InformationWeek

But CRM is rapidly evolving from being a technology-centric project to a business-value effort. And companies are moving from viewing customers as exploitable income sources to treating them as assets to be nurtured. This is a critical trend that represents the use of knowledge-management practices to build long-term customer relationships.

Companies need a CRM strategy because it helps them understand their customer-acquisition and retention goals. On the back end, CRM helps companies retain customers and increase profitability. A CRM strategy also helps companies coordinate the management of customer relationships across systems and business units.

CRM software can bring together data from disparate systems and business units to provide a holistic view of customers and the company's relationship with them. It can help coordinate customer contact and relationships across channels (retail, channel, Web) by presenting a unified message regardless of the contact point.

CRM strategies can be a defense against commoditization or a differentiator. For example, if you manufacture a generic product such as blank CD-ROMs, you can differentiate yourself through better customer-relationship management and customer service. CRM is most effective when companies deploy active strategies to support the whole sales process through acquisition, retention, and development.

Leading E-CRM Offerings These packages are designed for Web businesses
One-to-One BroadVision Redwood City, Calif. 650-261-5100 www.broadvision.com k-Commerce Suite Inference Novato, Calif. 415-893-7200 www.inference.com NetPerceptions Suite NetPerceptions Eden Prairie, Minn. 612-903-9424 www.netperceptions.com Flycast, AudienceNet Engage Technologies Andover, Mass. 978-684-3884 www.engage.com E-Business Suite Kana Communications Redwood City, Calif. 650-298-9282 www.kana.com V/5 eBusiness Platform Vignette Austin, Texas 888-608-9900 www.vignette.com Dynamo Suite Art Technology Group Cambridge, Mass. 617-386-1000 www.atg.com INTERSHOP enfinity Intershop San Francisco 800-736-5197 www.intershop.com	eBusiness Suite Open Market Burlington, Mass. 781-359-3000 www.openmarket.com Pandesicıetail Solution Pandesic Sunnyvale, Calif. 888-349-3249 www.pandesic.com MultiChannel Commerce 2.0 Trilogy Software Austin, Texas 512-794-8900 www.trilogy.com Commerce Connection Sterling Commerce Dublin, Ohio 614-793-7000 www.sterlingcommerce.com Customer Interaction System Blue Martini Software San Mateo, Calif. 650-356-4000 www.bluemartini.com PurchaseSource Frictionless Commerce Cambridge, Mass. 617-495-0180 www.frictionless.com NetAnalysis net.Genesis Cambridge, Mass. 800-982-6351 www.netgenesis.com Firstwave eRM First Wave Atlanta 770-431-1200 www.firstwave.com
DATA: PURCHASESOURCE

Most businesses are moving to Web-based CRM, but this doesn't negate the need for the person-to-person interaction that's so fundamental to many companies' sales processes. Active CRM technology means that a customer contacting a Web site for information is followed up immediately by a phone call. Salespeople are able to harness the power of the information available within the company and on the Internet to support their preparation for a business meeting with a client. The client is given access to information it finds difficult to pull together internally and is given choices relevant to its profile and needs, and the adoption cycle is quick and easy.

Companies need to think of ways in which Web-based CRM will develop strong ties with their customers where the service and information provision will be excellent but also where the relationship-management teams really use information available to build the relationship with their client. At this point, the E-communication and E-interaction between a company and its external contacts will truly be two-way.

CRM projects are major undertakings and the project managers must have clearly defined goals. Measuring the return on investment is an important first step in determining the metrics against which success will be evaluated. The primary characteristic of any set of measures has been to tell if each project requirement was met. It's also important to balance the risk vs. reward for each measure. Some common CRM metrics include the number of new customers, the cost of acquiring those new customers, customer satisfaction, customer attrition, the cost of promoting products, profit margins, incremental revenue, and inventory turns.

Any of these measures can be used, provided they're directly relevant to the purpose of the project. The CRM project team, along with the system users, must determine the specific goals and objectives of the CRM initiative. If the purpose of the project is to increase market share, then that's a critical success measurement. It's important to keep the critical success measurements as simple and clear as possible.

CRM project costs vary widely, depending on the scope of the initiative. There are some standard costs incurred for any IT project, such as hardware and software. Services are another big-ticket item, including consulting, Web hosting, Internet access, domain name registration, and subscriber-based services. Interestingly enough, the largest cost associated with CRM initiatives is labor. Hardware and software prices are dropping, while labor costs are skyrocketing because of the IT staffing shortage.

Benefits from CRM projects generally include increased customer satisfaction, reduced direct marketing costs, better-informed sales forces, more-effective marketing campaigns, and lower costs for customer acquisition and retention.