The Evolution Of Relationship Management
CRM must start with a business strategy, which drives changes in the organization and work processes, which are in turn enabled by Information Technology. The reverse does not work. Have you ever seen a company automate its way to a new business strategy?

The seeds of modern-day CRM were sown in the 1960s. Academic researchers found that the "4 Ps" marketing framework--product, price, place and promotion was less valuable for industrial or service-centric businesses where ongoing relationships were critical. By the 1980s, "Relationship Marketing" was used to describe this new focus on understanding customer segments, delivering ongoing quality service, and achieving high customer satisfaction.

Relationship marketing was about "putting the customer in the middle of the business circle," in the words of Dick Lee, principal of St. Paul-based Hi-Yield Marketing. "As part of that early relationship marketing movement, we had untold frustration because we didn't have the technology to support what we were doing," Lee says. "It really wasn't until mid-90s that we had the technology we needed."

In the 1990s, computer systems were deployed to support sales and service processes. Sales Force Automation systems quickly evolved from simple contact managers, while Customer Service and Support systems became the backbone of automated call centers.

By the mid-1990s, "CRM" became the umbrella term as it became clear that sales and service systems should share information. More recently, Enterprise Marketing Automation (EMA) applications joined the CRM fold, including systems for customer analysis and marketing campaign management.

By the late-1990s, the real action was outside the corporate firewall. Explosive growth in Internet usage spawned a proliferation of e-business applications to manage online customer and partner relationships, often called "e-CRM" and "Partner Relationship Management," respectively. Now, "multi-channel CRM" systems were available to, theoretically, support direct, Internet, and partner channels, while allowing users to use whatever mode of communication they pleased.

Left Hand, Meet Right Hand
Much of what satisfies customers, of course, is a company's ability to preserve the "single face" of a customer. Some companies are semantically confused and think the customer wants to see the company's "single face." Customers don't care about that. What they want is for the company to always see their--the customers'--full faces.

To see how it works, go to Amazon.com and click on "Your Account." The record of all your transactions, your credit cards, your shipping and billing addresses, the status of all your orders from last year to five minutes ago is there. It's like looking in a mirror. Talk to anybody from Amazon at any time, and they can swiftly deal with your concerns because they see your total dealings with their company. This is what is meant by "single face," and there's no better example of it than Amazon.com. You want every company you deal with to be able to do this.

Unfortunately, that's rarely the case. "With the Internet, companies in the present are still pretty bad about presenting a single face to the customer," says Jeet Singh, CEO of Cambridge-based ATG, Inc. "The Internet has blown the multiple touch point issue to the forefront, and in many firms, the left hand doesn't know what the right hand is doing." Customers might start researching product information on a Web site, then pick up the phone to get a crucial question answered, then do the actual buying with a local distributor or retail outlet. The challenge now is for companies to present that single face in all these real-world scenarios.

Why is this so difficult? The root of the problem is simply the fossilized ways that companies treat information--dump it in a "silo" (otherwise known as a department, division, or business unit) and then defend it from the rest of the organization. If you figure out how to redesign workflow to make
for happier customers, you're taking a jackhammer to functional silos, creating a lot of stress in an organization that will probably resist such changes. You also have to bend and reshape your internal technologies to support customer-centric, rather than silo-centric, business processes.

"This situation is driving interest to new CRM approaches with environments that can offer greater central control or management," says Karen Smith, senior analyst with Boston-based Aberdeen Group. "Organizations are demanding CRM solutions that provide greater visibility into asset management, forecasting and inventory management, product development, procurement, and order and transaction management."

It's clear that the Web is making the inefficiencies and inconsistencies of big companies transparent to customers and partners. To win the battle for customer loyalty in the future, companies must shift from stand-alone business technology approaches to systems that support the total customer experience and work across multiple enterprises.

The Next Evolutionary Step
If your relationships with customers are getting more important, so are your relationships with your partners. "The common assumption is that the Internet helps companies find partners. Our experience is that it helps less with finding new partners than allowing companies with complex supply chains to maximize inter-enterprise relationships," says Michael Levin, founder and CEO of e-Steel. "This is not like a cruise line for singles to meet, it's a cruise line for couples to have a great time."

And, of course, it's the Internet that makes it all possible. "Part of the evolution of CRM from a focus on internal efficiency to more effective external relationships is the ability to move information around about a customer which has become viable recently," says Scott Sims, partner with Chicago-based Andersen Business Consulting. "The Internet also has the ability to make alliances stronger. If you build a site that shows how your partnership benefits the consumer, you also can benefit greatly."

"Everything needs to tie into your overall CRM strategy," says Scott Creighton, general manager of Siebel Systems' eChannel Applications Dallas office. "However, you've got companies with homegrown silo systems, their own internal tools for managing marketing incentive funds, and partners have to use a call center which then places the order. What companies are trying to do now, under increased pressure to perform, is to consolidate all these tools into an Internet-based system so that channel managers and their partners have the tools to drive revenue."

Bear in mind that while customers expect to have their needs met, the character of the relationship isn't top
of mind for a customer in the same way it must be for a vendor--at least until the relationship turns sour. It's incumbent upon the vendor, not the customer, to do whatever it takes to keep the relationship in good working order.

Earlier ideas about customer satisfaction dealt with keeping the customer happy after a purchase transaction took place. In this Customer Economy, however, waiting for the PO to provide good
service may be waiting too long.

And let's not forget, good collaboration starts close to home, in your company. "In the early days, says Keith Raffel, chairman and founder of Mountain View-based UpShot Corporation, you'd ask a sales rep if he did collaborative sales, and he'd say he didn't. Then you'd walk him through all the steps internally that his sale has to hit, and he'd realize it's a very collaborative process." Collaboration is just as essential inside the enterprise as it is for channel partners, system integrators, agents and so on.

Partner Relationship Management has made great strides helping companies get used to the idea that their partners and channels are as crucial to their success as their customers or internal operations. Now, with business hurtling towards a collaborative future, managing integrated relationship networks will be essential. These C-Webs must provide the structural frameworks to keep a single face not only for all your customers, but business partners as well.

Instead of just automating individual channels, a collaborative e-business environment has to support complex many-to-many relationships, whether they're partner-to-partner, partner-to-customer, or whatever. If you think this means your job just got tougher, you're right. But with that challenge comes a new opportunity to gain, or lose competitive advantage.