If CRM has been a struggle or a passion for you then Infosys’ CRM blogs is the place to be in. Come join us as we discuss the latest trends, innovations and happenings which will have a bearing on CRM.

« April 2009 | Main | June 2009 »

May 29, 2009

Investing in Customers, during Recession

If, during economic growth you ‘reward’ customers for greater usage and spending, you ‘invest’ in them when there is an economic downturn.

The classic principles of Customer Loyalty seem to go haywire during an economic downturn. The loyal customer who was your advocate and evangelist seems to have switched his allegiance, the increasing profits customers were to provide as shown in your Customer Lifetime Value projections may show negative trends and all your attractive marketing offers designed to create the ‘wow’ is showing poor returns. Confusing times, indeed!

…But as it is said, ‘from confusion comes opportunity’

It has been displayed in the past that smart companies use recessionary times to consolidate their market share, by wooing customers defecting from their competitors, while being able to retain their existing customers. As it is oft quoted, ‘selling to a new customer is 5 times more expensive that to an existing customer’. So how do companies manage to retain customers during recessionary times? Put simply, They invest in them!

If, during economic growth you ‘reward’ customers for greater usage and spending, you ‘invest’ in them when there is an economic downturn. Investing in a customer is achieved by providing benefits, discounts which are not tied to usage, but those that directly address customer fears due to economic challenges. The results for these investments are the coming true of the profits the Customer Lifetime Value projections promised, notwithstanding the slight blip representing the economic downturn.

It is tempting to conclude that the only way to retain customers during recession is by offering everyday low prices, especially if you observe how well a Walmart or McDonalds performs. While it is true that customers are price sensitive during recessionary times, a loyal customer always looks for better value per interaction. So if the customer feels that he is continually deriving more value by pledging his allegiance with your company, he might not go to the lengths of taking risks by being associated with a new company, in response to the need to save money.

It is also a fact that, paradoxically, luxury is considered recession proof, which hints at the customer’s aspiration for luxury during recessionary times. So a smart marketer would invest in pampering a customer during recession than any other time. The same applies to the B2B markets too. Some examples from our clients in the manufacturing industry
  • A complimentary free month of service contract coverage on 1 year support agreements on machinery analyzers.
  • Free software updates even when customers are not covered under a service agreement.
Sometimes some of these discounts/benefits are essential to retain a customer and thus is in the realm of common sense. However, for these to work, they need to be part of your marketing strategy during recession and proactively be communicated to your customers. A challenge to CRM initiatives during recessionary times are the across-the-board budget cuts. They often mean a decrease in discretionary budgets and thus affect new CRM initiatives. (Arguably, companies still don’t consider Customer Relationship a core strategy and hence the dip in CRM initiatives) Accepting a decrease in discretionary spend a reality; however, it would be prudent for companies to improve efficiency of the current CRM systems.

So do not let recession be the elephant in the room, instead address it directly by planning on investing in your customer. Do not be instrumental in the premature death of your customer’s loyalty towards your company but instead build an even better breed of a loyal customer, by investing in them.

 

Have you been successful in retaining customers with recession-specific offers and customer relationship initiatives? If so, we would love to hear from you.

 

 

Open Source CRM - An Alternative to Hosted Models - Part 3.

In the previous part, we have seen the advantages of Open Source CRM over the traditional CRM model. In this concluding part, we will be looking at what are the factors that make Open Source CRM a viable option for organizations in comparison to Hosted models in the long run and also look at some of the uncertainties surrounding the Open Source CRM model that act as a blockade in its acceptance in the CRM market space.

Open Source software is something where the source-code is available freely, publicly modifiable and comes with a license to be flexible enough to the core. This hands the control to the users from a development perspective with the prospects of reduced licensing costs in the offering. Over the years, CRM has evolved into a mature market where there is a sizable market share available for open-source although market giants like SAP and Oracle who specialize in applications driven solutions have been able to occupy a fair share of the market. In spite of these issues, new entrants are busy knocking the doors in the form of Open source business application providers. In the words of John Roberts, CEO of commercial open software CRM provider SugarCRM, "CRM is a huge market and we do need a huge market. You need a large community. One should view CRM not as a nice application to have but as a mission-critical application. The big players have a fraction of the market because they cannot reach companies worldwide: they do not have the Internet to [establish] the reach."[4]

