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Slide 1: Gartner CRM Vision: Business and Technology Strategies for MoreProfitable Customer Relationships Ed Thompson
Slide 2: Conclusions • CRM budgets are less protected. So far, CRM has survived the economic slowdown, but pressure is building. • CRM is dangerous. Failure rates are rising, mistakes will be seen by everyone and the impact on the enterprise will be greater. • CRM is still a fantasy in most enterprises. CRM done at a department level suboptimizes the customer relationship. • CRM can provide a fundamental competitive advantage. Those enterprises that succeed are reaping substantial long-term benefits. • CRM should benefit both the supplier and customer. Few initiatives provide any benefit to the customer. • CRM is not just about creating a unified view of the customer. The customer would like a unified view of the supplier too. • CRM will evolve beyond customers. The future of CRM will include a greater focus on employees, partners and prospects. These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 3: Key Issues 1. What is the value of CRM to enterprises, and what drivers are continuing to force its acceptance? 2. How will organizations develop and implement a business vision for CRM? 3. What will CRM look like in the future, and how can enterprises position themselves now to be prepared for these changes? These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 4: Has the Slowing Economy/Stock Market Decline Made You Re-evaluate Spending in the Last Month? No. of Respondents 60 50 40 30 20 10 225 respondents with average revenue of $10 billion No change yet No change, but monitoring the situation Yes, planning to spend more slowly, more in 2H01 once I have a better read Yes, planning to spend less Yes, senior management requested a cutback in spending Yes, doing deals that are smaller than I would have otherwise 0 Jan Feb Mar Apr May Jul Aug These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 5: Which Areas Are Likely to See the Biggest Spending Increase in 2H01? • • • • • • • • • • • • • • • • • Microsoft Office upgrade – 29% E-commerce initiatives – 27% Network equipment – 24% Security software – 24% Windows 2000 server – 22% Windows 2000 desktop – 21% Wireless initiatives – 21% Unix servers – 20% Storage hardware – 20% PCs – 18% Net. and app. mgmt. software – 18% Call center projects – 18% CRM software – 17% Employee portal projects – 17% ERP software – 16% Web site enhancements – 16% Consulting – 16% • • • • • • • • • • • • • • • • Database software – 14% Customer service apps. – 14% New custom development – 14% Document mgmt. software – 13% Marketing/analytics – 13% Mainframe hardware – 13% Content mgmt. – 11% Business intelligence tools – 9% Mainframe software – 7% Storage software – 7% Supply chain mgmt. – 5% Sales force automation – 4% E-mail response software – 4% Mainframe system mgmt. – 4% Procurement software – 2% E-store software for Web site – 1% These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 6: Top 10 Trends: The Siren Call of CRM? Market Trends 1. Increasing Customer Education and Expectations Consumer complaints 2000 = 5x 1995 2. Customer Relationship Complexity Rises R(f) = (Segments) x (Products) x (Channels) x (Partners) 3. Rising Global Internet Adoption Executive Trends More accessible competition and more coordination between partners 4. Intensified CEO Attention on CRM CRM = profit increase = stock price increase = bonus increase? 5. Protected CRM Budget Allocation 6. Formalization of Governance for Customer Relationships CRMO, CCO, customer advocate? CRM Implementation Trends 7. Shift in CRM Application Architectures and Spending DIY --> package; C/S --> Web; best of breed --> suites; per seat -->role-based; $2,500 -->$250 per seat; buy -->ASP + rent 8. Explosion of Customer Data Web, chat, e-mail, instant messaging, expanded contact centers 9. Vendor Churn Leading to a Power Shift 500 --> 50 vendors; best of breed --> ESP and ERP 10. Increasing Numbers of Project Failures 65 percent --> 80+ percent in mid-2003 These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 7: Top 10 Causes of Failure in CRM Today 1. Management has little customer understanding or involvement 2. Rewards and incentives are tied to old, noncustomer objectives 3. Staff culture does not have a relentless focus on the customer 4. Limited or no input from the customers’ perspective 5. Thinking technology is the solution 6. Lack of specifically designed, mutually reinforcing processes 7. Poor-quality customer data and information 8. Little coordination of multiple departmental initiatives and projects 9. Creating the CRM team is left to last and lacks business staff 10. No measures or monitoring of benefits and a lack of testing These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 8: Implementing CRM Is a Fantasy ... for Most in Europe 2000 vs. 2001 2000 3% 17% 45% 35% 30% 30% 33% 2001 7% No implementation Unintegrated departmental projects Integration of more than one project "True" CRM United States – 75 percent implementing, 8 percent “true” These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 9: Not All CRM Strategies Are the Same Less than 1% Complex Infrastructure Extraenterprise (Type A) 5% to 10% Population Mix Universal View Competitive Enterprise Advantage Closed Loop Multidepartmental (Type B) Revenue Enhancement CRM Infrastructure Analytics 10% to 30% 45% to 50% Call Center SFA Efficiency Cost Reduction Departmental 10% to 20% Dedicated/ Proprietary Varies Varies Subdepartmental (Type C) Applications Goals Emphasis These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 10: Guiding Principles for Successful CRM Extend breadth and depth of relationships Leverage and enhance brand equity    Touchpoints Value Network Minimize transaction barriers and lower costs     E-CRM Focus on customer value, satisfaction and loyalty Self-Service These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.    
