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Weather the Storm by Focusing on Your Customers — In the Way That Matters for Your Industry

by Stefan Haenisch | SAPinsider

July 1, 2009

To withstand the downturn, businesses in all industries need to increase their focus on customer relations. But what this means differs significantly depending on your industry context. Soak up insights from four specific companies that have improved their own customer strategy with SAP solutions.
 

The economic crisis has hit hard and companies across all industries are looking at ways to weather the storm. The first and natural inclination is toward cost cutting, and many organizations have already taken immediate action. Yet cost-cutting measures alone are insufficient if you cannot also sustain your revenue stream. Former General Electric Chairman Jack Welch crystallized this concept in a statement he made at the very beginning of 2009: “Stay outwardly focused. The reason for being in business is to make sales. Without sales there is no business. All the activities of the enterprise come from satisfied customers. We have got to get people facing those customers.1

Across all industries, acquiring, retaining, and growing customers has become all the more important in a downturn. In particular, strategies to develop and increase share of wallet with your existing customer base are cost-effective ways to sustain your business in difficult times. Key to success is to fully understand your customers’ business needs, allowing you to offer the right value in sales deals, execute more targeted campaigns, and differentiate your services from the competition.

This requires the development and execution of customer-focused business strategies. Doing so efficiently, at lower costs, and with fewer resources requires the right technology and solutions to support those strategies — and with the flexibility to meet the specific needs of your particular industry.

Customer Interactions Differ Dramatically by Industry

Customer interactions can differ vastly, depending on your industry. Your customer may be a business or an end consumer. You may know your customers from long-term personal interactions or touch points in automated mass channels like call centers or the Internet. You may deal with them directly or through retailers or partner channels. Your customers’ buying decisions may be spontaneous — buying toothpaste at the store, for example — or they might be based on a year-long, analytical evaluation of a team of professionals for a multimillion-dollar investment.

While businesses in all industries need to increase their focus on customer relations, what this means differs significantly depending on the industry context. So do the requirements for the software solution that enables your customer strategy. The solution must be ready to address each industry’s specific needs, yet be flexible enough to support multiple businesses on one platform or support a single company operating across multiple industries.

After all, traditional industry boundaries are evolving. Consider fashion companies expanding into retail, consumer products companies developing more one-on-one interactions with their end consumers, or gas stations that have transformed into full supermarkets. Manufacturers have turned into services companies; high-tech companies into media stores. In communications, you find your TV broadcasting company providing your phone service (or vice versa), or your utilities company providing your Internet service.

We at SAP have worked directly with customers in developing our industry applications, and we’re wholly aware of how varied customer strategies are across industries.2 We focus on providing industry-specific customer relationship management (CRM) capabilities, helping companies drive the right customer initiatives in their specific business context and in a way that’s flexible enough to support the shifting industry boundaries of tomorrow, as business strategies require.

Here are just a few different industry-specific examples, all supported through SAP Customer Relationship Management (SAP CRM), along with insights from companies that have improved their own customer strategy with SAP solutions.

Sustain Customer Share with Your Retailers, Despite Tighter Budgets: Trade Promotion Management

Consumer products companies often invest as much as 17% of their annual revenues in trade promotions. When companies look at options for cost savings, trade funds are a huge line item that naturally come under heavy scrutiny. At the same time, lowering these budgets must not be done at the cost of losing share of wallet with retailers and ultimately end consumers. SAP worked directly with many of the world’s leading consumer goods companies to develop solutions for efficiently planning and tracking these promotion spends so they can be utilized for greatest impact — even if lowering spend.

The SAP Trade Promotion Management solution connects people and information end to end across the whole process — starting with key account managers at the front end who need to orchestrate their customer activities with brand strategies and tactics, to funds, claims, and related financial processes, and even including demand planning in the supply chain to ensure that the uplift generated can actually be delivered. All of this enables rapid transfer of account-specific knowledge and information, tailored for this highly specific industry environment.

Seize Customer Opportunity: Pipeline Management

In business-to-business environments, clear and timely visibility into your sales pipeline is extremely critical in difficult times.