By utilizing the Internet as both a distributed development environment and a distribution channel, open source CRM companies can gain geographical reach without requiring costly company infrastructure. The Internet continues to change the way IT works but the benefits of low cost and very broad reach are not restricted to open source vendors. Marc Benioff, Salesforce.com CEO thinks "the barriers to entry - and survival - in the CRM market are high. CRM is a matter of money, market share and integrated application suites, which is why dedicated CRM vendors are being acquired." [4]

One of the reasons why software vendors do not wish to share the source-code is because of the simple reason that it is the main source of revenue for them. Although there are apprehensions about the thought that open-source techniques does help in evolution of the product at a much faster time frame than a proprietary mode of operation.

There is always an uncertainty surrounding the Open source softwares as many a time people who buy open source software do not understand the importance of specifying the requirements more elaborately to the development community as such. There is a good chance that many of the features that are part of a proprietary vendor are available in a open source product as well as there is an uncertainty when it comes to integration of the components into a solution. Open source CRM thus represents the rise of engineering over marketing and has the potential to produce software that is developed faster, is more innovative than proprietary software because it captures vision from developers worldwide and has a diverse user base. The absence of license fees is a large part of the open source CRM economic argument, but as far as CRM software is concerned license fees are only 10% to 15% of the total cost of ownership. Implementation, hardware, the cost of internal or outsourced support, customization and maintenance are where the real cost-of-business applications lie.

Open source CRM is not as functionally rich as packaged CRM applications. It is still basic and lacking sophisticated functionality such as high-end or predictive analytics. There are potential risk factors in terms of development, application maintenance and upgrades where custom integrations are concerned as well as potential security and stability issues. There is also the knowledge issue in that organizations that opt for open source need in-house skills to manage it from a technology and business perspective. Open source is adaptable and can give SMBs what packaged vendors have failed to deliver for years and are only now starting to address. Open source woos with the promise that organizations can get what they need and that the application can be moulded to the business. Users have a much greater chance of finding something that fulfils their needs with little modification and have the opportunity to influence development. It can also be a springboard to custom development.

Finally, one of the main positives to come out with the Open-Source CRM is that there is no risk of getting locked to a vendor-specific infrastructure. Open source has been able to evolve and capture the attention of the CRM space because of the fact that it is different from the traditional proprietary approach. It has added another dimension to the traditional 5-level model of on-demand CRM solutions, by introducing itself as the sixth level with the capability to share applications on a platform. Also another factor that has aided in the growth of Open Source CRM is the speed with the application has evolved due to the community development that has formed the user base for the Open source developer community.

In conclusion, the Open Source CRM presents itself as another alternative to the existing traditional model and the hosted models. As far as users are concerned with the growing number of models, the chances of creating a better match between application and business requirement are improving. How will this help the CRM space is something we might have to watch and wait.

May 28, 2009

Customer Relationship Management/Enterprise Application Integration/Business Intelligence and Data Warehousing (CRM/EAI/BI) products can fulfill MDM Needs - Biggest Myth!!!

Fully fledged Master Data Management (MDM) packages have been in the market space since the turn of the decade and many fortune 500 companies have implemented the MDM solution to achieve tremendous value within their industry domain. I have been in the MDM Consulting stream for the last couple of years but still realize the need to evangelize the need for an MDM solution among peers within the CRM/EAI/BI domain space. Many of the renowned implementation using matured products such as CRM, EAI and BI has put forth a view that the respective products within various domains can indeed be customized to meet the MDM specific requirements. This is predominantly wrong for the very reason that just because each product stack (CRM/EA/BI) can fulfill a partial subset of requirements within the MDM domain, the central core of an MDM suite (360 view of customer including Data stewardship process to manage the golden copy of the customer) cannot be customized on a CRM/BI/EAI product stack. This blog helps in acting as a myth buster for some of the common misconception around CRM/EAI/BI products fulfilling the MDM requirements.

