Close
  • Latest News
  • Artificial Intelligence
  • Video
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Logo
Subscribe
Logo
  • Latest News
  • Artificial Intelligence
  • Video
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Subscribe
    Home Applications
    • Applications

    E-CRM: Making the Customer King?

    Written by

    Peter Coffee
    Published May 21, 2001
    Share
    Facebook
    Twitter
    Linkedin

      eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

      In the friction-free Internet marketplace, vendors are under constant pressure to match the lowest price that a buyer can find—with at least one supplier, on any given day, having some short-term reason to offer goods below cost. Customers, meanwhile, find themselves getting no more than they pay for, as thinning profit margins leave no room for once-common courtesies.

      The resulting race to the bottom has no winner: Buyers give back their purchasing economies to the cost of constantly comparing suppliers, while vendors find that every sale bears the burden of costly promotion. For buyer and seller both, CRM (customer relationship management) enables a return to win-win thinking, transforming information into services that can lower the buyers costs without erasing the vendors profits.

      Delivering e-CRM means more than being nonresponsive by e-mail instead of over the phone. A mere acknowledgment message, such as “Your e-mail was received,” has little value.

      How much better to use words in a customers e-mail inquiry as the basis for a document search, returning an e-mailed list of potentially useful hyperlinks or, better still, to contact a customer proactively before a known potential problem makes itself apparent? “Your device is 5 years old and may soon signal its need for a new backup battery … .” The proposition of e-CRM should be a better relationship, not a less expensive one: No one should think that the “e” in e-CRM stands for “easy.”

      How much is it worth to retain an established customer, as opposed to taking a philosophical attitude of “win some, lose some”?

      Pick a number: Researchers at the University of Victoria, in British Columbia, estimate that a business can retain five current customers for the cost of attracting one new one. The National Association of Business Ethics puts the ratio at 6-to-1, while Gartner Inc. asserts a factor of 10.

      Researcher Frederick Reichheld, of Boston-based Bain & Company Inc., estimates that U.S. corporations lose half their customers every five years, and that cutting these defections by 5 percent can in some cases double profits. Its vital to communicate these potential returns on a CRM effort. Without this perspective, the top-line cost of CRM may blind the budget-minded to bottom-line benefits.

      For example, Gartner estimates the cost of CRM implementation at $15,000 to $35,000 per customer over a three-year period.

      A survey by Insight Technology Group found an average CRM cost of just under $10,000 per customer per year—but that was for a population of 200 projects. Of these, the worst third yielded essentially no return, while the next-best third showed only minor benefits. For the remaining projects with significant returns, annual costs of software, hardware, customization, training and support topped $16,000 per customer per year.

      IT staff developing CRM systems may find themselves supporting sales and marketing personnel who believe in the role of personal relationships and subjective advertising appeals rather than hard numbers. Its not the same environment as, say, finance or manufacturing.

      Its helpful to develop logic based on increasing the percentage of leads converted to sales, or shortening the time to turn a prospect into a buyer, or increasing repeat business by some percentage. A sample analysis by Critical Path Inc. (www.critpath.com/ crmroi.html) may suggest an approach.

      Other useful guidance comes from Cap Gemini Ernst & Young. The company recommends identifying high-value customers, in whom its logical to invest the high costs of eCRM efforts, and conducting a well-focused pilot program that can generate support by yielding measurable returns. More CGEY recommendations are at right.

      Recognize, though, that staff may fear newly enabled management scrutiny of statistics, such as time to respond to a customer. Managers must strive to communicate goals of improvement and reward rather than measurement and punishment.

      Prospective users of the system must be involved from the outset if they are to feel any ownership of the system, rather than burying the project in change requests or disavowing any disappointments.

      A phased plan, such as the one shown at www.eweek.com/links, puts accountability where it belongs while avoiding premature commitment to an ill-conceived and costly CRM design.

      Peter Coffee
      Peter Coffee
      Peter Coffee is Director of Platform Research at salesforce.com, where he serves as a liaison with the developer community to define the opportunity and clarify developers' technical requirements on the company's evolving Apex Platform. Peter previously spent 18 years with eWEEK (formerly PC Week), the national news magazine of enterprise technology practice, where he reviewed software development tools and methods and wrote regular columns on emerging technologies and professional community issues.Before he began writing full-time in 1989, Peter spent eleven years in technical and management positions at Exxon and The Aerospace Corporation, including management of the latter company's first desktop computing planning team and applied research in applications of artificial intelligence techniques. He holds an engineering degree from MIT and an MBA from Pepperdine University, he has held teaching appointments in computer science, business analytics and information systems management at Pepperdine, UCLA, and Chapman College.

      Get the Free Newsletter!

      Subscribe to Daily Tech Insider for top news, trends & analysis

      Get the Free Newsletter!

      Subscribe to Daily Tech Insider for top news, trends & analysis

      MOST POPULAR ARTICLES

      Artificial Intelligence

      9 Best AI 3D Generators You Need...

      Sam Rinko - June 25, 2024 0
      AI 3D Generators are powerful tools for many different industries. Discover the best AI 3D Generators, and learn which is best for your specific use case.
      Read more
      Cloud

      RingCentral Expands Its Collaboration Platform

      Zeus Kerravala - November 22, 2023 0
      RingCentral adds AI-enabled contact center and hybrid event products to its suite of collaboration services.
      Read more
      Artificial Intelligence

      8 Best AI Data Analytics Software &...

      Aminu Abdullahi - January 18, 2024 0
      Learn the top AI data analytics software to use. Compare AI data analytics solutions & features to make the best choice for your business.
      Read more
      Latest News

      Zeus Kerravala on Networking: Multicloud, 5G, and...

      James Maguire - December 16, 2022 0
      I spoke with Zeus Kerravala, industry analyst at ZK Research, about the rapid changes in enterprise networking, as tech advances and digital transformation prompt...
      Read more
      Video

      Datadog President Amit Agarwal on Trends in...

      James Maguire - November 11, 2022 0
      I spoke with Amit Agarwal, President of Datadog, about infrastructure observability, from current trends to key challenges to the future of this rapidly growing...
      Read more
      Logo

      eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Advertisers

      Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

      Advertise with Us

      Menu

      • About eWeek
      • Subscribe to our Newsletter
      • Latest News

      Our Brands

      • Privacy Policy
      • Terms
      • About
      • Contact
      • Advertise
      • Sitemap
      • California – Do Not Sell My Information

      Property of TechnologyAdvice.
      © 2024 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.