CRM: A Customer-Centric Business Strategy Customer Relationship Management (CRM) is a business strategy to select and manage customer relationships to optimize long-term value to an enterprise. CRM requires a customer-centric business philosophy and culture to support effective marketing, sales and service processes across all direct and indirect customer interaction channels. CRM software applications can enable effective Customer Relationship Management provided that an enterprise has the right strategy, leadership and culture.

Source: CRMGuru.com www.crmguru.com

Impact of the Internet on the Customer Chain

Let's get one thing straight: The Internet doesn't change everything. Yes, it provides the opportunity for profound changes in the way companies and people can work, collaborate and interact with each other. Yes, it's enabling business-to-business collaboration to work better than ever before. But it's not changing the way you brush your teeth in the morning, nor does it change the value of human relationships in our lives.

Ultimately, the Internet makes it so easy to find a specialist who's the best at delivering packages or doing payroll or cleaning offices, or that the costs of interacting and doing business with these specialists have decreased dramatically--for you, your customers and your competition. But this idea that the Internet has revolutionized business models is just plain wrong--many of these "new" Internet business models are failing.

The conventional wisdom a couple years ago was that the Internet and CRM solutions could enable companies to directly target, sell to, and service all of their customers, be they consumers or businesses. High-profile ventures like Amazon.com, Dell, and E*Trade helped to hype the Internet as the means to disintermediate, or cut out the middlemen. The theory was that these indirect sales channels weren't necessary anymore, because it is now faster and cheaper to deal directly with end customers.

Yet indirect channels remain of vital importance in reaching target markets, adding consulting and services, and providing total solutions. Think about it: The last time you bought a car, you could've bought one online. Did you?

"The whole idea that the Internet is going to disintermediate channels doesn't make a lot of sense," says Chris Selland, vice president of marketing at Boston-based eSupport Now. Take car dealerships: It's possible to buy a car online, but people like to touch and test drive. Just because the Web lets you buy online doesn't mean that it's the best way to do it. Besides, it's hard to get your car serviced over the Web.

An "eCash Register" is Not Enough
The Internet occupies an interesting place in the customer value chain. Whereas in the early days of e-commerce it was expected to rapidly become the preferred method of purchase, it hasn't quite worked out that way. More and more it's used as a means for customers to gather information before purchasing. Customers can find a wider array of products online, more and more sites are letting customers custom-design products, and the costs of servicing customers online are far less than with human representatives.

While such experiences do increase value for customers, they don't point to the Internet as a cash cow. According to a report released earlier this year by Jupiter Research's Media Metrix, only nine percent of customers, use the Internet "mostly for purchases." Other studies have found that while the Internet is a fast-growing new channel, this growth has not come at the expense of indirect channels, which continue to be used extensively. Bottom line: the Internet is not eliminating intermediaries.

That said, intermediaries must adapt to a new reality where merely moving products and information is not enough to make a profit and survive over the long-term. The key is delivering value, perceived from the customers' point of view. The Internet is changing the definition of what customers expect and will pay for.

Confusion is rampant on this point. Are providers failing to capture the value from their investments in Web technology just because people aren't buying from Web sites? After all, companies are spending time and money to maintain their Web presence. Maybe the rich content the Web presence offers is all that's required of a Web site à maybe that's all people want to use it for.

The awkward human fact is that people rather like switching off their computers and tooling around town once in a while. Driving to the grocery store gives them something to do. There's no percentage, as Jazz Age colorist Damon Runyon would say, in trying to force the Internet to be something that it's not.

Logic In The Paradox
If the Internet is viewed primarily as a sales or purchasing channel, then you can call it a disappointment. Viewed as a channel for sharing information and servicing customers, which seems to be the real-world view, it's succeeding wonderfully.

The real payoff of the Internet is in its enabling of business collaboration--the sort of three-way "information partnerships" among manufacturers, business partners and customers. Michael Dell, in his book Direct from Dell said, "The Internet as a sales channel represents only a fraction of the Internet's value to business. The real potential lies in its ability to transform relationships within the traditional supplier-vendor-customer chain."

Even business partnerships, once thought doomed in the New Economy, are thriving online. Look at Dell, probably the world's largest consumer of disk drives. You'd think they'd be out on the spot market every day, checking for that day's cheapest supplier in the extremely price-sensitive disk drive market to save a few dollars here and there. Wrong. Basically, Dell has locked in one supplier of disk drives with a long-term contract, and has another as a backup.

There's logic in what some might consider a paradox. The Internet can lead to deeper partnerships because companies won't feel at risk in throwing all their business to one supplier. Now you can check easily if you're getting a good deal, and make a change if you think you can do better. Power in the relationship has shifted from seller to buyer, leading to stronger relationships all around.

Today, says Ross Brown, president of Seattle-based market planning firm Sound Consulting, the vast majority of consumers worth chasing are online, and are comfortable communicating online: "For the first time, customers' information can be centrally located and updated." Call centers were the genesis of CRM, and now we're tying in dealer networks as well, so this is the first time large-scale manufacturers are back in the position of a 14th century craftsman, who heard directly from his customers.

The Internet will bring massive changes to the business partner relationship as well as to customer interactions--at this point we're just scratching the surface. What's new is that the Internet allows businesses to look for efficiencies outside their walls, to try to streamline interactions with business partners and suppliers so completely that all the different companies operate as one. But we still have companies, relationships, competition for business, and we still use channels. The bar, though, has been raised.