December 20, 2000, 2:09 PM — Preface
THE LOGIC BEHIND customer relationship management (CRM) is hardly rocket science: If you design your business around your most desirable customers' wants and needs, they're likely to become better, more profitable customers. But whether your business is selling jet propulsion engines or cheese doodles, organizing the enterprise around customers' needs is easier said than done.
Contrary to current marketing hype, you can't go out and buy CRM. "CRM is really a business strategy, not a suite of products," says Wendy Close, a research director with GartnerGroup. Though vendors would have you believe that they offer "end-to-end CRM solutions," Close maintains that no single vendor today really does everything well. And if you decide on a best-of-breed strategy, you must do the integration yourself -- or pay someone dearly to do it for you. "Integration of all these systems is pretty damn hard," says Robert Mirani, director of the Yankee Group's CRM practice in Boston. Equally difficult is the cultural challenge of getting employees to focus on customers, not products. "Utopia is in some ways very easy to design but very hard to make happen," Mirani explains.
Few companies have truly transformed themselves into customer-centric organizations. But to give you an idea of what's possible with CRM, here's one view of how an integrated CRM strategy might translate into practice. The following scenario shows how the fictional Behemoth Bank built and maintained a profitable relationship with the prototypical good customer, Jane Gogetter.
Once upon a time, Behemoth Bank built a data warehouse. When Behemoth's marketers sliced and diced the bank's customer data, they uncovered a shocking fact. A third of their customers accounted for 90 percent of profits -- and many of the rest actually cost the bank money. What's more, the longer customers stayed with the bank, the more profit they generated. So Behemoth's president decreed that the bank must hold onto its best customers by recognizing -- or better yet, anticipating -- their individual needs. And thus was born Behemoth's CRM strategy.
Although the bank already collected customer information, it lacked a holistic view of each customer. Behemoth tackled the enormous job of integrating its operational systems and data warehouse with new CRM software. Now, no matter which channel a customer uses, the bank knows the history and potential value of its relationship with that customer. And that helps Behemoth focus on retaining the customers it most wants to keep -- customers like Jane.