Great Expectations - Accenture

In an increasingly customer-centric world, CEOs would be well advised to pay closer attention to customer relationship management and understand the role it can play in meeting high customer expectations, as Barry Mansfield found out from Woody Driggs.

Companies have much to gain by taking a more customer-centric approach when it comes to developing and executing their business strategies – which may be why Forrester Group anticipates that $7.4 billion will be spent on CRM-related activities by companies this year.

Gartner Group and other analyst firms are also highly optimistic about the future of the market. The question, however, is whether companies are getting value from the billions they’re investing in their new marketing, sales and customer service capabilities.

According to Woody Driggs, managing director of the CRM service line at consulting company Accenture, despite the investment that companies are making in customer-facing capabilities, the customers themselves are more unhappy than ever. ‘In the past they used to switch primarily because of price,’ he says. ‘Now, more than ever, quality of service matters. Expectations continue to rise. And that’s especially true in the emerging economies, even more so than in countries such as Germany, the US and Japan. Companies struggle to keep up with this. CEOs need a more pace-based platform to deal with the changes.’

CUSTOMERS CONTROL BUSINESS

Make no mistake about it: the tide has turned. Today, the customer controls the business universe. Understanding and satisfying the expectations of today’s empowered customer requires more than the operational, transaction-focused approach – which continues to define the way many organisations approach customer relationships.

The challenge, according to Driggs, is that most executives are products of the 20th century, accustomed to organising and managing business functions rather than the customer experience, as evidenced by their focus on maintaining rigid structures, processes, systems, costings, performance targets, accounts and administration practices across their organisations.

Such inflexible structures restrict business results and hamper business change. The enterprise may achieve some benefits from managing the cost and efficiency of business operations, but often sacrifice much when it comes to the customer’s perception of the goods and services it delivers. Improved methods of developing and operationalising insight into customer needs and preferences can address this problem, says Driggs, but CEOs must first banish their outdated impression of what CRM is, or even supplant the term altogether.

DUSTY IMAGE

In the executive mind, CRM is synonymous with the technology platforms created in the 1980s and 1990s, Driggs says. ‘More broadly, and as its name suggests, CRM is about the marketing, sales and service business processes involved in managing customer relationships. As technology solutions matured in these areas, the term CRM came to represent a group of software products focused largely on the functional applications required to support these groups. CEOs may think they’ve heard all they need to know about CRM, but in many cases there is more to learn.’

Accenture has been working hard to bring the image of CRM up-to-date for the enterprise today. As Driggs points out, managing customer relationships can be a complex task, as it is the sum of the experiences the customer has with an individual or company.

‘People talk about maintaining your emotional bank account. A satisfying interaction adds to the balance, but an overwhelmingly negative one can leave you overdrawn,’ he says. ‘As long as you have a positive experience, whether you’re taking car to be serviced or speaking to somebody in a call centre, customer concerns and challenges can be managed. And in a business-to-business environment you have different players in the value chain who need to come together and join forces to deliver that one experience, which makes the job more complicated.’

Driggs likes to use the example of a wireless carrier to illustrate this point. The on-demand video needs to execute on the handheld set, which needs to be delivered down a broadband line, which needs to be billed. ‘That’s quite an extensive channel that you need to deliver the interaction,’ he says.

Driggs points out that Accenture has found that the high performers in any given market are the companies that can deliver a more consistent experience, living up to the strength of their brand and fulfilling the hopes of their customers. In fact, Accenture research into high-performance businesses has found that, among the key factors that accounts for half of a company’s ability to drive loyalty, the ability to consistently deliver a differentiated experience has the biggest impact.

‘The tricky part is what is holding back the weaker companies,’ he says. ‘When a customer interacts with a company – whether through a call centre, a website or a physical location, such as a store or bank branch – the way it handles that interaction often ends up reflecting its internal complexities rather than what the customer expects.

When customers have to enter a customer number, for example, and the operator joins the call and asks for it again or they end up being transferred to one department after another, they quickly become very frustrated. These failed interactions add up quickly to a very frustrating experience and these frustrated customers will eventually take their business elsewhere. Some will also share their frustration with other customers, by taking them online for example. This is why different departments and business units must be synchronised so they work in harmony with the intended customer experience.’

So what exactly is meant by the ‘customer-centric’ world? According to Driggs, there has been a significant shift of power to the customer, meaning that customers have more choices, but this is combined with increased competition from domestic providers as well as emerging market providers. ‘The second major trend is the innovation cycle,’ he says. ‘There are so many more products in a market and the competitive advantage you get is ever shorter. For example, the typical mobile handset provider is now putting out a huge number of new units per year.'

'The customer controls the business universe, with companies now required to collaboratively meet the demands of the empowered customer much more than five years ago. The cycle is accelerating, with more products to choose from all the time. Strong customer relationships count for more in such an environment.’

CRM CUSTOMISATION

Large companies that once unilaterally controlled how they worked with and treated customers are also hoping to co-opt customers to jointly define and provide feedback for those services, products and platforms themselves – empowering their customers while enhancing their personal experience with the company.

What does that mean for CEOs? For some, it means mastering entirely new practices – gaining knowledge of user-generated content, blogs, podcasts, social networks, user communities and many other Web 2.0 properties. ‘Executives who are familiar with things like Facebook and YouTube and grasp the impact that these channels are having on the net generation are ahead of the game,’ says Driggs. ‘They understand the new tools of customer engagement and what the high-performing businesses of the future will need to do to engage successfully with the customer of the future.’

ERP TO CRM

A precursor to CRM, enterprise resource planning (ERP), used to exclude, to some degree, the most complex CRM applications. ERP included order and data management, yet lacked tools for delivery of the web channel, and other front office capabilities. Products were created by software companies to fill the gap – niche applications were bolted on to address the problem. However, during the late 1990s, those applications became a more standard part of ERP solutions. SAP and Oracle combined them into their SOA-based architecture, and they now cover web, marketing, planning and campaign management, for example.

‘It is more important than ever to have the CEO and CIO on the same page with regard to technology,’ says Driggs. ‘There are new choices to be made – subscription-based software as a service (SaaS) is making inroads into enterprise-level companies. More importantly, they must question how these new technologies are evaluated in the context of their strategic direction. Driggs recommends that CEOs make an effort to learn about the potential benefits. The high performers in any given market are the companies that can deliver a more consistent experience.