CRM Without Compromise: A Strategy to
Outsmart and Outgrow Your Competition
www.CRMproject.com/15703
CRM without compromise means taking a customer-centric approach and building a synergistic
ecosystem with employees, customers and partners that consistently creates and delivers
customer value.
Bob Stutz, Michael de la Cruz
and Volker Hildebrand
nvestments in CRM applications have produced
a broad spectrum of results. Some companies
experienced dramatic increases in revenue and
customer satisfaction along with significant cost
savings, while other companies have experienced
limited returns and disappointing results. The benefits
would be greater if more companies took CRM to the
next level by designing their CRM strategy for future
aspirations instead of just implementing software to
support current capabilities. The focus on bottomline costs and departmental goals limits the top-line
potential of CRM investments. To gain a competitive
advantage and promote sustainable, profitable growth,
organizations need to take a holistic approach to CRM
and develop bold strategies to win, know and keep
their customers.
SAP
Bob Stutz, senior vice president and
general manager, CRM, is responsible
for driving SAP’s CRM product and
strategy. He joined SAP in 2005
from Siebel Systems. Mr. Stutz had
overall responsibility for the 21
vertical product lines as well as base
horizontal poducts. Prior to Siebel, he
held executive engineering postions
with Intrepid Systems/PeopleSoft and
Sybase. He holds a B.S. in government
from the University of Maryland and an
M.S. in human resources management
from Chapman University.
Michael de la Cruz is senior vice
president of CRM applications
solution management for SAP,
having served as vice president of
alliances at SAP Americas. Prior
to SAP, he held leadership and
consulting positions with Siebel and
PricewaterhouseCoopers. Mr. de la
Cruz holds an M.B.A. from Harvard
Business School and a bachelor’s
degree in history from Yale University.
Volker Hildebrand is a vice
president of CRM applications solution
management at SAP Labs in Palo
Alto, and was an assistant professor
of marketing. He holds degrees in
technology (University of Stuttgart) and
business (University of Mannheim) and
earned a Ph.D. in business economics.
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Refocus on the Customer
Notwithstanding notable success stories, we have
been witnessing a paradox trend. While implementing
CRM, many organizations lose sight of their customers.
Their attention centers on efficiency gains. They focus
on single channels, ignore back-end integration needs
and get only a limited view of the customer, resulting
in missed opportunities and a negative customer
experience. Organizations often automate existing bad
processes instead of redesigning their customer-facing
operations based on best practices. It’s time to refocus
on what CRM is really about – the customer – to
achieve the results CRM has promised to deliver.
Let’s not forget: No business can exist without
customers. No matter how good a product is or how
efficient an organization operates, without customers
there is neither growth nor profitability. Customers
make the purchase decision. They bid the price up or
drive it down depending on the value they perceive
in a product or service. The customer decides which
way and when he wants to interact with a company
and how he wants to buy – online, over the phone, in a
store or through any other channel. It’s the customer’s
perception of everything a company does that creates an
image of its brand and eventually determines its success
or failure as a business.
That’s why successful companies build their
business around the customer. (Figure 1 illustrates
this concept.) They know who their most valuable
customers are and they understand their needs and
buying habits. They target and tailor their offerings
and personalize the interactions with their customers.
Successful companies design and continuously improve
business processes across their entire ecosystem –
including suppliers and channel partners – to respond
quickly to changing customer needs. They strive
to become fully customer-driven, deliver superior
customer value and consistently provide exceptional
customer experience across all customer touch points.
They make every effort to build long-term relationships
with their customers, recognizing that keeping
customers is more profitable in the long run than
winning new customers over and over again. Essentially
this is what “CRM without compromise” is about.
Generate Sustainable, Profitable Growth With CRM
More than ever, CRM is critical to an organization’s
success. After more than a decade of harnessing
cost-savings potential to remain competitive in an
increasingly global economy, driving growth has
replaced cutting costs as the most important goal for
most CEOs. Hence it’s no surprise that CRM is back on
the agenda of many top executives. To stimulate new
growth, organizations are beginning to explore a more
disciplined approach to exploit untapped opportunities
and make the most of relationships with customers.
They seek new ways to increase wallet share, deploy
new channels, penetrate underserved segments, reach
out to new customers and enter entirely new markets. To
ensure sustainable, profitable growth CRM must take a
leading role in the value chain, enabling organizations to
excel not only across, but beyond customer touch points
and rapidly adapt to changing business needs.
(Re)Define and Achieve Operational Excellence
When price and efficiency were the driving forces of
competition, many companies focused on increasing
their competitiveness by improving their internal
processes. Continuous, standardized processes were the
and reliability. Organizations need to break down
the silos and redesign business processes from end
to end, intertwined and coordinated across front
and back offices for a common goal: to create and
deliver customer value.
Attain Competitive Agility
Figure 1: The Customer-centric Enterprise
key to new efficiency potential and to survival in
the market. But the spotlight has since shifted to
relationships with customers and partners. Internal
efficiency alone is not enough to guarantee market
differentiation and competitive edge. Success is no
longer determined only by price and product, but by
well-designed sales channels and service processes.
