Vendor Bender
Of course, a CRM installation can easily run $10 million. Cloninger of Cahners In-Stat notes that a corporate end-user might pay $2 million for the software license alone — and then might have to spend three or four times that amount to hire a systems integrator to get the system working properly with its other applications.
Such a price tag goes a long way toward explaining why so many software vendors are adding new functions to their systems. Companies that shell out $10 million on a CRM deployment want the deluxe model. Cloninger points out that cleaning up customer databases — while a worthwhile goal — may not be enough for a CFO to justify an eight-figure investment in a software system. The addition of analytical tools, however, often sways prospective buyers. ''The biggest trend you're seeing is that the operational vendors are branching out into the other realms,'' says In-Stat's Cloninger. ''The analytics guys are not looking to get into the operational side, but they are looking to leverage their partnerships.''
In June, for instance, CRM software developer Kana Communications completed its acquisition of business intelligence software publisher Broadbase Software. In March, SAS Institute, whose products include a CRM analysis system, acquired Intrinsic, a U.K.-based developer of marketing automation programs.
Some vendors are also selling CRM initiatives as ''value exchange programs.'' Translation? ''If I invest in you as a customer," explains Siebel's Lackner, "I want to see that it's reciprocated in your buying behavior.''
Harrah's Entertainment Inc. is taking the value exchange approach. In the mid-1990s, the Las Vegas-based operator of 25 casinos launched its Total Rewards program. David Norton, Harrah's vice president of loyalty marketing, can't provide an exact figure for the system's total cost, aside from saying Harrah's spends several million dollars each year to operate and maintain the program. But he does estimate the CRM program generates an extra $1.60 in revenue for each $1 of investment. Says Norton: ''I'd say that within a year, it broke even.''
Norton explains that in Las Vegas, it's common for gamblers to stay at one hotel, but hop from casino to casino on The Strip. While Harrah's hasn't updated its customer research to determine how much of each dollar its customers are now gambling in its casinos, he's convinced that the advent of Total Rewards has upped the company's take. ''What we know anecdotally is that a few years ago, we were only getting 36 cents out of our customers' gaming dollar,'' says Norton.
Crossing the Channels
The current trend toward merging business intelligence with operational systems won't complete the CRM evolution process, however. Avaya's Bird says the next challenge is making sure that all the different channels of customer interaction are in sync. The goal: providing a 360-degree view of the customer on one screen pop.'' Customers are calling companies and saying I'm phoning you today about the e-mail I sent you yesterday regarding the Web transaction I made last week,'' he explains.
Indeed, it doesn't do much for customer loyalty when a service rep has no knowledge of either yesterday's E-mail or last week's Web purchase. By his lights, Bird believes ''there around 10 companies on the planet that are doing CRM right today.'' That's an awfully low percentage — particularly considering the ever-increasing number of channels customers use to contact companies. Already, there's E-mail, the Web, voice, fax, and direct mail. Wireless devices are headed this way as well. Observes Byrd: ''If I'm traveling, I expect to push a button and talk to someone who knows exactly what I want. There's quite an intensive level of technology that's going to be applied to the voice user interface.''
Until companies can incorporate all these channels into one over-arching system, expect to see more push pins at corporate call centers.
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