For such industry environments, SAP offers a pipeline performance management application that provides sales representatives and decision makers with full visibility into their sales pipeline at all times to identify gaps and critical opportunities, simulate what-if scenarios, and react quickly and effectively to define and seize opportunities for growth.

Get Closer to the End Consumer: Loyalty Management

The classic neighborhood mom-and-pop store and your favorite restaurant have already set the bar when it comes to retaining and growing share of wallet with customers. They have known you, the customer, for years, they know your preferences and behavior, and as a result they can come up with the right treatment and offers — in short, a great customer experience — each time you visit. But how can retail and services companies that deal with millions of end consumers provide the same level of understanding of their customers and correspondingly relevant customer interactions on a far larger scale?

To support companies with such business-to- consumer focused strategies, SAP CRM offers capabilities to manage loyalty programs. Loyalty management, together with the respective analytical capabilities, helps companies establish a clear profile of each customer, track their buying behavior and preferences, and then use this information to enable targeted initiatives. Ensuring you get the right customer experience increases the likelihood you’ll remain a customer and increase your share of wallet.

Conclusion

It’s a pivotal time to solidify and strengthen your customer relationships — not to retreat and retrench. Now, more than ever, is the moment to turn your attention to your established customers. But to do it right, you need to focus on solutions that solve the real business problems of your industry in an end-to-end way:

  • Don’t focus on cost cutting alone. Develop the right strategies in your industry’s business context to acquire, retain, and grow your customers. It’s often precisely those existing customers who will be invaluable to your success in tough times. Understand their needs clearly, and provide the right value and customer experience to sustain and increase share of wallet.

  • To make this happen, implementing or expanding a CRM software solution can be a critical enabler of your strategy — but only if the solution addresses today’s real business problems in your industry and enables you to grow to meet tomorrow’s challenges.

  • You may be tempted to look for quick, tactical fixes. Fast impact is important, but don’t forget to keep your broader customer strategy in mind as well. A quick win that puts you on a dead-end road doesn’t get you far. On the other hand, if you implement the right customer strategy and solution now, there is a great opportunity to emerge from the storm stronger than ever!

For more information on SAP CRM, visit www.sap.com/usa/solutions/business-suite/crm/index.epx. From there you can link to industry-specific processes to address your end-to-end needs.

Additional Resources

  • “Siloed CRM Applications vs. a Process-Based Approach: Which CRM Strategy Is Right for Your Business — and Your Customers?” by Vinay Iyer, Reshma Mani, and Reza Soudagar (SAP Insider, January-March 2009, sapinsider.wispubs.com)

  • “CRM Solutions for Your Industry” by Stefan Haenisch (SAP Insider, January-March 2004, sapinsider.wispubs.com)

  • The CRM 2010 conference in Orlando, February 23-26, 2010, for strategies, techniques, and advice on using SAP solutions for customer relationship management (www.sapinsidercrm2010.com)

  • Service with SAP CRM by Markus Kirchler and Dirk Manhart (SAP PRESS,
    http://store.sapinsider.wispubs.com)

 

Stefan Haenisch (stefan.haenisch@sap.com) is Vice President of Industry Solutions at SAP AG. Stefan drives global go-to-market strategy, new product introduction, and field enablement for SAP across all industries. His deep industry experience is paired with more than a decade of helping companies with solutions for their customer and business strategies in leadership roles spanning product management, business development, and consulting both outside and inside SAP. He holds a master’s degree in management and engineering from the University of Karlsruhe, Germany.



1 From “Resolutions for the Recession” (BusinessWeek, www.businessweek.com/mediacenter/qt/podcasts/welchway/welchway_01_02_09.mp3). This theme is also reflected in additional resources:

2 For more information on the holistic SAP Industry Solutions approach and how to leverage SAP resources to address industry challenges, please see the Q&A with SAP’s Bob Stutz (“SAP Serves Your Industry — But to What Extent?”) on page 4 of this July-September 2009 issue of SAP Insider (sapinsider.wispubs.com). [back]


 

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