What Comes After CRM?

Customer-Led Business Transformation

November 8, 2001

Why haven’t CRM systems yielded a strong ROI? Because it’s not enough to know who your customers are and what they want. Unless your company transforms itself to be more customer-centric than product-centric, you’re going to be disappointing customers and prospects. In addition to investing in CRM, let your customers redesign your company’s core business processes.


In today's tough global economy, businesses are focused more than ever before on retaining their existing customers and on lowering their operating costs. Customer Relationship Management (CRM) strategies and systems, once thought to be the silver bullet that would catapult companies to higher profits, are now coming under increasing management scrutiny. The "problem" with CRM, if there is one, which we doubt, is that capturing customer information and acting upon it is only one piece of a much larger challenge confronting today's businesses. Customers don't just want to be marketed to, they want to be well-served. Our companies are notoriously ill-prepared to meet the challenges posed by today's increasingly demanding business and consumer customers.

What do we need to do beyond installing CRM systems to help us better understand our customers and to better market products to customers, sell them to customers, and support customers? Actually, there's a lot beyond CRM that we need to do. Despite our investments in customer-facing Web sites, customer portals, and CRM systems, our businesses are still designed from the inside out as product-centric and functional fiefdoms. This drives our customers nuts! Until we actually begin redesigning our entire businesses to be customer-driven and customer-led, we won't be able to meet the needs of 21st century customers.


You've already got a customer-facing Web site or portal. No doubt, your company is also in the midst of a major CRM initiative to pull together and to mine much of your customer information so that you'll be better able to target your most profitable customers with relevant offers and to aim your marketing campaigns at more likely acquisition targets.

But customers aren't buying right now. And your sales cycles have gotten longer and longer for smaller and smaller returns. You've trimmed staff, lowered prices, gotten rid of excess inventory, and your management is looking for the next place to cut costs. You're looking for the best opportunity to bring in revenues and profits without increasing costs-to-serve. You're both looking for improved results. What's the answer?

Go Beyond CRM

Guess what? CRM isn't the silver bullet that will yield more effective sales, greater wallet share, and faster profitability. There's only one thing that will really do that. You're going to have to let your customers drive your business-all the way through.

Pulling together customer information and mounting better marketing campaigns won't make it easier or more enticing for customers to do business with you.

Let Your Customers Transform Your Business

Face it. Your business is broken (from your customer's point of view.) Your customers can't get consistent information across your Web site, your contact centers, your retailers, and your channel partners. They can't easily locate the products they need. They have to make several attempts to resolve problems and to get questions answered. Your business, like any business, is designed inside out. It's designed for you to develop, build, and sell stuff. It's not designed to help customers buy stuff from you. The problem is as simple as that. And as hard.

So what SHOULD you be doing? Where SHOULD you be investing your scarce resources? How do you transform your business from a collection of product line silos and functional fiefdoms to a streamlined, efficient customer-driven pipeline-one where customers' needs and requests appear at one end, and product development, delivery, and service take place in a transparent and dynamic Value Web?

The good news is that there IS a proven way to transform your company to be lean, clean, and customer-centric. And you can do it one step at a time. This transformation starts with the Web and with your other customer-facing interaction touchpoints. Then it ripples through your entire organization, your partner chain, and your supply chain-in fact, your entire Value Web. (At some point in the past five years, supply chains became supply Webs; the same thing happened to demand chains. Instead of a series of one-to-one causal relationships, we now realize that each customer request or need fans out through an entire Web of organizations, each of which may participate in providing the solution.)

Clearing the Way

But, in order for this customer-centric transformation to take place, you need to remove barriers, solicit high-level support, and seize tactical opportunities. Once customer information and requirements begin to drive your business in real-time, the path forward becomes clearer and clearer and more and more compelling.

WHO SHOULD LEAD THE CHARGE? The people who are leading the customer-transformation of their companies tend to be the same people who have spearheaded their companies' e-business initiatives. Usually, they're strongly backed by the CEO, aligned with their company's IT visionary and with the global marketing executive, and have a strong business P&L sponsor-usually in an organization that is already organized around a major customer segment.

Occasionally, as at Delta airlines, the major transformational trigger comes out of the need to streamline operations. (Delta began the revamping of its internal systems in order to gain a better real-time view of its fuel needs. Then the company was able to use its business events-based "digital nervous system" to proactively improve customers' experiences when the inevitable travel disruptions occurred (see footnote).

Learn the Survival Skills from Customer-Centric Organizations

If you look at the evolution of the customer-driven transformations that have rippled through the today's most successful companies, you'll see some interesting similarities. Here are some of the patterns that I've ...


1. See John Mann's " Customers Experience Your Internal Operations ," July 19, 2001.
***End Footnotes***

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