At first, companies focused on CRM for a
single department or function. They often turned to
niche CRM vendors to support their CRM efforts.
However, while sales productivity, call center
efficiency or marketing effectiveness may have
improved, progression to effectively managed
customer relationships was often prevented by an
internal focus, deployment of tactical departmental
solutions and inadequate integration of front-office
and back-office systems. Successful companies
have realized that integration along the entire
process chain is the only way to gain a lasting
competitive advantage. But so far, few companies
have used this time profitably, redefining their own
strategies and reshaping business processes for a
truly customer-driven enterprise.
Operational excellence in business today
needs to encompass not only customer-facing
operations within departmental boundaries but
also end-to-end business processes in an industryspecific context. To succeed, an organization must
achieve more than simply running an effective
marketing campaign or operating an efficient call
center. Entire business processes such as order
to cash or customer problem resolution need to
be customer-driven; seamlessly connected to
other critical business functions from finance to
the supply chain; and designed to meet customer
expectations regarding quality, speed, convenience
In today’s dynamic market environment
organizations need to continuously develop
distinctive capabilities to quickly perceive, adapt
and respond to ever-changing customer and
business needs – ideally before their competitors
are even aware of an opportunity. Agility
and speed have become critical competitive
differentiators. Constant innovation and business
transformation have become imperative. In some
respects, it is this capability for an organization to
reinvent itself that ensures its long-term survival
and success. As less emphasis is placed on the
products and services offered by an organization,
what becomes more important is how quickly
it can deliver those products and services to
customers and how flexibly it can respond to
market changes. For a company to enjoy success
in the coming years, flexibility, openness,
collaboration and speed must become an integral
part of its corporate culture.
Coping with constant change and market
dynamics, adapting business processes rapidly and
quickly turning innovation into customer value are
not only key to improving the bottom line, but are
also fundamental to achieving sustainable top-line
growth. This puts CRM at the core of a successful
business strategy. By capitalizing on customer
insight, organizations can better and more quickly
identify and prioritize new sales opportunities;
discern and leverage sources of differentiation that
are difficult to imitate; spur product and service
innovation; and strengthen relationships with
customers and partners. Anticipating customer
needs early helps improve decision making and
reduce time to market; and also provides the basis
to better align supply with demand and quickly
shape demand in times of constrained supply.
The Path to CRM Success
Today only a few organizations have managed to
become truly customer-centric. Most companies
CRM Transformation
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CRM Without Compromise: A Strategy to Outsmart and Outgrow Your Competition
Tactical
Strategic
still have highly fragmented
customer management
ed
rat
g
Customer
Value
Network
e
applications to support specific
Int
departmental or divisional needs.
Customer Value Focus
CRM implementations range
Enterprise CRM
from initial, isolated efforts
Customer Focus
to improve customer-facing
Intra-enterprise
Front-Office CRM
and inter-enterprise
processes (such as simple contact
Channel Focus
collaboration
management or spreadsheetEnd-to-end
Processes
based sales planning) to moreDepartmental CRM
Multiple
sophisticated support of specific
Department Focus
Channels
customer interaction channels
Value-networkSingle Channel/
Integrated,
Productivity Tools
enabled ecosystem
Functional
multichannel
for improving sales effectiveness
across all
Efficiency
Task Focus
Call Center;
touch points
or call center efficiency. In years
E-Commerce
Simple Tools
Basic
to come, more companies will
Salesforce
Automation
Spreadsheet-based
embark on a journey to reach
Sales Planning
higher ground, aligning channels
and departments, to become
ed
Limited or No
Customer
Customer
lat
entirely customer-focused, valueo
Is
Customer Visibility
Centricity
Visibility
network-enabled organizations,
thus allowing them to achieve
Figure 2: Evolution of CRM
better and more-tangible results.
This transition isn’t easy.
It takes time and calls for a commitment to
ongoing customer interaction and drive product
efficiency doesn’t matter unless you do the right
a customer-centric philosophy across your
innovation. Over time they continuously improve
thing in the first place. That’s why effectiveness
organization from top to bottom. You need a vision,
their capabilities to not only achieve efficiency
must take precedence over efficiency – without
a strategy and a deliberate execution road map to
gains, but also to increase customer value and
neglecting to identify critical processes and areas
get there. It requires a holistic view of customers,
maximize the value they get in return.
for efficiency gains.
channels, processes, employees, partners and
technology. The key to success of such wideA Strategic Framework
Capitalize on Customer Insight
ranging CRM implementations is an evolutionary
for CRM Without Compromise
To stay ahead of the competition, organizations
approach where each step in building the ecosystem
To gain a sustainable competitive advantage and
need to develop proprietary information about
represents a carefully planned, well-defined
make the most of relationships with customers,
customers beyond common industry wisdom
advancement of the business strategy (see Figure 2).
organizations should consider a basic set of
and embed this customer insight into critical
Successful companies have taken a very
strategic principles that we have identified
planning and decision-making processes such
disciplined, sequenced path to implementing
based on the successful strategies of best-run
as sales planning, new product development,
CRM, launching highly focused projects first
companies. These principles constitute a strategic
marketing investments, and resource alignment
to solve clearly defined problems in areas that
framework for the customer-centric enterprise
and supply chain planning. Successful orgcan undermine overall performance, such as
and can help organizations to distance themselves
anizations build a customer intelligence
customer service or order management. In
from their competition and secure long-term
network, make customer insight accessible
these most critical areas they start with the
success (see Figure 3).
throughout the organization and translate this
improvements that will yield the biggest returns.
knowledge into frontline actions.
