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CRM Software: Good, but Not Enough

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Posted October 15, 2013 By Paul Rubens     Feedback

Thanks to market maturity, most CRM software is pretty darned good, according to Ovum. But CRM software alone isn't enough to offer a good customer experience.

Here's a frightening fact:  More than 400 of the companies that were in the Fortune 500 in 1955 are no longer around today. To put it another way, only 65 of that elite 500 were able to adapt quickly enough to the changes that occurred over the last half century to stay relevant to their customers.

Customer relationship management (CRM) software is one tool that enterprises of all sizes use to help themselves stay relevant. But how well has CRM kept pace with changes in marketing and customer service?

CRM vendors have traditionally concentrated on automating sales force, marketing and service functions. The core technology is not new, and many organizations are on the third or fourth implementations.

CRM Leaders, Challengers

"The CRM software market is pretty mature, so almost all the products are very good," says Jeremy Cox, principal analyst at research house Ovum.  That said, there are differences between different vendors' CRM products. Ovum's recent research into CRM, which looked at functionality, customer satisfaction research and market data, identified four market leaders:

It also identified several up-and-coming challengers:

CRM Software Not Enough

But here's the problem: There's a limit to what CRM software can do for your organization.

Solutions such as these offer you "tactical" benefits, as Cox puts it, when it comes to dealing with sales, marketing and customer service. But to stay relevant to customers  -- and to avoid the fate of the 435 now-defunct companies in the 1955 Fortune 500 -- enterprises have to go further. The key to success, Cox believes, is to become a customer adaptive enterprise (CAE).

"A CAE is an organization that delivers value to customers by adapting its behavior year in, year out so that it remains relevant," Cox explains. What that comes down to is delivering an excellent customer experience.

To do that, you need to understand your customers however they touch your organization -- through the Web, by phone, in person or by any other means. "You also need to recognize their context -- the journey that they made to get to you -- and then surface all the relevant information you have about them," Cox says.

That's made difficult because most companies are organized into silos -- e-commerce, mobile, physical retail and so on, Cox says.  "An awful lot needs to be tied together, and at the moment no CRM solution provides everything you need," he adds.

Integrated Information

That doesn't mean that CRM software is irrelevant, though. Far from it: there is still a vital need for a centralized repository of customer information.

"Companies don't just need CRM software for tactical purposes. It can be a central hub around which other functionality needs to be integrated," says Cox. "If you just have a tactical requirement for CRM software, then by all means do the feature and price comparisons, but the software itself is less of a differentiator if you are trying to become a CAE. The importance of CRM as a standalone product is diminishing, and you need to look at the ecosystem of apps that are available beyond the core CRM offering."

In other words, since there is no single amorphous enterprise-wide solution that does it all, when you look at a CRM offering you need to look at how well it can integrate with HR, ERP, salesforce automation, financial and other back-end software solutions. That would certainly appear to give companies like Oracle, which has a broad portfolio of well-engineered enterprise software products, an advantage.

8 Key CRM Attributes

But buying a suite of enterprise software from Oracle (or any vendor, for that matter) is not enough for companies striving to become CAEs, according to Cox. Ovum has identified eight core attributes that it believes organizations also must have if they want to stay relevant beyond the average lifespan. The attributes:

  • Leadership
  • Workforce engagement
  • Collaboration
  • Sensing capabilities
  • Customer experience
  • Innovation
  • Process integration
  • Enterprise architecture

Perhaps the most important attribute needed is good leadership -- a corporate leader with the vision and belief to drive the company forward, according to Cox. Without that, all management can hope to do is tinker at the margins of a company's activities.

It's also vital that staff feel engaged to provide a relevant customer experience, Cox says. Ovum research shows that up to 40 percent of the workforce does not feel engaged, yet the link between workforce engagement and the customer experience has been known for decades.

These and the other attributes mentioned above are mainly management issues rather than things that can be solved by implementing an enterprise software system and getting the right people to use it. But Cox believes these people and process factors are essential for companies wanting to move toward being a CAE.

That should include every company, he concludes. "You have to have the ability to respond, innovate and deliver good customer service; otherwise you will find yourself out of business. To remain relevant and create value you need good CRM software, but you also need a hell of a lot more than that."

Paul Rubens has been covering enterprise technology for over 20 years. In that time he has written for leading UK and international publications including The Economist, The Times, Financial Times, the BBC, Computing and ServerWatch.

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