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Article Excerpt
Central to many operators' churn reduction/customer retention strategies has been the move to incorporate technology solutions into back and front office systems that then impact its various customer touch points. While the intention of this report is not to provide a detailed evaluation of every available solution, later sections of this chapter do look at some of the options available.
Earlier chapters have introduced some of the reasons why customers churn from one operator to another. It was highlighted that one of the key factors that influences the customers' propensity to churn was the level of customer service that they received. From the operators' point of view this is an area that they know they can act upon and try to resolve. In fact operators do spend a lot of time and money on implementing solutions to improve their customer relations. A lot of the time these solutions can be brought under the umbrella of Customer Relationship Management (CRM) and there are a great many software vendors and consultancies in the market that are able to provide CRM solutions and services.
6.1 Past failings
Why are customers still not satisfied with the supposedly newly improved customer centric approach and still churning despite the availability of CRM solutions? Why has CRM failed before? There are a number of reasons why this has been the case until now.
6.1.1 Buy the solution and it will work for us
The telecommunications industry has often been said to have followed in the footsteps of other industries (finance and retail for example) in terms of the more human aspects of business, namely customer care. It has therefore been a little slower on the uptake of the ethos of CRM and customer care. It has tried to make up for lost time over the past few years and is now, some would argue, spearheading the development of CRM.
This shift in attitude can be attributed to the fairly recent deregulation of many of the world's domestic telecoms markets, which has resulted in a need to find ways to beat the competition. However, with this sudden uptake of CRM technology a gap appears to have developed in understanding the fundamental issues involved.
There have been instances where boards of directors have heard the CRM buzz and made it the primary goal to buy in CRM software simply because that is what the industry says it needs to improve its business. It is, unfortunately, the case that far too often the resulting software has been bought in and either left sitting on a server collecting dust or been half-heartedly implemented and then phased out or replaced. It could be that the IT department was unwilling to support the project, or that there was no ownership of the project, or even that the vendor who supplied the software did not effectively follow through on the initial sale to ensure that implementation would be carried out correctly. Wherever the initial blame might lie, the underlying reason for failure lies in the fact that there was no focus to the project. In other words, simply to buy in a CRM software solution and think that it can be plugged in and all your customer care issues will be solved is naive.
Clearly this is over-simplifying the issue (thankfully it is not often the case that CRM is implemented quite so blindly!), but nevertheless far too often the CRM issue is approached with little overall strategy. The intention of this report is not to cover the finer points of implementing an overall CRM strategy--but it is to say that there is good reason as to why customers still churn on the grounds of poor customer service despite the efforts of the operators to do something about it.
6.1.2 Knowing what your customers want
The second reason why subscribers still churn in the name of poor customer service is based around a need to refocus on customer needs. When we talk about customer relationship management as a solution we are assuming that the customer wants a relationship with their service provider in the first place. Is this really the case?
The CRM acronym itself has often been juggled around or evolved to promote various messages--one of which is CMR (Customer Managed Relationships). The inference here is that the customer is the one who is in control of the relationship. Is this any more satisfactory? It is probably truer to say that the customer really isn't interested in any 'relationship' at all.
The trouble is that any operator which satisfies itself with that approach will miss out on the benefits to be gained by cross-sell and up-sell. There is clearly a fine line between turning your customer off your service completely and keeping that sales opportunity line of communication open.
6.1.3 Too broad and not strategic enough
The criticism levelled at many failed or failing CRM projects is that they are either too broad in their objectives or that they are simply not strategic enough. The reason for this is often that the company is trying to do too much too soon--such as transform the entire organisation into a mass of customer-centric activity using every available touch-point to glean even more information about its customers and feed it all back into one giant analytical pot which will improve retention, reduce churn and increase profitability. This is not a bad objective in itself but practically it is highly unachievable unless it is approached in bite-sized chunks.
CRM strategy also needs to be business-specific and that means taking a tailored approach that reflects the operator's own unique processes and requirements. Out-of-the-box will not be good enough. This implies that there is a huge amount of ground work to be done before even beginning to consider what software tools are best suited. In other words, as an operator you cannot implement software to fix a problem if you don't have a good idea what the problem is and a specific plan to fix it.
6.2 Optimising CRM
Although CRM has been incorporated into the mindset of many operators and implemented in their businesses there is evidence to suggest that its use has produced often less than satisfactory results. In 2003, a survey of companies around the globe (not just in the operator space) conducted by CSO Insights found, rather encouragingly, that almost 70% of those surveyed had evaluated CRM software. Furthermore, almost 75% of these had then either purchased a system or developed one internally.
However, these rather positive initial results soon begin to lose their shine when it is acknowledged that only around 25% of those that implemented CRM achieved 'significant' improvements to their business (including revenue increases, increased sale-cycle, increase in leads generated, reduction in order errors and better customer satisfaction). Of the rest, 45% said they achieved minor improvements, 18% said they didn't achieve any measurable improvements and 12% said they simply could not tell.
What goes wrong? Time and time again research, operators providing insight at industry conferences, vendors and systems integrators each demonstrate that there are some very fundamental hurdles which need to be faced in any CRM project. Many of these are detailed below.
6.2.1 Management buy-in
Before any software tools are purchased and implemented, managers from key areas, such as marketing and sales, should get together to discuss their overall business requirements and their vision for how to take this forward. The questions they should ask and answer will include:
* what data they can access
* what additional information they will need to perform their jobs better
* how enhanced access will improve the company's profitability.
They should also reach agreement on what role analytics software will be expected to play in the operator's overall business strategy.
6.2.2 Populating and maintaining data
Once it is known what information is required and why, it is also necessary to work out how to attain the desired level of data access. That means understanding where the data currently resides (which will require the involvement of the IT department), who is responsible for collecting the information, and how it can be accessed across departments. Not surprisingly, one of the most challenging aspects of any CRM project is in managing the data--not only in terms of identifying that which is relevant, but also in terms of populating the applications where the data resides and maintaining it thereafter.
Most operators rely on some form of data warehouse whose vast store of information is organised and interpreted through the use of analytical programs. However, across an organisation data is typically not always integrated, particularly where the organisation may have grown through acquisition, and retrieving useful information from disparate systems can be both difficult and time-consuming. Because organisations are often reluctant to replace their legacy support systems altogether, they require their CRM solutions to integrate seamlessly. Many companies also have complex technical operating environments and therefore in order for a CRM solution to be successful it must understand and interact effectively with the systems that comprise this environment.
The problem for marketing managers is that they need quick, easy access to real-time customer information to be able to measure the effectiveness of their strategies and make timely changes accordingly. Analytical CRM can help them to sift through large amounts of data and is particularly useful where it integrates disparate data from across the organisation.
Verifying the data
Confronting data quality issues, in part by implementing a framework to address them regularly, is key to achieving the full benefit of any CRM initiative. Data sources need to be cleaned, standardised, and integrated to ensure that the information will be able to be manipulated as intended by the analytics software. Here, appropriate managers should establish who owns the data, whether all the data has been verified, and who will take responsibility for making sure that information is clean and remains so in the future.
6.2.3 Mapping technology to processes
One of the biggest mistakes in any CRM implementation is to let the technology features drive the project and impact too heavily on the outcome. Customer relationship management--and there is a purposeful distinction here in using its full title rather than its acronym--is certainly not primarily about technology and adapting your focus to incorporate the software. It should primarily be about the business processes that support your customer relationships and then applying technologies to automate those processes. This is also a fundamental reason why CRM, in most circumstances, needs to be customised. Off-the-shelf CRM is doing a great dis-service to your business if it is then supposed to reflect...
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