IN THE RACE for new customers, companies are often forced to take a deeper look into the heads and hearts not only of their current customers, but also of potential clients.
Traditionally, only small firms of up to 10 employees had a chance to personally get to know their customers, the products they buy, their preferences and problems.
But now, large companies can also benefit from taking a personal approach by using software that serves as an "external memory" of their customers.
The technology is known as Customer Relationship Management (CRM) software. Although only a small percentage of companies in Slovakia currently use CRM, IT firms believe its popularity will grow.
"Today, the successful company is not one that merely wants to sell, it's one that knows what its customers want to buy. The goal of CRM is to find out the needs and behaviour of customers, and based on this information to strengthen relations with them," Lucia Simonová, a marketing assistant with LLP Group, told The Slovak Spectator.
"CRM is closely connected with human resources because it also requires employees to have knowledge and skills as well as greater discipline in following company procedures."
Ľuboš Gajdoš, CRM & Self Care practice manager at LogicaCMG, said the general purpose of CRM is to "enable organizations to better manage their customers through introducing processes, procedures and supportive tools - IT systems - for interacting with those customers."
He emphasized that the main misunderstanding about CRM was that it is only software. On the contrary, he said, CRM is an entire business approach, meaning that a successful CRM strategy demands more than simply installing and integrating a software package designed to support CRM processes. "This is also the main reason why a lot of CRM implementations have failed," Gajdoš said.
Ivan Schun, a CRM consultant with SAP Slovensko, said that if a company wants to reap the benefits of CRM, it must adopt a customer-oriented philosophy and make its customers the focus of its attention.
In environments that take a customer-focused approach, CRM software solutions offer great added value. They give staff more transparent and standardised processes, better information for creating analyses, and better grounds for making strategic decisions.
Schun of SAP Slovensko added that CRM solutions are used in all processes where the customer plays the main role. "It's not just sales support and the customer acquisition phase - the emphasis is also on serving existing customers," he said.
CRM architecture
According to LogicaCMG, the application architecture of CRM has three parts: operational - the automation of basic business processes (marketing, sales, service); analytical - analyzing customer behaviour; and collaborative - ensuring contact with customers (phone, e-mail, fax, web, SMS, post, the personal touch). Collaborative CRM is often considered part of operational CRM.
In terms of investments, 70 to 80 percent of CRM costs go towards operational CRM, while 20 to 30 percent are spent on analytical CRM.
In terms of the value created, however, analytical CRM provides about 80 percent while operational CRM accounts for 20 percent.
"Your first reaction might be - let's just implement analytical CRM! Unfortunately, you can't have analytical CRM without operational CRM. In addition, operational CRM has to be implemented first," said Gajdoš of LogicaCMG.
What CRM suits you best
The final CRM solution a company chooses depends on its communications channels with its customers, and to a lesser extent on what sector and field the company is in.
CRM systems have the character of modules. It is up to each company to decide which modules it wants implemented.
"Some firms are perfectly satisfied with a customer database, and a contact centre for receiving calls and registering customer needs," said Simonová of LLP Group.
On the other hand, maintenance companies, whose contact centres play an advisory role, need a planning module that gives out information about the availability of maintenance workers and equipment.
Telemarketing agencies, in turn, need a call centre that is able to handle thousands of calls a day. In this case, the more communications channels a company has, the more complex a solution it needs.
There are also highly specialised CRM solutions for specific industries, such as the pharmaceutical sector.
Benefits and security
Using CRM solutions, a company can target specific groups of customers. CRM tools also support the creation of long-term relationships with customers, cut down on redundant activities, and enable the selection of an effective strategy when addressing a customer.
Ideally, the customer will feel the almost personal approach and the one-to-one marketing. Thanks to this he might be more willing to test new products and services. If a system is correctly set, it can help identify new sales opportunities and the best customers.
Information on customers is both highly sensitive and highly valuable. Access to such information is controlled through authorised codes, with access rights to customer data often depending on the position of an employee in the organization, Schun of SAP said.
Opportunities for CRM market
According to LLP Group, only 10 percent of Slovak companies, mainly large firms, use CRM software. It's not that small firms don't need it - it's more that CRM is relatively expensive.
"However, the latest market research suggests that small and medium firms are now prepared to invest more in IT than in the past. The two areas they are most interested in are IT security and customer support services," Simonová of LLP Group said.
SAP believes that CRM solutions will penetrate not only the commercial but also the state sector. "There's not a typical customer/supplier relationship [with state administration], but there's vast potential for making processes more effective," Schun of SAP added.
Gajdoš of LogicaCMG predicted two main directions in CRM development.
First, he said, greater emphasis will fall on analytical CRM, where the main tool will be micro-segmentation of customers enabling one-to-one dialogue. "This aspect of CRM today is often called Customer Experience Management - CEM."
The second trend will be for CRM systems to function as self-help systems. In this scenario, customers would have access to some processes through call centres or Internet portals, and would have a chance to control their relationships with suppliers.
Electronic Bill Presentation and Payment (EBPP) is a typical example of such a service, in which customers have access to invoices and data about their consumption, and are able to check on the status of their accounts with their suppliers.