CRM is able to handle all the customer attributes and can manage 360 degree view of customer/CRM does handle customer demographics- Myth buster

Some customers think that a CRM product implementation can manage customer demographics and can fulfill the need of getting a single view of customer in the enterprise. The claim though partially true, cannot meet various functionalities around the Customer Master data. A few are listed below

  • CRM products come with a data model to manage customer interactions and customer management, however it is not able to support the multi-form, multi-domain requirements that truly represents a 360 degree view of customer.
  • CRM products are not able to group the customer demographics requirements into customer preference management.
  • CRM  products are not truly designed for Service Oriented Architecture (SOA) based master data services, to facilitate Create Read, Update and Delete (CRUD) transactions on Customer data from various systems in the enterprise

EAI is able to provide the true integration between disparate Customer information systems- Myth buster

I have seen many of colleagues within the EAI space mentioning that EAI product has all capabilities to handle Meta data related to Master data entities and can transform and share the data with disparate systems. Though it is partially true, EAI products fall short in meeting various requirements in the MDM space.

  • EAI products typically are not packaged with pre built Schemas for multi domain, multi form master data entities like Customer, Product, and Location etc.
  • EAI products seldom come with data consolidation frame work and built-in data quality features.
    Even if one want to leverage existing EAI and CRM investments and convert them as a custom MDM solution they  may end up undertaking massive customization and having higher footprint with less than optimal performance
  • EAI built over CRM data model cannot meet the Non functional requirements stated in a typical MDM project.

BI does handle consolidation among various customer repositories- Myth buster

Additionally I have seen references where many customers treat their BI solution as a customer master data hub. The concept itself is dismal, since a truly integrated transactional multi channel ecommerce system requires real time data which cannot be met through a BI solution. (Key channel systems ended up getting stale data). BI packages are built up for OLAP (for reporting and analysis purpose), but not to maintain and manage transactional Master data. Though BI packages come with Data consolidation frame work (summarization and aggregation) they are not able to meet the functional requirements of a true MDM solution.

  • BI products do not support transactional data and cannot fulfill the real time transactional data requirements mandated in most domain space.
  • Typically BI products do not come with SOA frame work to support the primary needs of data synchronization required in an MDM product.

My personal experience so far with clients who have tried to retro fit their existing CRM/EAI/BI products into a fully fledged MDM customer data hub have failed  Either their existing CRM system could not meet the transactional requirement required in terms of performance or data synchronization and/or EAI system having limitation in providing the multi-domain, multi-form customer focus and/or BI systems failed to provide the real time information for business critical systems like Banking, Telecom, and Insurance domain etc.

This discussion is not definitely old wine in new bottle, and many a times there requires a need to convince the customer (both internal and external) the need for procurement of a commercial of the shelf MDM solution to meet the extensive Master Data management requirement over a much hyped view of converting their existing investment into a fully fledged MDM solution. Though it is prudent to carry out a fit-gap analysis against their existing CRM packages, it is extremely important for clients to understand the limitations of CRM and other domain packages in fulfilling MDM needs.

 

May 20, 2009

Open Source CRM - An Alternative to Hosted Models - Part 2.

In my previous post, we looked at why Open Source CRM can be looked at as an alternate to Hosted CRM models. In this part of the post, we can look at the adv and disadvantages of the hosted models and how open source CRM could be a viable alternative to overcome the challenges posed by the Hosted CRM market space.

Traditional CRM models as addressed above can basically be divided into two groups, Traditional On-Premise CRM Model and Web-Based CRM Model. Each of these CRM models have their own advantages and disadvantages that they provide to the businesses they are associated. Both forms of CRM systems provide a business with a way to manage leads, contacts, campaigns, accounts, customer service and all other areas of business within a software solution.

The advantages and disadvantages of CRM on-premise solutions are wide spread. One of the main advantages of on-premise CRM Software is that they are very secure and operate as an intranet application. But the disadvantage with such an approach is that there is a huge cost involved in terms of infrastructure and software installation.

These disadvantages were overcome with the arrival of the Web-based CRM model. Web-based CRM model works on the concept of CRM Software-as-a-Service model (SaaS). Another primary advantage of web-based CRM is that all data can be  accessible from anywhere in the world as this works as an internet application. The other advantage is that information security is ensured by taking frequent backups.

