Is CRM dead? That was the first question on our minds when we contacted the participants in this year’s DIRECT roundtable. For months, we had been hearing stories about multimillion-dollar boondoggles and the corrosive effect of the economy on CRM initiatives. Well, we were in for a surprise. The three front-end marketers on our panel — Karen Gopalan from JP Morgan Chase, David Welch from HP and Maria Goldblatt from Mercedes-Benz USA — all reported on innovative programs at their firms. A broader but just as sunny perspective was provided by Claudio Marcus of Gartner and Pamela M. Larrick of MRM Partners Worldwide. All agreed that there have been failures, and that many companies invested in technology they couldn’t handle.
But they noted that some firms are making new investments to get those older expenditures to pay out. The rest of this roundtable, including segments on marketing strategy and customer expectations, will be featured in a special Webcast April 8 on our Web site (www.directmag.com).
DIRECT
Tell us a little bit about the current state of CRM technology investment.
WELCH
Our own philosophy at HP is that we’re pretty much tooled up. In fact, the idea when we started some of our most successful programs was not even to focus on technology but on the business process. You can actually run a lot of CRM just from an Excel spreadsheet. We found through experience that the state of CRM technology usually greatly exceeds people’s current conceptual ability. Some of the companies that we hold up as having a highly vaulted CRM practice are running on tools that you would look at and say, “Wow, that’s fairly antiquated.” People are probably better served to sit back and look at those drivers that are really key to making their business operate, and then look at technology.
GOLDBLATT
There’s a book by Geoffrey Moore called “Crossing the Chasm.” What it says is that in the early days of technology, the innovators will take it and run with it, and they don’t really care whether it works, except to propel their vision. And then they leave the company and everyone else has to pick up the pieces. As the life cycle continues, it moves to the early adopters, and then the late adopters. But between the innovators and the early adopters is the chasm. And a lot of times, all of this innovative stuff never makes it across the chasm. They try to put all this big-bang CRM technology in place, reorganize, recompensate, and maybe not even retrain people.
DIRECT
Has Mercedes-Benz made it across?
GOLDBLATT
With Mercedes-Benz, it goes back to the German heritage. We make sure that what we want to do, we’ve done our homework on, so we’re not going to just leap off into the chasm. With our cars, we’re always right there on the cutting edge. With technology that does other things, we want to make sure that we’re not going to be throwing good money after bad.
DIRECT
What about the rest of you guys?
GOPALAN
Not only are we investing in the technology, we are reorganizing around CRM-type initiatives. At Chase, retail banking is a very much a customer-centric business. We have about 500 stores, and we have certain systems within those stores that I think provide exceptional CRM-related experiences to our customers. But we’re also a very complex business. We have some of the largest credit card, mortgage and auto finance portfolios. And there we aren’t able to offer the same kind of treatment for our customers — to give them value based on the multiple relationships they have with us. The organization is starting to organize around customer needs and customer opportunity in each of these businesses. And on a parallel path with the older and more basic CRM technology, they’re investing in technology that will start bringing these pieces together.
MARCUS
I’ll chime in here on what we’re seeing on a broader scale. During the mid-to-late ’90s, we had the go-go times where people felt like they were in a race, where they had to make certain investments to stay in the pack. And, of course, many of those investments have not delivered the results expected because the thought was that the tools themselves were providing the solution. It’s become more than painfully obvious that these tools are enablers and not solutions in themselves. It does require a solid understanding of where you’re trying to get to — a solid vision. It requires an orchestrated strategy. Typically, senior management sponsorship of those strategies is critical. You have to be redesigning processes to be able to leverage the technologies. It requires a high degree of organizational collaboration. In all too many organizations, these things have failed because of people-related silos and it has nothing to do with the quality of the technology. Data quality has been a tremendous issue. I mean, these systems can do wonderful things, but not if you haven’t addressed issues around data. Setting proper metrics to understand where you are to begin with has been an issue. How do you know what you’ve accomplished if you haven’t even measured where you’ve been?
DIRECT
What are your clients looking for?
MARCUS
Gartner’s clients want to know: What can I do with what I have, how do I make better use of the investments I have made, or what kind of investments can I make now that magnify my return on my prior investments? We’re seeing investments in tools that enable integrated, multichannel marketing capabilities. We’re seeing investments in areas that reduce latency, and in use of models and real-time interaction capabilities so that we can respond or put an offer in front of a client in a more relevant time frame. Increasingly, we’re moving from basic measurement and reporting, which many enterprises have already deployed, to more predictive-type analytics. The key there is that those investments can act as a multiplier on prior investments if you already have the operational CRM infrastructure in place.