Slide 11: Gartner Definition of CRM, But … Every Enterprise Should Have Its Own CRM is a business strategy whose outcomes optimize profitability, revenue and customer satisfaction (the why?) by organizing around customer segments, fostering customer-satisfying behaviors and implementing customercentric processes (the how?). CRM technologies should enable greater customer insight, increased customer access, more-effective customer interactions, and integration throughout all customer channels and back-office enterprise functions (win-win outcomes?) These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 12: Customer Value Propositions Product Superiority Best Product High Touch and Best Product Enterprise Resource Trade-Off Best High Touch Best Time/Cost Best Time/Cost Plus High Touch Best Product at Best Time/Cost Customer Intimacy Operational Efficiency These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 13: Zen and the Art of CRM: Yin and Yang Definition and Segmentation Customer Requirements Processes Customer Expectations Customer Feedback Customer Communications Metrics External: Customer Experience Organizational Structure Internal: Organizational Collaboration People: Skills and Empowerment Processes Incentives and Compensation Data Mgmt. and Applications IT Infrastructure Metrics These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 14: The Eight Building Blocks of CRM Vision Organizational Collaboration Strategy Customer Experience Processes Metrics CRM Information Technology Perceived pain points: Least pain Some pain Most pain These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 15: Customer Processes and Metrics Customer Process Re-Engineering 1. All customer-facing processes are mapped 2. Key processes are identified with customer input Horizontal 3. Prioritized by impact on customer satisfaction Death Auto Insurance 4. Measured by contribution to customer value Welcoming Claims Hotline 5. Implemented in front and back office Change Address Claims Processing 6. Given a cross-functional “owner” Quote to Cash Inquiry Handling 7. Implemented with partners Winback Claims Tracking 8. Targets sent to customers Campaign to Compensation Problem Resolution 9. Compensation for failure 10. A customer SLA Retail Banking Telecom 11. SLAs vary by “We’re speeding up your processes” Provisioning segment? Interbank Transfers Fault Restoration 12. By……. Available Balance Service Reliability Seven-Day Account Transfer Processing New Service Intro Real-Time Account Balance Salesperson Know-How ATM, Telephone, Branch, TV, Internet Individual? These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 16: Customer/Supplier Win-Win Outcomes Unified View of Customer Unified View of Supplier ► ► ► ► ► ► ► Integrating across channels Providing consistency across channels Ensuring people resource per channel Planning new channel life cycles Consolidating internal and external data Trading information with partners Sharing information with customers Greater Insight Into Customers Greater Insight for Customers ► ► ► ► ► ► ► ► Unified view of customer, supplier Churn likelihood Current profitability Lifetime value Channel preference Life events Relationship events External events More-Effective Interactions Lower-Cost Interactions ► ► ► ► ► ► ► Unified view of customer, supplier Minimizing customer transfers Creating cross-functional roles Retraining employees Empowering employees and restructuring compensation Involving partners Tracking customer processes Greater Customer Access Lower-Cost Access ► ► ► ► ► ► ► Unified view of supplier, customer Accessible: Nearby or within reach Available, convenient: Open 24x7, self-service Approachable: Via multiple channels Simple: Easy to use Transparent: Within the enterprise and across the supply chain Trustworthy: Privacy is respected These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 17: Case Studies of Successful Outcomes Dow Chemical consolidated all customer service and sales information into one corporate memory to ensure a consistent face to the customer after having measured customer interface costs and activities per channel. Ford added a Web-based product configurator to simplify