The benefits of a good open source CRM model over the traditional CRM models can be addressed as below –

  1. Low cost involved in the form of Pricing,
  2. Customized versions of the open source provider's applications. This feature is possible as the source-code is freely available and the developer community is open in contrast to the traditional CRM models.
  3. Time-to-Market improves with more innovative and creative versions of applications getting delivered to the user community.

There are risks, however with the Open Source CRM -- the biggest being quality control of the deliverables and the second being lack of coordination with regard to the releases of various versions of the applications. The other risk involved here is that open source CRM is often built on open source platforms with open source tools. At a minimum, one needs Linux to run the applications. This problem is, of course, mitigated by a hosted solution.

To summarize the advantages of open Source CRM over the Traditional CRM model, we can have a look at the points listed below:

  • Open Source CRM models involve less implementation time and higher speed-to-market.
  • They are cost-effective and incur a reasonably low investment.
  • They have fewer License issues as the licences are governed by GNU/FSF.
  • Open Source CRM covers various subscription issues and hence result in long-term business commitments towards vendors.

(To be continued…)

May 17, 2009

SAAS – Where is the money, honey?

True, we are going through unprecedented era. There have been feelers that the US economy has been able to overcome the tide of recession. Goldman Sachs was able to report a profit (http://www.financialpost.com/news-sectors/story.html?id=1492381), this quarter, though they had to resort to usage of a $10 billion bail-out package from the US Treasury, as late as October 2008. This may lead to more banks trying to balance and juggle their financials to declare a profit, the subsequent quarters. So what does this have to do with SAAS? Well everything! Most companies who operate in the SAAS space have been failing to pass on their operational efficiencies to the client, leading to the client aggressively trying to cut the cost outlay for managing these hosted applications. Clients have evaluated switching over to a new vendor for the hosted application or have tried to bring in-house the functionalities delivered by these hosted applications. The SAAS players have aggressively tried to reduce the per user cost and has offered slab based bundling price to keep the exodus of their current clientele list.

Recently, I was discussing the financial scenario with a colleague of mine, who has started a SAAS firm in US. They operate in a niche segment and the business model used is to manage and to monitor the print capabilities of large publishing houses with remote soft-ware that can effectively manage the entire inter connected printers. The entire print and publishing capability is outsourced and the client just gets a monthly bill, just like a pay-as-you go telephone bill. The clients are delighted with the business model, and they obtain customized print features (gloss, texture of the print medium, color) based on the target audience. True the model seems outlandish, but the embedded software has been made by the best of brains from MIT and has the support from Venture capitalist that provides seed capital for such innovative ideas. The embedded software is able to manage and monitor the consumables utilized in the printing process. Yes, it is true that they have been able to break-even by aggressively collaborating with Small and medium business enterprises, Printing channel partners (GA/VAR – graphical arts value added resellers) and publishing houses. The participating partners are able to realize the benefits by focusing on their core business model and competency, while non-core processes are outsourced to the SAAS provider. For the particular SAAS firm the profits earned is in sub minimal level per copy, but when the volumes are huge, e.g. during elections, they do make a good amount to tide over the capital cost incurred in setting up the infrastructure. Additionally the SAAS firm needs to have a service oriented focus, i.e. Customer first, and the belief customer needs the best in terms of customized service always.

So where is the money, honey? It is definitely in SAAS, if you have used Innovation as the underlying factor while coming up with the business model and is able to deliver consistent value to your end-customers in terms of personalization and customization.

