The financial services industry should certainly award itself nine out of ten for effort on customer relationship management (CRM). Compared to most other sectors, organisations in this market are ahead of the game.
Financial services companies have accepted the concept that a company needs to be able to take a single view of its customer. In many cases, if they have not done so already, companies are implementing customer databases and CRM packages enabling them to do so. They are often adding the business intelligence tools that are needed to make use of customer information in order to market and sell more effectively. They are even starting to use customer information across product boundaries to enable cross-selling – something that other industries would like to achieve.
However, financial services companies are not yet achieving maximum benefit from these efforts. Most have yet to extend the scope of customer-focused marketing activities beyond the bounds of traditional salesforce automation packages, point of sales tools, and of traditional financial services business. It could be in this relatively uncharted area that the real competitive advantage is to be found.
Entering new areas
By using customer knowledge to drive activities on the web, for example, you can reach whole new markets and simultaneously reduce the sales costs. Affiliation marketing is one example. An insurance company could induce an IT company selling computers on the web to promote its hardware insurance policies to customers buying new kit.
This kind of affiliation marketing is a virtually cost-free way to sell, and can be combined with CRM techniques to ensure that the proposition reaches only the right type of customer. But to make it possible, you need to integrate front and back office systems together in a way that has rarely been attempted to date.
Until now, the difficulty has been finding someone with enough knowledge and experience to integrate the technology effectively. Companies need someone who knows not just about CRM and financial products, but also about ecommerce and the web. CRM vendors have been too focused on CRM to be able to help deliver a complete solution, while ebusiness specialists and more generalist integrators don't know enough about CRM.
Things are changing. The CRM software industry is going through the same cycle that every other packaged software market has experienced. First there were just a few CRM package vendors, then as the market took off more contenders flooded the market. Now, the number is declining again as smaller vendors are squeezed out by a handful of international companies such as Siebel, Pivotal and Onyx.
Smaller businesses have to find new roles and niches if they are to survive. The obvious route for the most successful of these small players is a shift towards systems integration and away from development. Rather than compete with large US counterparts, alliances are being are formed with them.
The US companies welcome these alliances, seeing them as ways to reach clients more effectively: the integrators provide local knowledge and resources, together with service capabilities, that they, as software developers, lack. In particular, integrators can provide a channel through which the big vendors can reach the medium-sized clients, a market that they have had difficulty in penetrating.
For the user community, too, the emergence of specialist integrators can only be good news. These players combine in-depth knowledge of CRM and related disciplines with expertise in vertical markets like financial services. They are able to offer clients what, increasingly, they are looking for: not just a software package, but a complete solution. A “holistic” approach that applies customer-oriented thinking right across the business.
As anyone who has ever bought software knows, you can't usually get everything that you need from a single vendor. Integrators are well-placed to build solutions that incorporate multiple products from multiple vendors, providing independent advice on what product is best in each area. With an integrator masterminding the project, though, you still have the benefit of “one butt to kick”. Integrators are also well-positioned – and well-motivated – to monitor the software package market after the initial system is in, so that companies can continually extend and evolve the solution to keep up with technological advances.
A new breed
Systems integration is not a new discipline, of course, but the new breed of integrator differs significantly from the old.
First of all, the new integrators have a strong grounding in, and focus on, customer-based systems – that is their area and they know it, and the relevant products, inside out. Second, they have a different approach to tailoring software for clients: rather than write code, they will combine packages and other prewritten elements, giving a faster and more economical implementation route than ever before. For even greater speed, they offer “palletised” solutions incorporating combinations of packages that they have integrated on earlier projects.
Another difference between the old integration model and the new is that, rather than walk away from the project after implementation is complete, these new integrators will be offering sustained support.
That means not only continually improving the solution, but also offering an option of running it on behalf of the client under a facilities management or application service provider (ASP) agreement. The ASP model of using an outsourced pre-configured CRM solution for a monthly cost will further reduce implementation time, as well as limiting or even eliminating the client's need for an in-house IT resource.
As CRM follows the parabolic development path common to all packaged software markets, not only will the number of software vendors decline, but the leading products' functionality will also converge. Ultimately, for the end-user, it will not really matter which of the packages they opt for. Finding the right integrator, however, could make all the difference.