Upon achieving their goals with small projects,
Balance Efficiency and Effectiveness
they leverage their initial investments to address
A good CRM strategy needs to balance efficiency
Align Marketing, Sales and Service
additional challenges. For example, they may
and effectiveness. Many organizations tend to
With the Customer in Mind
extend their implementations by integrating
focus largely on efficiency and often ignore the
Operational excellence and consistent customer
additional channels like the Web and commence
impact of their actions on effectiveness. This may
experience can’t be achieved when departments
with leveraging customer insight to better target
alienate customers and erode profits. Improving
make independent decisions and take isolated
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Create a Customer-driven Value Network
Capitalizing
on Customer Insight
Aligning Marketing,
Sales and Service
Creating a Value
Network with Partners
CUSTOMER
Managing
Customer Experience
Across Touch Points
Connecting Front Office
and Back Office
Guiding Customers
to the Right Channel
As companies focus increasingly on their core
competencies, they will be ever-more dependent
on an ecosystem of suppliers and partners to meet
customer demand and generate new growth. To
be successful, partners need to become an integral
part of a value network, providing complementary
capabilities to promote the brand, sell products and
offer value-added services. It is critical to define
the role of these partners, manage the relationships
with them and integrate them in a way that enables
seamless end-to-end business processes across the
entire network.
Adopt a Technology Framework
for Adaptability and Integration
Figure 3: Strategic Framework for CRM Without Compromise
actions to achieve their numbers. Organizations
need to give up their internal, departmental views
and revise their frontline business processes and
information sharing practices across marketing,
sales and service. They need to align their customer-facing operations, break the silos, link
discrete systems or – even better – create a single
instance, so they can frequently share valuable
marketing, sales or service information with the
right people.
Manage Customer Experience
don’t guide them to the most appropriate channel.
For example, a common strategy is to simply
push as many customers as possible to low-cost
self-service channels. This can, in fact, increase
costs and churn rates and destroy market share. It’s
important to understand the channel economics,
strengths and weaknesses of each channel, and
carefully evaluate how to reach out to customers.
To yield the best results you must optimize your
entire channel mix, aligning your channel strategy
with customer segments (based on interaction
needs and customer value) and business goals.
Across Touch Points
Today customers demand multiple channels that
they can use to get information, purchase goods,
pay their bills, request services or get support
based on their specific needs and preferences.
They expect convenience, choice and operational
reliability, and a consistent experience across
all touch points. Companies can differentiate
themselves by successfully managing the
complexity of customer interactions across multiple
channels in a proliferating environment, while
synchronizing off-line and online channels and
taking advantage of the efficiencies of automation.
Guide Customers to the Right Channel
Many organizations fail to tailor the channels to
meet the touch-point needs of their customers and Beyond the Touch Point: Connect the
Front Office and the Back Office
Synchronizing front-office, back-office and supply
chain activities is absolutely critical to attract and
retain customers, fulfill demand and deliver on
service promises. Many organizations are losing
revenue simply because they fail to connect their
front and back offices. Without seamless, real-time
integration, customer satisfaction declines, and
customer attrition rises as online transactions
fail, products aren’t available at the time and
places needed, orders can’t be changed, service
technicians don’t have the right spare parts, returns
aren’t correctly passed through to accounts payable
and customer issues can’t be resolved immediately
at the first call.
As adaptability, collaboration and speed
become winning elements of corporate success,
organizations need an open and flexible IT
architecture providing a platform that seamlessly
integrates and processes information from
disparate applications, enables intra-enterprise and
inter-enterprise collaboration and quickly maps
business processes to changing business needs.
Use IT as a Catalyst for
Business Transformation
Information technology has become a missioncritical enabler for CRM, not just to understand
customer needs but also to determine how
to most efficiently and effectively deliver on
those needs. But IT can be more than just an
enabler – it can serve as a catalyst for business
transformation. CRM without compromise is
about transforming a business into a customercentric business. It’s about building a synergistic
ecosystem with employees, customers and
partners that consistently creates and delivers
customer value – an ecosystem where customer
demand drives the supply chain; customer
insight inspires innovation; and employees
are empowered to best serve the customer.
Organizations that are able to build such an
ecosystem which is flexible enough to quickly
respond to changing customer needs and
business challenges will have a sustainable
competitive advantage and enjoy profitable
growth for years to come. ■
CRM Transformation
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