The white labeling business and importance of CRM

White labeling of products/services is not a new business and is in every sector. However there is a big difference from products to services industry. White labeling of services involves integration of IT systems on both sides of Retail Service Provider (RSP) and Wholesale Service Provider (WSP).
 This is throughout customer life cycle starting from marketing the services as retailer branded products, fulfilling and assuring of the sold products under RSP's brand in the WSP's IT systems as well as RSPs systems.  The example situations where white labeling is used is British Telecom's internet services are being sold by Royal Mail, Vodafone, O2 etc. Similarly in India, local cable operators and internet service providers sell the products/services in their brand name.
Traditionally we are aware that the CRM systems used for product catalogue, marketing, sales and order capture as a part of customer data and relationship functionality. In some cases CRM tools go to the extent of service assurance (recording customer problems and tracking the SLAs). 
I tried to think about few important areas in CRM that gets impacted by this latest business model. These include
1) Wholesale Product Catalogue Management - Creating and maintaing these new wholesale product catalogues for Retail Service Providers and ensuring the synchronisation of these product/services between RSPs and WSP systems.
2) PartnerRelationship Management with these RSPs who can make our services penetrate in remote areas and in areas where the presence is less. Handling these partners is an impacted area.
3) Product fulfillment of RSP Customers When RSPs sell the white label products in their brand, the corresponding product on WSP needs to be fulfilled/provided and track that order to closure, this impacts the CRM system and related integration on WSP side. Also B2B integration with the RSP systems.
4) Assurance to RSP Customers Ensuring that if a customer problem arises because of the systems (not only IT) on wholesale service providers side identifying those situations and providing solutions to the customer and also informing the RSP about the progress of resolution is WSPs another important area.
These are a few that came into my mind. Can we think of a few more areas that gets impacted and how can we accomodate this new business model? Can we think of a small framework to address this latest business model? Waiting to see your inputs.

May 15, 2009

Extending transactional data elements in MDM Hub: Desirable or Unnecessary?

By definition Master data is core data which does not change frequently. The very objective of Master Data Management is to consolidate master data, cleanse, enrich, and publish to consuming applications, like CRM, ERP, Data Warehouses, etc. This leads to a belief that Master Data Hubs should only have master data like customer, product, assets etc and there should not be any (or limited) transactional data in MDM Hub. E.g. Sales Orders, Opportunities, Service Requests, Invoices.

 

Contrary to the above, MDM vendors like Oracle are offering MDM Hub license with additional options of integrating Sales Hub, Service Hub, Activity Hub with MDM Hub. IBM and Siperian too have a very flexible Data Model and their out-of-the-box data model could be extended to include transactional data elements. What are the real implications of this? Would the Organizations that are implementing MDM or have plans to do so in their IT roadmap, be better served by extending transactional data elements in MDM Hub?

 

The answer could be both yes or no and depends on the Organizations’ Business Case for MDM. Moreover, it needs good consulting proficiency on the part of SI’s to help clients refrain from establishing incorrect expectations from MDM. MDM is not supposed to replace any existing transactional application; it is to consolidate the master data from various application silos and to aid the business functions that need accurate representation of master data. Expectations from MDM like ‘Ability to raise customer invoices’ or ‘Ability to Create Sales Orders / Service Requests’ should be laid to rest, even while preparing/validating the Business Case. Usually, during the initial assessment of MDM programs, we have seen a huge list of master data (customer, product etc) related pain points being set forth by client IT after duly collating such pain points from various departments. While it may be prudent to analyze the list and recommend solution to all pain points, the customer is better served if the non-MDM pain points are identified and an alternate solution proposed to address those.

This being said, MDM application may still have the Sales, Service and Activity related details but it should only facilitate establishing the accurate customer profile to help with customer segmentation, prepare target audience for campaigns, various reporting purposes etc.

 

The MDM space continues to be dynamic and as the leading vendors (Oracle, IBM, SAP) and niche players (Siperian, Initiate etc) carry on with their roadmap, we will witness quite a few new products being introduced and in relatively newer domains E.g. Site Management (to streamline supply chain) etc. In addition to this, the concept of Enterprise MDM, or a true ‘multi-entity MDM’ has already been widely recognized and the newer versions of leading packages should see support for both ‘party’ and ‘product’ based entities. This would make MDM consulting even more exciting and would call for greater refinement in MDM solution offerings E.g. Data Modelling, Data Rationalization, Consolidation etc.

Implementing Royalty Solutions using an Incentive Compensation System

I am currently working on a proposal where a prospective client wants an estimate for the above.  Preparing such an estimate is always more challenging because the client needs are generally not met by an off-the-shelf package meant for a different business scenario.

 

Incentive compensation systems typically operate in a business scenario where sales reps and sales managers are required to be compensated on their performance related achievements. Royalty Systems on the other hand, pay commission to the service providers of content based on the usage and the revenue generated by their content. The common feature here, as can be gathered, is that both systems calculate and pay commissions but the other aspects differ vastly.

