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Why a Traditional Siloed CRM Approach Is Doomed: 6 New Core Competencies for Delivering the Total Customer Experience

by Volker Hildebrand and Vinay Iyer | SAPinsider

January 1, 2010

Customers are more empowered and demanding than ever before, requiring companies to re-vamp their CRM strategy. Learn how you can manage the customer experience effectively by applying the new customer engagement model and leveraging social media channels, mobile applications, Web channels, and more.
 

In a 2009 Strativity Group study of 869 executives, 80% of those surveyed declared that customer-facing strategies are high on their corporate agendas — and are even more important than they were three years ago.1 Strativity’s research also shows that companies that invest 10% or more of their revenues in the customer experience realize a far greater number of customer-driven referrals. 

In short, organizations that embrace the concept of customer experience management are more successful than those that do not.

So how can you manage the customer experience successfully? And what are the key success factors?

The Customer Empowerment Phenomenon

For starters, companies must recognize that customers today are very different from customers in the past. They are more empowered than ever before, due largely to three important factors:

  • The dramatic growth and increased availability of communications technology, which connects an ever-growing number of people worldwide
  • The rapid and pervasive adoption of the Internet as the medium for information consumption and interaction
  • The recent explosive growth of online social media and other Web 2.0 technologies, which enable peer-to-peer interactions on a global scale

Since today’s customers can so easily connect with one another, with companies, and with influencers, nothing can be a secret for long. Product performance, pricing, and customer experiences are no longer under the direct control of companies. Rather, the power has shifted dramatically to consumers, who now collectively determine how brands and customer experiences are identified, defined, and expressed.

The Resulting New Customer Engagement Model

Given this dramatic shift in customer power and the free movement of information, companies have to adopt a fundamentally new approach to engaging with their customers. They can no longer simply manufacture products, advertise them, market and sell them, provide after-sales service, and repeat the process all over again. Today’s world requires a very different customer-facing approach, which we’ve broken down into six core competencies (see Figure 1).

Figure 1 The six core competencies of companies’ new customer-facing reality

 

  1. Sense customer and market sentiment. Customers are already engaged in several online and offline communities, expressing their opinions, preferences, needs, and trends. It is imperative that companies listen to and engage in these conversations — arguably even before they design a new product or service. 
  2. Develop comprehensive customer insight. By actively listening to customer conversations and sentiments, and by leveraging historic customer interaction information, companies can derive comprehensive customer insight.
  3. Create optimal offers. Companies can then leverage this comprehensive insight to create the right products, packages, and offers to cater to customer expectations.
  4. Market and sell consistently across multiple channels. Next comes marketing and selling to the customer, leveraging traditional channels like direct or email marketing, as well as new social media channels like Facebook and Twitter. Ensure that you’re delivering a consistent customer experience across all channels. 
  5. Deliver superior customer service. This consistency of experience has to be carried beyond the sale to whenever the customer requires service and care — through whatever channel the customer chooses, including new channels like Twitter. Whether the customer needs repairs for the product they purchased or has questions related to billing and payment, service agents at every touch point must have adequate knowledge of the customer’s previous interactions. This is critical; customers must receive a consistent experience in order to formulate a steady — and positive — opinion about your company and your brand.
  6. Seek and influence ongoing customer engagement. Finally, it is no longer enough to provide customer service only when the customer requests it. Companies should also constantly engage customers in ongoing conversations — in whatever forums the customers are participating in — as a continuing effort to build mindshare and brand perception.

How Does SAP CRM Support This New Customer Engagement Model?

To re-architect your customer-centricity strategy in line with these six new core competencies, we have identified three key pillars of customer experience management that every organization should consider: operational excellence, interaction excellence, and decision excellence (see sidebar).

Let’s take a closer look at how SAP is driving innovation in each of these areas (see Figure 2).

