Investment in Customer Relationship Management - How to gain the competitive edge

24 Oct 2006 12:00 AM | Anonymous

Competition is fierce in the investment community. Struggling against increasingly fickle consumer behaviour, investment companies are striving to find the Holy Grail of customer loyalty – trying to find the balance of cross selling the right products to customers and tying them in to longer term relationships. Customer promiscuity is on the increase in every industry and the financial sector is no different.

The companies which will gain prominence are those that step up to the mark in terms of customer management - the companies that put customers and their requirements at the centre of their businesses will be far more likely to succeed than those who shun what is often considered the softer side of business, to rely on hard nose sales tactics and uncoordinated efforts. But managing customers effectively can be a daunting task and even some of the biggest companies struggle to do it effectively.

But because of the few investment companies that manage customers effectively, a precedent has been set that companies need to attain in order to make any lasting impression on the customer. Customers are finally realising that rather than being at the mercy of their suppliers it is they who are in a strong position and consequently are demanding more – investment professionals need to realise this and meet the high service levels that customers are expecting.

So how can companies reach the requisite standards in customer management and start to build a reputation that makes them synonymous with high customer standards? Customer Relationship Management (CRM) is the principle technology used to interact with end users and as such is the most important tool in retaining customers. Embracing the latest CRM technologies is not optional - it is essential if investment companies want to keep a step ahead in the marketplace. And it’s not just the big multinationals that need to implement this technology. CRM is often associated with call centres, but in reality it has far wider reaching applications and should have a pivotal role in the customer management strategies of investment companies of all sizes.

European companies are increasing their investment in customer relationship management (CRM) software to increase revenues and grow their customer bases, according to Gartner. The analyst firm says the European market grew to $1.9bn (£1bn) in 2005, a 9.7 per cent increase on the previous year. This rise in spending on CRM software correlates strongly with the state of the economy, says Chris Pang, a senior research analyst at Gartner.

In the past, CRM has been an ambiguous term used to describe any customer interaction. However, as it matures as a business and technological process, more investment companies are beginning to realise that it refers to how a company manages its customers effectively, underpinned by carefully designed technology. Effective CRM is more of an ethos, a strategic practice that pervades every element of customer relations, underpinned by technology which is properly integrated into all relevant company systems. CRM feeds off information the company retains on existing customers and potential customers, carefully analysing it to aid in customer management, marketing and sales initiatives.

Whilst there is no blueprint to CRM and no one solution that will be suitable to all investment businesses, there are important factors that companies need to bear in mind in their approach to CRM. These include:

• Identifying factors that are important to clients - customers and their requirements should be the focal point if the business and a good CRM

• Promote a customer-oriented philosophy – this should resonate throughout the company and all staff should feel this

• Develop end-to-end processes to serve customers – a 360° view is essential in order to get a complete picture of the customer and make accurate inferences

• Provide successful and insightful customer support – letting a customer down when they need help the most is often the death knell in a supplier/customer relationship

• Track all aspects of sales – this allows a company to gather effective intelligence on what works and what doesn’t with different types of customer and completes a customer history to help achieve a 360° view

Most companies would agree that CRM is important to them but achieving a successful CRM system is something that needs careful attention. CRM technology is now able to be fully integrated with other business systems. Integration with the relevant marketing systems and client databases will ensure that more cross selling opportunities for investment professionals. Previously a CRM platform would have been a stand alone technology. Tying all systems together ensures greater efficiency, better sharing of data and less duplication of effort which ultimately serves to save time and consequently money and gives the customer a better experience.

The complexity of CRM projects, means that they are never plain sailing. However, CRM failures are largely due to human intervention as opposed to specific problems with the technology, according to analyst house Ovum. David Bradshaw, principal analyst at Ovum has commented, ”There have been instances of disappointing CRM projects but the decisions taken around the balance between service and cost is the problem with poor customer satisfaction.”

As with all technology, CRM is moving at a tremendous pace and the latest CRM technologies enable companies to know their customers better than ever before. The latest CRM can improve business/customer interaction in a number of ways. It can provide online access to product information and technical assistance around the clock. This can be directly to the customer in circumstances that suit but can also be within a company to enable all staff everywhere to have access to real time data online, regardless of employee location. The latest technology can also speed up processes to streamline systems and to cut costs through time efficiency and can provide mechanisms for managing customer communications and on-going support.

Data protection is another important issue to consider with regards to a CRM system – the data that is gathered can raise concerns over customer privacy. However, CRM generally involves making better use of customer information gathered as a result of routine customer interaction. The privacy debate generally focuses on the customer information stored in the centralised database itself. Fears over how companies handle this information arise, particularly when third parties are involved. Therefore effective CRM systems need to incorporate data protection policies and access processes, which should ensure that only staff who work with customer data can access it. This is particularly important in investment management due to the level of personal and financial information.

CRM is always evolving and the systems of the future will become more and more sophisticated. As investment companies strive to attain the competitive edge and attract and retain an increasingly fickle customer base, CRM will become core to the overall business strategy of the investment community. The outlay, in terms of resource, may seem daunting, but in order to survive, investment companies need to plough resources into an intelligent and effective approach to CRM.

Case study - Deutsche Bank

Deutsche Bank needed to build a business critical Customer Relationship Management (CRM) system with the objective of replacing the CRM application previously developed in-house. The new system needed to provide the sales division with a flexible work space that links CRM information with other business critical content to ensure an accurate, up-to-date and comprehensive overview of each client relationship. The main goal was that the new application should improve customer relationship quality, increase service efficiency and make the client more attuned to customer needs.

The application was deployed within a portal framework and is based on a three tier architecture. Employing a three-tier design, with the database and application installed on the server dramatically simplifies system maintainance, load balancing, upgrades and configuration. System users need only a standard web browser. The architecture works regardless of user operating system, thus avoiding the need to create different applications to accommodate different operating systems. All data is stored in an Oracle database and is retrieved through the business-logic layer and displayed via a web-based user interface.

An innovation introduced into the web-based system is the use of the Think Map module that displays client data in three dimensions, making it easy to analyse a lot of data in one graphic. Adding further convenience, the system’s interface gives sales staff access to all system functions and client information from one location and each user has the ability to customise his or her own application environment to best suit individual needs and preferences. The application’s interface is intuitive and presents bank staff with a look and feel in concert with the most well-known and popular business applications.

As a result of the implementation of the new CRM system, the time taken for data entry within the bank has been significantly reduced. For example, the time required to log a call report decreased from 8 minutes to 3 minutes, which results in 750 hours saved per month.

The new CRM system provides a single point of access to corporate clients’ data to all the parties and brought together sales, global relationship managers and senior investment bankers across the client organisation. The system is three times faster than its predecessor and the new functionality allows bankers to manage customer relationships in a more interactive and intelligent way.

The new system integrates with the majority of customer applications in the bank- database schemas, loading mechanisms and infrastructure, allowing the client to deliver updated business information to bankers as soon as it is available. Employing a three-tier design, with the database and application installed on the server dramatically simplifies system maintainance, load balancing, upgrades, and configuration.

The Deutsche Bank CRM project achieved a high degree of ROI, estimated at a saving of 30 – 40 per cent compared to conducting the project onshore.

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