Special Report: CRM sophistication vital goal for marketers in 2001

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The roots of customer relationship management are very familiar: direct and database marketing, sales force automation, data management/data architecture and call center management. Yet the challenge of implementing CRM—managing databases to track a complete customer life cycle by integrating all points of contact into one all-encompassing profile and then reacting to that information—well, that’s a more thorny issue.

"CRM is a very difficult challenge for marketers," said Scott Lochridge, principal and director of the strategic solutions practice of DiaLogos Inc. "They have to redefine their role in the company. They’re the ones who own the customer relationship." Dia-Logos, a Boston-based general management consulting firm, partners with clients to help them navigate the diverse range of CRM offerings. Lochridge recently spoke with BtoB and shared his thoughts on where CRM is now, and where it is headed.

BtoB: Why is it so difficult to implement CRM?

Lochridge: There are lots of pieces to it. You’re talking about a lot of people in the organization who have a huge vested interest in making sure it goes right, and oftentimes in many companies there’s not really one place that owns it. There are the marketing executives, the sales executives, the customer service executives—and they are all chartered with doing their part of the program. There are the IT guys or the CIOs, the [people] with the budgets that have to build this stuff. In the last couple of years, people have really started to put the pieces together. And all the people that started off in these various areas got more and more sophisticated and created software to do this.

BtoB: How are companies deciding which products or consultants to use?

BtoB Q&A
"CRM is a very difficult challenge for marketers. They have to redefine their role in the company."
-- Scott Lochridge, principal and director of the strategic solutions practice, DiaLogos Inc.
Lochridge: For clients, some of this is kind of new to them. They may have had a sales group or a marketing department, but when you start talking about CRM, they are confused. And they have all of these different people coming to talk to them. And the tool guys, and there’s a few in particular, are really trying to race toward kind of a one-stop shopping approach. [They] are trying to offer suites of products and suites of solutions. They can just say, ‘Calm down, we can do all of this. We can solve all of your problems.’ And so I think one of the trends you are seeing is a push toward greater consolidation. The problem with that is because we are still in an environment where technology is evolving very quickly … you see a lot of product development, you see a lot of people racing into find better solutions. Sometimes the best solutions don’t come out of these big one-stop shopping places. They come out of the little firms that have got some cool idea but they are off in some warehouse somewhere. But then the big guys see those guys and say, ‘Well, let’s go buy them and put them in our package.’

BtoB: How is CRM evolving?

Lochridge: Companies walk through different levels of sophistication as they get better at it. They start off with what’s commonly known as closed loop marketing, taking action to gauge customer response, such as coding a catalog. The second step is that they are actually able to predict a little bit. They are actually taking that information and learning and focusing. The next time they send out a catalog, they get a better response rate and spend less money doing it. The third level, the most sophisticated level, is that they start to anticipate what [a customer] wants. There are very, very, very few companies that have even begun to think about that.

BtoB: Where do you think most companies are in terms of CRM?

Lochridge: Most of them aren’t even closing the loop. They’re just starting. People are spending a ton of money to be able to do that. I think what you’re going to be seeing over the next several years … is a push to greater and greater sophistication in terms of a company’s ability to use all of these tools, not just from a technical perspective but from an organizational perspective to be able to take advantage of this. Because what’s happening in all of this is … customer expectations are going to be raised. So it’s just going to raise the ante of competition.

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