Oracle: Customers Come First - Steve Fearon
Enhancing the customer experience and achieving customer-centricity have become increasingly hot topics in recent years. Oracle’s Steve Fearon explains to Jim Banks that, as Web 2.0 alters the nature of customer interaction, companies must keep pace with change to make their customer relationship management (CRM) strategies pay off.
The concept of CRM is familiar to all large organisations but the evolution of Web 2.0 social media sites such as Facebook, Twitter and countless online forums are once more changing the way companies interact with their customers and how they use the customer data they gather.
No one doubts that success is about putting the customer first, but it is not always clear how best to achieve this goal. ‘Technology is driving changes within customer management, but these issues should always be on the CEO’s table,’ says Steve Fearon, vice-president CRM at the world's largest business software company, Oracle. ‘If you look at today’s business environment the biggest drivers are the current economic situation and the rise of Web 2.0 as catalysts for businesses to become more customer-centric.
‘If you compare the current economy with previous times, the biggest difference now is that CRM wasn’t mature before. Now it is mission-critical, not just a nice-to-have. The current economic situation is also happening against a backdrop of huge growth in new media developments. It is more important than ever to know your existing customers and prospects better and become more efficient in your interactions with them. However, first of all you have to know that you are working on developing the right customers,’ Fearon says.
The ultimate CRM goals are to have better visibility of the sales pipeline, generate the right forecasts and put in place the right marketing strategy to generate new leads. Companies are investing in this to position themselves for the economic recovery. The question is, are they are investing in the right places? One key target must be technology that enables customers to inform themselves and react to the peer-to-peer recommendations that are the crux of social media websites.
But this must come only when the basics of CRM have been properly put in place. ‘The idea of customer-centricity has been around for many years, but now technology is driving new desires among customers. There has been a definitive shift in the power relationship, with consumers wanting to buy more and be sold-to less.
Customers want to communicate with businesses in new ways and, as advertising and marketing strategies for brands change, it will be the businesses that listen and respond to specific customers groups who emerge the winners,’ says Fearon. ‘It is now easier than ever for companies to respond to these groups and there is a lot of information available that will enable sales. However ,if a company simply broadcasts its message, then it will find customers simply don’t listen.’
Making the right changes
The importance of peer-peer recommendations and so the power of Web 2.0, cannot be underestimated. ‘Research shows that some 86% of people take recommendations for a product from people that are like them. However, there is a much lower response rate to general promotional material.
Companies therefore must get into the conversations people are already having. One key difference that a CEO must understand is that using social media is not about increased costs for CRM projects, it is about becoming a better listener,’ explains Fearon.
‘Customers can afford to be fickle more than ever and will sever their relationship with an organisation if it engages in the wrong communications behaviour of oneway product broadcasting, or worse still simply does not listen to the conversations that customers have with its chosen provider of goods or services. There is a difference between the B2B and B2C markets, and the key to understanding what CRM means to an organisation is to consider the implications of going completely customer-centric. A product company could be more customer-centric and position everything against what customers want, whereas in B2B, the goal could be to improve the efficiency of a particular sales process,’ he adds.
Fearon is also keen to stress that moving to a more customer-centric approach by focusing on key customer segments through a different analysis is not necessary as dramatic or disruptive as it may at first appear. In telecommunications, this has been essential as firms move away from a focus on individual products to concentrate on average revenue per customer.
Oracle is well-placed to examine this area, following a major piece of pan- EMEA research, questioning senior customer management executives at telecommunications providers and over 3,700 consumers that examined the challenges faced by these companies in servicing and retaining customers.
‘According to the research more than three-quarters of CSPs [Communication Service Providers] currently do not have the systems and processes in place to identify and retain customers reaching the end of their contracts and more than half of consumers stated that their mobile providers had never contacted them at the end of their contract to entice them into a new one,’ Fearon says. ‘We know that telecommunications companies spend millions of dollars on marketing to attract new customers, but this does not matter if their existing ones continue to leave.’
However, it is not all bad news. There are options available to help them reduce customer churn. Firstly, Fearon references the empowering of customers through social CRM tools and secondly through technology that flags when customers are reaching the end of their contracts.
With the application of enterprise-grade CRM engines, such as those provide by Oracle, driving the recommendations, fulfilments and self-service tasks such as bill analytics, the resultant conversations can cross channels, products, sales and services departments, and can truly change the customer interaction dynamic.
Similarly, Fearon feels that, in terms of technology, there are changes occurring that enable companies to have a more flexible, cost-efficient approach to CRM. ‘All CRM projects must look at people, processes and technology, none of which can be regarded in isolation. Many CRM implementations have followed an analysis that sees the company manage the application themselves, but the longer the implementation the longer it takes to see the benefits,’ he explains.
‘Now we have software-as-a-service, or SaaS, where companies buy access to applications. This becomes operational rather than capital expenditure. It can grow as the benefits manifest, so you can see the value in nine-to-twelve weeks, rather than nine-to-twelve months. That is why people are buying into SaaS a lot more.’
Building from the ground up
Perhaps the most important element in successful CRM as the driver for a customer-centric company is understanding what a company needs in terms of CRM implementation. Fearon breaks this down into four categories. Firstly, he highlights operational CRM, which requires the automation of processes and the integration of marketing, sales, service and customer contacts. This, he notes, can be done through SaaS or through technology a company owns and operates.
Secondly, he defines industry CRM, which takes account the front-end processes that different kinds of business need. ‘A government organisation, for instance, may have conversations with a citizen on a specific issue within a case that many service providers to the government organisation are also involved in. This is very different to the relationship a bank or a telecommunications company has with a customer, which may involve billing across different goods and services,’ he comments.
Thirdly, the need for integrated CRM moves the issue into the back office. A telecommunications company or an e-commerce site, for example, will need to look at inventory to check that a product is available. Linking to the back office is vital in order to expose internal information to buyers of goods and services.
The final area Fearon believes will be crucial is social CRM. ‘First, they need to look at how to apply Web 2.0 capabilities to internal users to learn about what is going on within the company with people who are like them. Very often, individual sales agents can learn from each other by tapping into what is known as the "wisdom of the crowd" to inform their sales campaigns and prospecting based on what others like them have done successfully. Learning from employee to employee interaction fits nicely into successful CRM thinking,’ he says.
‘The bigger trend in social CRM is in facilitating customer interaction. They need to look at customers as application users to identify the next generation of customer. Using the telecommunications example, it is easy to see costs decrease through online billing, but they can take that further and enable real-time access to billing information so that customers have more control over how they use the service. They may want to know what their usage of texts and voice calls looks like compared to other people like them, so they can judge whether they are on the right tariff.’
There is evidently great value in tapping into the content of customer-to-customer conversations, and in taking the opportunity to create and participate in online communities. This is increasingly how companies will be able to facilitate customer conversations and in so doing improve their understanding of what different customer groups need and desire. ‘This is not an expensive way to communicate with customers, but many CEOs are not sufficiently aware of that. We see growth in all these areas of CRM, and we have the technology to facilitate and automate real-time CRM decisions. CEOs must understand how their companies interact with customers.
A good strategy that worked well in the previous game changing era of the e-commerce boom is encouraging young web 2.0 and social networking-savvy employees to give input on what they see this new world becoming and how it will affects new customer engagement strategies’ says Fearon.
‘You can tap into valuable information flows quickly and without huge cost. This is more than just hype about new channels. The CEOs job is to take a company to the next level, which means doing the basics of CRM right and then taking advantage of the new world that is opening up.’ The full report referenced above can be found at: www.oracle-marketing.com/ customerintimacy.