It costs less to maintain a current customer than to attract a new one. According to Jeff Golterman, Vice President, Group Director for Gartner Group in Stamford, CT, this is why many firms are turning to the business strategy of Customer Relationship Management (CRM).
Supporting a technology that is championed by another department can be a challenge for the CIO who is used to leading enterprise technology integration, said Golterman. But there are several reasons for the savvy CIO to help promote CRM within the boardroom as well as the company.
Lead, follow, or get out of the way
“CRM clearly places the customer at the heart of an enterprise strategy,” said Golterman, Global CRM Practice Leader for Gartner Group. But according to Golterman, the CIO cannot lead this transition; instead, “the business side has to lead it.”
The CIO should be, and is, a partner in terms of providing the transforming technologies, but the senior VP of sales and marketing typically is where it starts, said Golterman.
Terry Vavra, President of Marketing Metrics located in Paramus, NJ, agreed. “Most often, the CFO or CEO initiates the cause for CRM,” Vavra said. “CIOs can often be a major roadblock to the implementation of CRM,” said Vavra, who is the author of Aftermarketing: How to keep Customers for life through relationship marketing .
Vavra suggested CIOs get on board with the cause by understanding what drives the CFO or CEO to champion CRMs.
“The CEO generally is looking to sustain and grow the business while the CFO is looking to lower costs,” said Vavra. CIOs can play to one of those positions to champion the CRM cause within an organization.
Why CIOs don’t understand
“CIOs that don’t get CRM are too narrowly or too historically defining their position,” said Vavra. Vavra suggested that CIOs need to broaden their role within the company to embrace CRM. CIOs can learn from other industries that have implemented CRM, but before they can sell the concept, they must first adopt the vision behind it.
Mark Peacock, principal with Deloitte Consulting , warns CIOs to have their data in good shape before taking on CRM. He also suggests that CIOs “lead from behind” when pushing the vision of CRM.
“CRM involves the integration of each of the customer channels. And each of those customer channels and the degree of importance varies by industry and by customer,” said Golterman.
According to Golterman, these channels include:
- Field service channels
- Bricks-and-mortar retail channel
- Channel partners such as retailers, resellers, distributors, and wholesalers
- Web channels
- Contact or call center
- Direct-to-consumer or customer marketing channels, such as advertising.
“The CIO, from a technology standpoint, needs to understand how he or she will integrate customer interaction data across those channels,” said Golterman. The CIO must also inventory existing technology and/or invest in technology that enables each of those channels to interact effectively with the customer.
“The CIO should think of him/herself as someone who will be there, ready with the tools and with the ability to pull together elements of a total cost of ownership model,” said Golterman. “Eighty percent of our clients and inquiries do not have the infrastructure in place today in order to turn on CRM,” he said.
Golterman said CIOs should focus on four key architectural elements:
- How IT supports analytics
- How IT supports mobile computing
- How IT supports traditional client server
- How IT will support the newest form of client server—the Web.
For example, Vavra points to the difference between database warehousing and database mining. Traditionally, the IT function has been to warehouse data. CRM brings to this function an opportunity to mine the data, which allows companies to better understand individual customer value and lifetime customer value. According to Vavra, the banking industry already uses CRM to identify customers rather than transactions.
“Companies may experience a compelling epiphany when they see clients very important to the corporation but not at the top of any division list,” said Vavra.
For example, in large companies with multiple products, any one customer may not be high on the sales ranking list for any one product. When product or division databases are combined for the corporation, however, a low-ranking division customer may be viewed as a high-ranking corporate customer. CRM systems drive this sort of information flow and show the importance of the corporate customer versus individual product or division customers.
Vavra suggests that CIOs have a significant opportunity for professional growth by selling the vision of CRM.
“The CIO is in a critical role for CRM. He or she is the gatekeeper or facilitator of information databases about customers,” said Vavra. The CIO can demonstrate how the information in the customer database can change the company’s perspective of the customer.
Cathleen M. McCarty is founder and president of Demand Strategies Inc., a business and marketing consulting firm. You may contact Cathleen at CIO@techrepublic.com.