI) for evaluation.

Analytical CRM functions

The following are the functions of analytical CRM:

* Create a comprehensive customer knowledge base while ensuring privacy: Capturing all relevant customer information from different sources, channels, and touch-points before, during, and after the sale and then integrating it into a customer knowledge base that provides a 360 degrees view of the customer. This knowledge base must, however, be guarded with utmost care so that the customers’ right to privacy is never compromised in any way.

* Measure and predict customer behaviour by analysing customer knowledge: Applying a comprehensive set of analytical methods to measure and optimise customer relationships and answering all relevant business questions. The customer intelligence that results from this analysis includes:

* Customer behaviour: This is expressed through customer preferences, priorities, and activities.

* Customer Value: This is expressed in terms of customer profitability, customer lifetime value, and potential.

* Customer Portfolio: This requires developing a clear understanding of the composition of customer portfolio and how it can be optimised.

Deploy the results of the analysis to improve customer value: The insights gained through the above analyses helps a company gear its CRM processes towards customer-centricity, and improve its customer interactions. Following are the possible outcomes of deployment of the analytical insights:

* Acquiring new profitable customers by cloning your best customers.

* Improving relationships with existing customers by addressing their individual needs more effectively and more efficiently. This accomplished through automating and personalising interactions with them on the basis of the sound customer knowledge acquired through CRM analytics.

* Optimising cross-selling and up-selling opportunities.

* Improving customer loyalty and reducing a customer’s propensity to churn.

* Targeting high-value customers. CRM analytics provides a company with the knowledge of the customer lifetime value that enables a company to focus its limited resources in marketing, sales, and service at high-value customers.

* Integrate customer value into strategic enterprise management to improve shareholder value. An improved understanding of customers and customer segments facilitates integration of marketing, sales, and service strategies into the enterprise strategy.

Customer Interaction Cycle supported by CRM

The author is associate professor of Supply Chain Management at S P Jain Institute of Management & Research, Mumbai.

He can be contacted at khalid_sheikh@hotmail.com