Figure 2 SAP’s new CRM framework of excellence

Enabling Operational Excellence: SAP Business Suite

SAP has always been committed to helping organizations achieve operational excellence. We do this simply and efficiently — by providing industry-specific solutions for end-to-end sales, marketing, and service business processes out of the box. These processes ensure that organizations have a 360-degree view of customer interactions and operational constraints. And they enable managers to focus on process efficiencies, thereby optimizing every opportunity to increase revenue or cut costs.

At SAP, we will continue to focus on entire business processes, not only across sales, marketing, and service (and across customer touch points), but across the enterprise and beyond. Customer relationship management (CRM) — and customer experience management in particular — is not limited to the front office: Orders need to be shipped as promised, field service technicians need spare parts in time, sales reps need information about unpaid bills or back orders, and retailer shelves need to be stocked when a promotion hits the street. And if you want to know who your most profitable customers are, you will need information from your financial system. SAP Business Suite is unique in its ability to seamlessly connect one end of your customer-facing processes to the other.

Organizations must adopt a new approach to CRM — one that focuses not only on efficiency gains, but also on the total customer experience.


Making Every Interaction Count: Exciting New Developments in SAP CRM

As we noted earlier, the explosive growth of wireless communications and the rapid adoption of the Internet globally are enabling people to be connected and informed like never before. Realizing this opportunity to expand the reach of enterprise information and processes to every participant in the business conversation, SAP Customer Relationship Management (SAP CRM) is pioneering several major capabilities. Here are a few exciting developments that either are available today or will be available soon. 

SAP Business Communications Management

SAP Business Communications Management is an all-IP (Internet) communication software solution that empowers organizations to integrate multichannel communications (such as telephone, email, fax, voicemail, text message, or online requests) with customer business processes across sales, marketing, and service. SAP Business Communications Management, in conjunction with SAP CRM, replaces traditional telephony hardware-based solutions with software. Intelligent routing ensures that your customers and front-line employees can reach the people with the right skills to best address their questions — no matter where in the world those experts might be.

 

Mobile CRM

In collaboration with partners like Sybase and Syclo, SAP is co-innovating exciting new smartphone-based solutions to deliver SAP CRM on mobile devices.

Sybase is developing SAP CRM applications on its Sybase Unwired Platform (SUP); these applications are designed to run on the iPhone and Windows Mobile smartphones. SUP provides a single platform for delivering applications and data to multiple mobile devices and mobile operating systems, thereby simplifying the challenges of delivering mobile applications to global users.

And through our partnership with Syclo, we are launching a mobile CRM application specialized for traveling field service personnel. Syclo offers deep domain expertise in field service mobile solutions, along with a best-in-class mobile field service solution that complements SAP CRM.

 

Web Channel

The Internet is a low-cost, high-impact channel through which you can market, sell, and provide services to customers (who expect to interact with vendors online 24/7) — so it’s an increasingly important channel in tough economic times. Today, many companies have homegrown Web presences that are either custom-built with high TCO or based on outdated technology.

SAP’s next-generation Web Channel platform, with its state-of-the-art visual and interaction design, will set a new standard. The platform, which will be made available in the latter half of 2010, will enable organizations to create an exceptional online customer experience by leveraging existing back-end processes and creating content-rich customer interactions.

Exciting innovations — including a revolutionary interactive catalog, a sensational product gallery, embedded product ratings and reviews, user-focused online self-services, and integrated, real-time offer management — will allow organizations to turn the Internet into an appealing and powerful B2B or B2C sales channel, unleash the power of Web 2.0 technologies and media, and provide their customers with convenient, intuitive online self-services.

 

Social Media Channels

Realizing the emerging need to embrace social media channels as avenues of customer engagement and intelligence gathering, SAP CRM has pioneered business process integrations with Twitter and Facebook.

Twitter is a rapid-fire communications channel for broadcasting short messages (“tweets”) to “followers.” And it is very easy for followers to respond to your messages. Consequently, in a very short time, a message can reach very large audiences. Companies are interested in tracking these conversations to evaluate sentiment and determine what response may be required. SAP CRM has developed integration with Twitter to read tweets, analyze them by leveraging SAP BusinessObjects Text Analyzer, and formulate a sentiment (positive, negative, or neutral) based on business rules. Marketing and service professionals can now monitor tweets, evaluate sentiment, and respond — either directly on Twitter or as a transaction in SAP CRM (see Figure 3).