The commission in incentive systems is typically paid to employees while in Royalty Systems; they are paid to a third party. To implement a Royalty solution using an Incentive system (IC), the first question is- How do I represent this third party entity in the system? If the IC system only allows ‘salesperson’ to be paid incentives, you will have no choice but to classify your ‘content providers’ as salespersons.

Royalty processes have an explicit need for formal contracts which need to be maintained and updated as and when changes occur. Incentive Management systems may not adopt such a formal approach. This could necessitate adding a contract management system to the solution or else modeling the ‘contracts’ as ‘incentive plans’ in the system.

Content providers may not have access to the company’s systems so Royalty systems need to possess capabilities to email Royalty statements or provide access to their partners to a portal where they may view the same. Incentive systems might not be burdened with the same requirement. This means that additional capabilities might need to be plugged in to your IC system to achieve the above.

Given the fact that there are so many differences why is this post relevant? Why would companies try and fit a square peg into a round hole, as it were? The answer is, in these times, companies no longer have the luxury to fund the best product for every business requirement and are willing to cut corners and costs. Many companies who need to fund investments on an IC and a Royalty system as well might chose to fund one of them and modify or customize the same to meet their other requirements.

Which one of the systems should get funded? Now that’s a whole other blog post.

May 11, 2009

Make your calls count through intelligent call planning

We are not new to receiving unwanted calls from the various marketing agents selling everything from banking products to holiday packages. This kind of cold calling to acquire new customers is simply based on a list of potential customers with hardly any planning and profiling involved. A more mature sales organization or service organization will engage a planning methodology to reach out to customers. Call Planning is an essential task in CRM strategy, where the need is to constantly reach out for a wide range of purposes including acquiring new customers, developing existing customers, after sales service calls, survey calls etc.

Traditional, manual, volume based calling is time consuming, low in efficiency and high in cost. While traditional methods could have served the purpose thus far, the data that an organization has accrued over a period of time has made it impossible to consider all parameters for planning call activity for a representative, say, for a period of one month. Organizations have spent huge amounts in storage to store ‘gazillion’ bytes of data that they have collected for a customer. Harnessing this huge amount of data requires IT solutions backed by strong strategy.  Companies have realized that it is impossible to manually plan for hundreds of sales and service associates over multiple geographies. Business rules change way too often in this dynamic era and manual efforts simply can’t catch up. Absence of feedback loop doesn’t help the overall planning process either. As a result, more time is spent planning than calling.

Such organizations are looking for a solution which streamlines call planning and ensures that the business rules are always in sync with the ever changing business environment. For example, majority of the reps should be focused on acquiring new customers during the holiday season while focusing on maintenance and servicing during lean sales period. Another important consideration should be the amount (number of parameters) of customer information that can be used in planning the calls. Ability to measure post planning effectiveness is another important factor that organizations look for in a solution. In short, they expect a fast, flexible, comprehensive analytical solution.

I will be discussing in detail ways and means of addressing the above mentioned challenges with the Call planning process in the subsequent blog entries and welcome your point of view on the subject based on your experiences.

May 08, 2009

Faulty CRM and Anniversary blues

Tomorrow is my marriage anniversary and here I am, 750 miles away from my wife, secure in the thought, that, thanks to the sophisticated systems of online retailers I can wow her with a nice bouquet of roses in a jiffy. Well I logged in very early in the morning to one of India’s most reputed online retailers and spotted that lovely bouquet which would make my wife swoon, and quickly transferred it to my shopping cart, and then, clicked on "proceed" and was connected to my bank, after feeding in the account details and pressing confirm I got the approval instantaneously.

I patted myself for the brilliant and effortless way in which I went about anniversary gift shopping Cool and waited patiently for my bank to communicate the go-ahead to the online retailer/merchant but from here onwards things didn’t kind of follow the script. Firstly it took ages for me to reach back my merchant's site and then to my horror I saw that I have reached the login page, and, hoping against hope, I plugged in my credentials, went to my account, and noticed that my order is still pending as they are "awaiting payment".

I thought this is a minor hitch, let me call the merchant (outstation call) and sort this out, after all I had the bank reference number and a screenshot of the approval message (smart on my part to have captured it, right?).

Well, I was told by the polite call center agent - who greeted me by my name - that they will look into this and call me back, I was pleasantly surprised by the prompt response and zero call hold time, and my faith was somewhat restored in online purchasing.