GOPALAN
One of the things that’s helped CRM get more supporters within organizations is this refocusing on data. It’s getting so much more difficult for companies to carve out and understand what customers are looking for and what they need. CRM brings so much self-reported information. If you can capture and analyze that and get the right kind of offer to the right kind of people, what that opens up to an organization is huge. I know that when Mercedes was first looking at CRM, what kept those programs going wasn’t that the marketing and the contact with customers was so different or that they loved that so much. What they loved was the data they were getting about their customers and their prospects.
GOLDBLATT
People are always data hungry — and I wonder, what did they really do with it? Because I can see a lot of it going in, and I don’t always see a lot going out. An ongoing challenge for us is the question of who owns the customer. Is it marketing? Is it product management? Is it our customer assistance center? Is it the dealer? Everyone does, I guess.
MARCUS
I would suggest that no one owns the customer. The customer is the only one who owns the customer. And that’s why it’s about maintaining relationships with a customer, not owning the customer. Once you get that mindset across an organization, you start to see that you really need these other parties to work with you in order to have stronger relationships.
GOLDBLATT
OK, I’m going to give you one. But do they really want to have a relationship with their toothpaste, soda or even their car? Or do they just want it to be there working for them when they need it?
MARCUS
A relationship begins when people start to interact with you. For example, people may aspire to have a Mercedes. I would suggest that that’s a good starting point for a relationship with someone who’s not a customer yet. And you begin to understand their needs and their preferences. Over time, if that relationship matures from both sides and the people are able to graduate to a Mercedes, then they do become customers. I like to emphasize to our clients that customer relationships are not that different from personal relationships.
LARRICK
We’ve seen clients invest millions of dollars in the technology, and now what they’re looking for is to really leverage it. We’ve got a terrible economy, so there’s much greater pressure on an improved P&L. The second thing is that the competitive frame has changed because the customer is much more in control. Because of the technology, I can go on your Web site and I can hear what you’re saying about Mercedes. But I can also click away if I don’t have access to relevant information, and go to the Lexus Web site. What companies are saying is, “We have to take advantage of this investment technology we’ve made. But we also need to see what the return on investment is. How is it helping us pay off?” And that return on investment is not only the quantifiable return, it’s also the qualitative. We’re seeing more requests for proposals for major enterprise initiatives.
WELCH
We’ve got an interesting philosophy, which is to separate the owners from those who are responsible. There are certain parties within the customer’s life cycle with the company who are responsible for the care and feeding of that customer. If you look at the different phases — decision and purchase, use and service and end of service — you can divide those into functional groups who own that responsibility. We’ve broken it down in a fairly detailed way on the engagement cycle and the post-purchase. We’re now just drilling down more deeply on the decision cycle or the pre-purchase cycle and understanding our customers much better. As leads are passed off to different sales organizations or to partners, they then take over ownership. And there’s a number of other internal constituencies like e-marketing and privacy that have a hand to play in this. It’s often difficult negotiating that, especially if yours is an organization that has been very decentralized.
MARCUS
David, you made some really excellent points. The companies that are succeeding have evolved from a tactical approach where it’s very program-centric or functionally focused to having a deeper understanding of the broader processes involved, of the handoffs required, and of the fact that you have to manage the broader relationship. And once you have those processes in place, you can start to remove some latency, reduce the time involved in those processes, and be able to handle greater complexity and flexibility, which enables better resource allocation.
WELCH
Yes. All the IT systems give you is reach, range and maneuverability. If you’ve got a broken process, you’re just going to spit customers out at an ever-increasing rate in the wrong directions or mishandle more of them inappropriately.
GOPALAN
What both of you are suggesting is that an organization would need to shift from a siloed ownership orientation to something that’s more related to data transparency. Who owns the data — the dealer, the manufacturer or the customer service center? If that’s going to be your mentality, then you’re never going to get to efficiency, because as soon as customers go from one area to another it’s a whole different experience. But when you can have data transparency, where everyone is opening up their books to the data, then the product people can’t hide and be maneuvering the data to support their needs vs. what the branches need for the customers. I’m starting to see that within my own organization, and not just around data.
LARRICK
I applaud Chase for doing this, and increasingly we’re starting to see this move into the fast-moving consumer goods. Now that’s going to be a shift. There’s an opportunity for the Nestlés to start really leveraging the Nestlé knowledge across all brands and portfolios.
MARCUS
The important point there is that it’s increasingly not just within industries but across industries. Amazon, which has become a household name, initially transformed the expectations about the type of interaction that you were going to have when you went to a retailer. And now most retailers have had to deliver that presentation online — some better than others. Our experiences as a whole now affect our expectations for just about every product category.
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