Figure 3 Through SAP CRM’s Twitter service, marketers can track customer conversations and tweets to evaluate sentiment and determine what response may be required

Many companies are launching promotions on Facebook to leverage Facebook’s powerful networking and trusted referral opportunities. For example, some companies are enticing users with loyalty rewards as an incentive for providing referrals. Accordingly, SAP CRM has developed an integration into Facebook to extend the reach of its powerful loyalty management solution. Companies can deploy a simple widget to present loyalty rewards information calculated in SAP CRM directly in Facebook; then, consumers can easily access their reward program information through Facebook. Furthermore, companies can launch promotions on Facebook, and when customers participate in the promotion or refer the promotion to a fan, they’ll acquire loyalty rewards that are calculated and assigned through SAP CRM.

These SAP CRM social media pilot launches are generating considerable interest in the exciting new sphere of social CRM. SAP continues to actively experiment with these and other innovative ideas.

Capitalizing on Customer Insight: SAP BusinessObjects Analytics and Dashboards

Many organizations are still struggling to achieve a true 360-degree view of their customers, let alone make this information available to every customer-facing employee in an actionable way. SAP’s approach to CRM analytics utilizes market-leading SAP BusinessObjects tools to provide intuitive, operational intelligence for line managers and employees across sales, marketing, and service (see Figure 4).

Figure 4 An SAP BusinessObjects dashboard embedded within SAP CRM; here a sales manager can view monthly sales by sales rep, actual versus planned sales, and more

For example, out-of-the-box, role-based Xcelsius dashboards, as well as flexible, ad hoc reporting through SAP BusinessObjects Explorer, give users intuitive access to personalized information that’s embedded in a business context. With this dynamic and easily customizable data visualization software, business users gain autonomy from the IT department; they can engage with enterprise data directly and then use this information to make more informed decisions.

What’s more, integrated planning, forecasting, and simulation capabilities can help you optimize operational processes — and a predictive real-time offer management engine provides product recommendations across customer interaction channels, helping to boost cross-selling and upselling opportunities.

Key Takeaways

Consistently managing all aspects of the customer experience has become more important, yet more challenging, than ever before. Customers are more demanding, powerful interaction channels are proliferating, and margin pressure is increasing. At the same time, new technologies are emerging — and they’re enjoying rapid adoption.

Consequently, companies must look beyond traditional CRM and leverage all available channels and information sources to better engage with today’s customers. And they also have to deliver a consistent customer experience at every interaction opportunity.

Doing this is not easy. There are too many channels to manage and too many conversations to monitor. However, with careful planning and prioritization — and by applying the right technologies, including exciting new capabilities in SAP CRM — customers can deliver on the promise of a consistent total customer experience.

To connect with the SAP CRM community, we encourage you to check out the following resources:

 

Volker Hildebrand (volker.hildebrand@sap.com) is Vice President of CRM Solution Management at SAP. He has been with SAP for over 10 years, building momentum in CRM and e-commerce. Prior to joining SAP, he was an assistant professor of marketing and helped companies drive CRM initiatives as a business consultant. A thought leader in CRM for 15 years, he has written several books and 100+ articles. Volker holds degrees in business and technology and earned his Ph.D. in business economics.

Vinay Iyer (vinay.iyer@sap.com) is Vice President of SAP CRM Global Marketing, responsible for go-to-market and thought leadership. He has championed the use of social media and Web 2.0 channels in SAP CRM’s marketing efforts, and aspires to keep SAP CRM in the forefront of new media marketing. Prior to joining SAP, Vinay held product marketing and business development roles at Siebel Systems in the US and EMEA. Vinay has a master’s degree in electrical engineering and an MBA from the Wharton School at the University of Pennsylvania.

 


    1 "The Customer Centric Enterprise: Part 1 — New Customer Strategies for Competitive Advantage in the Millennium," Strativity Group (2009). [back]

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