This incident led me to think about where the transaction went wrong. What could the merchant have done to ensure a seamless transaction and consequently a better experience for me. The retailer obviously had a modern ecommerce site and handed over my transaction smartly to the bank, whose security credentials I do not doubt. Here too everything went off smoothly and then the confirmation message back to the merchant system was generated but lost in transit. So the order is parked in the pending queue. Only after getting the banks approval will the merchant pass it on to their shippers.

Now when the merchant has invested so much in creating a modern ecommerce system why shouldn’t they think of overcoming such communication glitches? After spending on a good CRM system internally (good call center, chat facility on their website, friendly campaign messages and customized promotional discounts during significant events like birthdays, festivals etc) and having a secure interface with the bank why should they relax? Couldn’t they have anticipated such mishaps?

Should the bank send just one asynchronous confirmation message to the merchant and not wait for a received notification from the merchant? Or shouldn’t the merchant IT system ping the bank a few minutes after transfer on not "hearing" back from the bank regarding my transaction?

Or shouldn’t the merchant build some logic in their system which ensures that as soon as the money is transferred to their account by the bank (which I believe will be done instantaneously) they get a notification and their system will try and connect this transaction with a placed order and automatically update the status of my "pending" order to confirmed. Instead of leaving the order as an orphan.

Why should the investment made on internal systems – and customer satisfaction - be compromised due to a less than optimum interface with the bank? A less optimum solution would be for the merchant to have an agent deal with such fallouts manually but though this gives a human touch to their operations it will still lead to delays. For all such connection breakages there should be an inbuilt logic for automatic reversal of the transaction, at the banks side, on an unsuccesful hand over, with an appropriate notification (sms/on screen message) to the customer, this will certainly reduce the customer's anxiety and may even ensure that he visits the site again for a repeat transaction.

Another solution would be for the online merchant to invest in good PRM systems to connect with their shippers and other sales and service partners to ensure that they are notified of such an order which is very likely to be confirmed soon and in the meantime they ought to go ahead and start with the shipping formalities.

So after not hearing back from the merchant’s call center agent I sent them an email with all my case details and am anxiously waiting for a response. Should I visit another online retailer and place my order before it is too late? Hope CRM doesn’t become a reason for some marital frictionInnocent and if it does then I certainly know whom not to entrust to send more flowers to mollify my wife, I would be better off calling the florist near her home for an assured delivery Wink.

May 07, 2009

Open Source CRM - An Alternative to Hosted Models - Part 1.

Open source software (OSS) is defined as computer software for which the source code and certain other rights normally reserved for copyright holders are provided under a software license that meets the Open Source Definition or that is in the public domain. [1] This permits users to use, change, and improve the software, and to redistribute it in modified or unmodified forms. Many a time one does not have a clear understanding of what an Open Source Solution is, in relation to the Proprietary solutions available in the market today. One needs to understand that each of these have their own advantages and disadvantages in them.

Traditional CRM Packages have been relying primarily on 2 basic models of hosting applications i.e. On-Demand model and On-Premise models. Open Source products have come to the fore over the last couple of years with various vendors like Redhat, Apache, MySQL etc coming up with some extremely customer friendly products. This has resulted in open source taking an influential stand in the Enterprise Solutions domain with emphasis on the CRM vertical space. They have been able to challenge the Traditional CRM market by providing products that suit Enterprise Integration coupled with support offerings.

Primarily Traditional CRM Markets have been focusing on three segments - Large Scale Enterprises, SMBs and SaaS. Open Source Solutions have come to be recognized as a fourth segment in the CRM solution space. While the traditional CRM products have big players like Oracle, SAP who have been able to get a fair share of the market over the years, Open Source solutions like SugarCRM are still lagging behind to find a foot holds in the CRM space. It won't be long when Open Source solutions will have their share of the market as they tend to offer High level of flexibility that enables companies to easily adapt the technologies to provide easy usability.

This kind of approach suits the SMBs as this model is a counter to the high effort and cost involved with the proprietary solutions. Also, the SaaS model benefits from the Open Source CRM solutions as they are offered with free licenses which is in contrast to the software cost and subscription model of the commercial softwares. One other advantage with the Open source softwares is the ease with which they can be scaled to make them custom-developed to suit the needs of the customer.

