Chicago August 12, 2002 Many corporate customer relationship management (CRM) initiatives fall short of expectations due to a focus almost exclusively on the front office while other important activities and processes go ignored, according to consultancy Inforte.
While front office activities, the activities and processes that comprise customer touch-points, are highly visible and critical to the overall success of a CRM implementation, companies must also consider back-office, planning and execution processes, too, Inforte reported.
The consultancy said it has identified three key stages that companies must go through to optimize revenue and profitability driven by CRM initiatives:
Phase One: "The Integrated Front Office" Achieving a comprehensive view of the customer, as well as addressing indirect channels, improving forecasting capabilities, and providing a means to optimize marketing activity and stimulate short-term revenue where necessary.
Phase Two: "The Intelligent Back Office" Setting different service-level commitments based on customer value and segmenting supply chain planning activities by customer value.
Phase Three: "The Demand-Driven Enterprise" Addressing planning and execution processes across the various interlocking departments and business units to optimize profitability.
"Effective CRM begins in the front office, extends to key back-office processes and continues through to the planning processes that management adopts to define and update operating plans," said Darius Vaskelis, vice president of research and solutions at Inforte. "A seamless flow of these three stages enables a company to become a demand-driven enterprise that is efficient and differentiated, has generated tremendous customer loyalty and optimized profitability."
Based on the market performance of many public companies in the past year, Inforte said most organizations are still in the phase one stage where they focus exclusively on the front office, have yet to tackle multi-channel issues and put minimal emphasis on the role of forecasting or effective revenue management.
As an efficient front office senses opportunities, an intelligent back-office can respond to and turn those opportunities into revenue. The phase two stage requires that companies also focus on differentiating the fulfillment of the firm's essential good or service through its back office processes based on the value and needs of the various customers or customer segments.
When an organization has properly achieved these first two milestones, it can then begin to drive increased revenue and loyalty. The third stage the demand-driven enterprise goes to the heart of the way the firm manages its day-to-day operations. Here, firms must move away from traditional static quarterly planning and toward a more dynamic, continuous planning approach, where management builds operating and resource allocation plans and budgets that are flexible and easily adjusted. Formal processes for assessing and adjusting the current state should also be in place across every department and business unit.