the order-entry system and thus aid its fleet sales dealers in more-effective interactions with fleet buyers and the drivers of the vehicles. Harrah’s Entertainment shared data across multiple casinos and hotels to create a unified personalized loyalty and rewards system based on customer profitability through greater customer insight. Compaq created a Partner Relationship Management solution to allow channel partners consistent and greater access to information about leads, products, services and user profiles. These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 18: The Evolution of CRM: Ajax? Stage Strategy Metrics Departments Systems 24-Month ROI Functional Departmental Partial CRM Total CRM 1X – 3X 2X - 5X 4X - 7X 5X - 10X Competitive Advantage Business Efficiency Impact Marketing Service Finance Sales Support Effectiveness Mrktg Sales Service These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 19: Industry CRM Involvement Current Technology & High-Tech Banking Financial Svcs. 1. More Commodity Telecom Product/Service Retail Utilities 2. More Channels Insurance of Communication Media Petrochemicals Pharma. 3. More Global Automotive Competition Distribution Gartner estimates: “Dot-Coms” Percentage FMCG or CPG organizations Manufacturing that have Business Services implemented Healthcare more than one Government CRM function Construction 5 Yr Projected 90% 95% 5% 10% These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 20: Future CRM: It’s Not Just for Customers Anymore Customers Prospects Channels Access: Data Exchange Integrate: Link Systems Collaborate: Create a CRM Ecosystem Implications: – Communities Affiliates – “E to E” Approach – Part of Several Different CRM Ecosystems – Not Only Will Channels Merge/Morph, But so Will the Argument of Who Owns the Customer Employees Your Company Suppliers Partners Influencers These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 21: The Competitive Future: CRM Ecosystems Value Chain Network Corporate Hierarchy M is s i o I it n n $ $$ e rs om st Cu s ye e plo rs Em s rtn e Pa s te m s c lyti a l Sy na A tio n re c tu e ra Op a s tru nr If ee Rv n ue e am Str s Fin ia tiv es Franchise B ack Pro M e tri d c Sa l s M es ktg 4 companies, 10 vendors each = 10,000 permutations Off Se r Fro ic e v Su nt pp l Off C y ic e h a in These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.
Slide 22: Recommendations 1. What is the value of CRM to enterprises, and what drivers are continuing to force its acceptance? • • • • • • Recognize that the long-term trends and drivers behind CRM have not changed, despite the slowdown in the U.S., European and other economies. Protect the budget for CRM investments — it will come under even greater pressure during the next six to nine months. Examine the past mistakes of others and avoid considering CRM a technology issue. Define both enterprise and customer value propositions before charting a CRM strategy. Use the “Eight Building Block” model as a checklist to determine which elements of CRM are currently lacking and to identify areas of responsibility where no one is in charge. Focus on customer-centric processes and metrics — these are the areas of the Eight Building Blocks that most enterprises have found to be most problematic areas. Implement processes based on customer benefits; start with customers and then work backward. Balance the internal focus with that of the customer experience — appoint an individual who is responsible for the external viewpoint. 2. How will organizations develop and implement a business vision for CRM? • 3. What will CRM look like in the future, and how can enterprises position themselves now to be prepared for these changes? • • Aim for “total CRM” with involvement across the whole enterprise, but don’t try to do it all at the same time. Benchmark and invest appropriately for the industry in which your enterprise operates, avoid over-extending investment unnecessarily or being left behind. These slides are for internal use only. External use of Gartner copyrighted material must be approved in writing by Gartner Vendor Relations. Please e-mail your usage request to quote.requests@gartner.com for approval.