One of the major hurdles that companies world-wide are facing today is in the area of integrating the aspect of transparency into the marketing and sales activities. The combination of open-source analytics and CRM application is essential in resolving the above mentioned hurdle. With the open-source market looking to evolve, open-source CRM opens up many new possibilities for addressing specific business issues in a cost-efficient manner, either as a standalone CRM solution or as building blocks in more-complex solutions that offers the required business agility to compete in an increasingly fast-paced and competitive market space.

In a recent analysis conducted by Independent research firm on behalf of a solutions-oriented IT services provider  & consulting firm [2] and released in Dec 2008, titled "Open source paves the way for the next generation of enterprise IT"[3] where a great emphasis has been laid on the fact that open source delivers Cost and Quality benefits. The survey focused primarily on enterprises are already using open source, at least at a minimal level, which represent around 15 to 24 percent of enterprises in Europe and North America today. The survey brought out the impact of the open-source paradigm on enterprise IT by suggesting the current trends of open source adoption.

  1. Open source is moving up the technology stack.
  2. Industry sectors are adopting open source software (OSS) at different speeds and focuses. 
  3. Open source is now strongly used to develop mission-critical apps, services, or products. 
  4. OSS isn’t just cheap — it’s good and cheap.
  5. Cost is the primary adoption driver, but other factors are important, too: independence, flexibility, and innovation.
  6. The future implications of the above are far-fetched in terms of the way the enterprise IT is handled and looks at a fundamental mind-change in the success adoption of open source if the next generation of enterprise IT is to be successful. Some of the emerging trends are:

    1. Open source components are ubiquitous. 
    2. Customers will increasingly adopt OSS in the same professional way they have dealt with commercial software. 
    3. The principles of open source like free sharing of source code or the way of forming communities of contributors & consumers are transferred to corporate best practices.  
    4. A full new branch of service providers and competence centers inside established systems integrators will address commercial support for open source products.

      Although the enterprises may dabble in open source for the cost savings, but they will stay, according to Independent research firm, for far more critical factors like:

      As enterprises' adoption of open source software matures, they are likely to find more value beyond saving money on software license costs, low barriers to entry, and rapid evolution of successful open source projects.

      The open source paradigm embraces an even more important long-term benefit--a more innovative IT shop that can rapidly adapt to changing technologies and seize new opportunities as higher-level open source infrastructure projects mature.

      This combination of upfront cost savings and improved time-to-market will become a powerful weapon for those shops that can wield it strategically as a way to maximize the effectiveness of their software investments.

      (To be continued......)

May 04, 2009

Should you really acquire that customer?

I was reading up on Customer Lifetime Value concept and its relevance for taking customer acquisition costs related decisions. A thought struck me as to how in the present market scenario, when budgets are tightening, marketers are faced with the challenge of tradeoff between retaining existing and acquiring new customers. General convention is that new customers are expensive to find and acquire. This has brought about an urgent need to make an objective decision about how much time, money and effort should be spent on acquiring a new customer.

Hence the concept of Customer Lifetime Value (CLV) [that projects the value of a customer over the entire useful relationship period with the organization] looks relevant given the current recessionary trends. We can use CLV to take go/no-go decisions on customer acquisition by doing a cost benefit analysis, in terms of how much value will a prospect/ customer potentially bring in vs. how much the organization should spend to acquire it.

The concept can also be used for enhanced segmentation by complementing the demographic parameters and customer preferences, hitherto used for segmentation, with the potential that prospects/ customers have in terms of future cash flows. We can use any standard OLAP tool to calculate CLV to provide intelligence to business by using the existing application and data.

Some of the pertinent questions that come to mind are:

  • How is CLV a superior method than traditional marketing and sales budgets used to determine resources that organization should invest to achieve the targeted volumes and revenue?
  • At what levels (customer/prospect/segment/organization etc.) can CLV be calculated and what can be the possible benefits / applications at each of them?
  • How can CLV concept be built using a standard OLAP tool instead of a sophisticated data mining tool?

Let us discuss this concept and use the forum to explore the possibilities that it can open in terms of its application and business value that can be derived from it.

Subscribe to this blog's feed

Infosys on Twitter