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Intelligence – Only Asset To Maintain Value

By Retha Keyser

In today’s tough economic times, organisational differentiation is very difficult. As in declining markets information does not lose value, companies should delve deeper into their information assets to increase profit.

Intelligence is the only asset that maintains its value, regardless of the current economic situation. Differentiation based on intelligence is extremely difficult for a competitor to replicate.

As business has changed, with traditional growth opportunities becoming more difficult, companies can no longer simply develop new products and expect to stay ahead of the pack. Markets today are extremely volatile, and many – like the Scandinavian telecommunications market – have reached saturation point.

Companies today have to become focused on customer relationship management (CRM). Their business cases and philosophies must be built around customers.

CRM projects, however, have a notoriously high failure rate. Cap Gemini says 70% of CRM initiatives fail, while the Boston Consulting Group puts the figure at 66%. Gartner states that 75% of CRM initiatives fail to substantially impact customer experiences, while Meta Group says that 90% of enterprises cannot show a positive return on CRM (see references *).

The key requirement for successful CRM implementations is an appropriate customer-focused strategy ,which must be aligned with the organisational, product and competitive strategies, as well as with market conditions.

Market conditions are vital, as these will determine whether the company chooses an acquisitions-based strategy, one to grow the customer base; or a cost containment strategy. Many companies worldwide are currently adopting the latter.

Once the strategy has been decided – and this may vary for different customer segments – the organisation must choose the appropriate leadership style, organisational culture, HR strategy, IT solutions and performance metrics.

To be successful, CRM projects must be practical and evolutionary, implemented sequentially in a series of manageable steps.

While focus should be on the entire process, clear objective and goals should be put in place so that targets can be met. If the biggest pot of gold is on top of Mount Everest, that is not the one to aim for first off.

It is also vital to understand customer value and economics.

Even if companies have unsophisticated measures of customer value, this at least represents a beginning. Companies need to understand customer economics by working out what customers are costing them. Activity-based costing has become simpler and easier, making it essential for ascertaining customer value.

CRM is about getting customer loyalty by satisfying expectations and needs, but not to the detriment of profit.

The technology chosen to support any CRM strategy is vital, with companies needing both operational and analytical CRM systems.

The former is the interactive layer, such as the call centre or web site, through which companies interact with customers. On their own, they do not provide competitive advantage, but without them, companies are at a disadvantage.

Companies also need customer-centric analytical systems that allow them to profile, segment, and understand customers, as well as measure the success of CRM campaigns.

The two types of system must work closely together, so need to be open and inter-operable.

Companies should choose vendors that are accessible, provide a full service and are reliable. Local as well as global presence is a big advantage.

Retha Keyser is CRM business specialist at SAS Institute, a market leader in providing business intelligence software and services for enterprise intelligence. They can be contacted at (011) 713-3400, or visit their web site at http://www.sas.com/sa

*References:

Cap Gemini – Gartner G2 “Use the Balanced Scorecard to Execute CRM Strategy,” July 2002

Boston Consulting Group – “The Antidote to mismanaged CRM Initiatives”, Bettermanagement.com, 2002

Gartner – “Want to maximise your CRM performance? Measure it!,” James Brewton, CRMetrix.com, 2002

Meta Group – “Human Capital – empowering employees for CRM,” Jackie Roberts, 2002

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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