The Customer Relationship Management Forecast for 2006

By Outsourcing Center, Beth Ellyn Rosenthal, Senior Writer

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The Customer Relationship Management Forecast for 2006

1. Companies want to personalize their marketing. That means they want to mine their data differently.

Ten years ago direct marketers wanted knowledge about the characteristics of prospective consumer segments they were going to mail an offer to, according to Marty Sunde, Client Services Organization Leader, Axciom. Today, with the proliferation of the Internet on top of continued mass marketing and direct marketing efforts, consumers have become desensitized to general marketing messages. “So, the more personal a message, the higher probability it will be meaningful to the consumer,” explains Sunde. “Today, companies want precise consumer household knowledge.”

The Axciom executive predicts even business-to-business companies will want to personalize their offerings. “This is a growing macro trend,” he says.

That means companies want their CRM data organized so they can run common analysis tools against it and find out more personal insight about the person than was important before, he explains. That’s good new for suppliers “who are able to provide infrastructure that organizes personalized content dynamically and who can ship it to the ultimate consumers, either physically or electronically,” he adds.

2. Customers want data integrated so they can analyze it more effectively.

Sunde says most customers new to outsourcing have their data fragmented throughout a variety of databases. He says Axciom’s customers tell him they have three call centers–one will treat the customer like a platinum customer and another will view him or her as a credit risk and want to check their credit. “They want to stop aggravating their customers,” he says.

Many of these buyers purchased software packages to solve this problem. Sunde predicts an increase in CRM outsourcing in 2006 because buyers “are realizing these tools don’t do the trick or gum up their systems.”

Tom Mangan, Senior Vice President of Convergys’s Customer Management Group, says Convergys works with its buyers to analyze this data quarterly and make recommendations to improve the process or spot problems.

3. CRM providers will develop a consulting side of their business.

Mangan says Convergys has developed “a lot of experience” in call center management and has recently developed a professional services practice to help customers–those who outsource as well as those who don’t.

He says this makes sense since the majority of companies still choose to manage their own call centers but are want to know how to manage them more effectively. “We used the intellectual capital from our outsourcing business to build a service business for companies not choosing to outsource their call centers,” Mangan reports. Margins on professional services are better than for outsourcing services, he adds.

At Axciom, Sunde says clients ask: “So I have the right data? Where can I get more? If I want to understand similar insights in a different country, where do I look?” “So we advise them,” he says.

And if Convergys sees risks, the supplier identifies them. “This has led to fee-based consulting around competitive uses of information to help our clients position themselves to use that insight. It’s a small but very healthy part of our business,” says Sunde.

4. Buyers want to understand the behavioral attributes of their customers.

Mangan says buyers now want to understand buying motives of their customers so they can effectively up-sell and cross-sell. Next year “our customers want us to apply business analytics to support their decisions,” says Mangan. He says behavior analytics software is now becoming available.

5. CRM will grow next year and expand into new verticals.

Credit card companies and financial services firms were the first to realize the value of CRM. Next year Mangan predicts automobile manufacturers and pharmaceutical companies will focus on the value of CRM and customer intelligence. “New verticals are turning to CRM outsourcing because they realize lack of customer understanding is hampering their growth,” he explains.

Sunde predicts outsourced marketing services will “accelerate” in 2006. Not necessarily for very large companies, but for smaller firms “that can’t afford to take the risk and have an unpredictable ROI (return on investment) on their marketing investment.” He says these companies want an integrated solution and a partner who will share the risk of executing.

Some companies will buy CRM as part of their supply chain. “A broader view of supply chain will take awhile, but it will come,” he says.

6. Like other BPO areas, there will be consolidation among suppliers. This includes the creation of value coalitions.

Axciom, for example, purchased Digital Impact. “Suppliers want to round out their product offerings,” he explains.

But in CRM, Sunde also sees a second path to a complete suite: value coalitions. These are groups of suppliers who work together to deliver a customized offering to a buyer. He says the buyers that are going to win the marketing game are “the ones that actually put together a value coalition of multiple expert suppliers delivering an organized business process with a contracted result and shared risk.”

Sunde predicts “we’ll see more integrated BPO offerings; sales and marketing operations will be an interesting and simple extension.” CRM suppliers have to be “willing to form these coalitions to go after integrated, complex challenges.”

7. CRM analytics will help companies identify root causes of problems in addition to managing customer inquiries. They want to know the “why.”

Mangan says companies want to know why their customers are calling them so they can use this intelligence to solve problems and increase customer satisfaction. For example, if there are a slew of product returns, it could signal a product defect. “We would recommend a look at the product and what’s happening at the warehouse,” he says. The goal: “To make it easier for our buyers’ customers to do business with them.”

8. CRM service level agreements (SLAs) will include a customer satisfaction component.

Call handle-time metrics are standard for CRM SLAs. Mangan says buyers are adding business analytics to their SLAs by integrating customer satisfaction surveys. “When you do that, buyers can effectively make decisions to optimize their options,” says Mangan.

About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].

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