Dears,
I believe ERP and CRM are Corporate Cousins. If you strive to run a customer-centric business CRM along is not going to get you there. At least, not all the way. Here's why. Being customer-centric means delivering what customers value. Customers value all sorts of things, but generally you can put it into three buckets: products/services (what they buy; functional value), experiences (how product/services are delivered and supported; emotional value) and price (what it costs to get the other two things).
A successful customer-centric business strategy is a plan to deliver customer value more effectively than competitors, to drive profitable growth and other value to stakeholders. So what does this have to do with CRM, which some say is synonymous with customer-centricity?
Let's leave aside for the moment that CRM as commonly practiced is mainly about extracting value from customers, not delivering value. OK, let's not. Seriously, do you want to argue that SFA is why your customers are doing business with you? Or that your call center is the only thing your customers care about? Or that those targeted marketing messages are your customers' main loyalty drivers?
Sorry, while these are important, there's more to loyal customer relationships than CRM. If you don't believe me, just ask your customers.
The core limitation is simply that CRM (and its new "hot" cousin Social CRM) are still mainly about the front-office. And much of the value that customers, um, value comes not from the front-office and certainly not from the new trendy social front office such as Twitter, Facebook or online communities either. No, much of what customers value comes from the so-called "back office" where ERP reigns.
That's where products are built, services are provisioned, quality is managed and cost is reduced. Sure CRM (however you define it) can add value, but it's not the sole driver. In my benchmark studies the past 10 years, over and over again I found that core products/services are worth about 40% of the value, experiences another 40% and price 20%. Your mileage may vary.
Where does ERP fit in? I'm not an ERP expert, but I think Wikipedia provides a pretty good definition: "Enterprise Resource Planning (ERP) is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources."
I find it interesting that ERP is not defined as a "strategy" but rather a system-based approach to manage resources. Somewhere along the line CRM became a strategy but still at its core CRM is also a system-based approach... focused on customer information rather than internal resources.
If you think CRM is a concept, strategy or whatever, that's fine. No harm done and you're entitled to your opinion. But ask around and you'll find that most think of CRM like ERP -- systems that can be used to support a business strategy, but not a business strategy in and of itself.
You'll need ERP+CRM (and a customer-centric strategy driving them) to deliver the full value package that will earn your customers' business and loyalty. CRM is not enough. If you are truly interested in becoming a customer-centric business, you need to factor ERP into your thinking. Are you?
Your P&C
DC*
I believe ERP and CRM are Corporate Cousins. If you strive to run a customer-centric business CRM along is not going to get you there. At least, not all the way. Here's why. Being customer-centric means delivering what customers value. Customers value all sorts of things, but generally you can put it into three buckets: products/services (what they buy; functional value), experiences (how product/services are delivered and supported; emotional value) and price (what it costs to get the other two things).
A successful customer-centric business strategy is a plan to deliver customer value more effectively than competitors, to drive profitable growth and other value to stakeholders. So what does this have to do with CRM, which some say is synonymous with customer-centricity?
Let's leave aside for the moment that CRM as commonly practiced is mainly about extracting value from customers, not delivering value. OK, let's not. Seriously, do you want to argue that SFA is why your customers are doing business with you? Or that your call center is the only thing your customers care about? Or that those targeted marketing messages are your customers' main loyalty drivers?
Sorry, while these are important, there's more to loyal customer relationships than CRM. If you don't believe me, just ask your customers.
The core limitation is simply that CRM (and its new "hot" cousin Social CRM) are still mainly about the front-office. And much of the value that customers, um, value comes not from the front-office and certainly not from the new trendy social front office such as Twitter, Facebook or online communities either. No, much of what customers value comes from the so-called "back office" where ERP reigns.
That's where products are built, services are provisioned, quality is managed and cost is reduced. Sure CRM (however you define it) can add value, but it's not the sole driver. In my benchmark studies the past 10 years, over and over again I found that core products/services are worth about 40% of the value, experiences another 40% and price 20%. Your mileage may vary.
Where does ERP fit in? I'm not an ERP expert, but I think Wikipedia provides a pretty good definition: "Enterprise Resource Planning (ERP) is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources."
I find it interesting that ERP is not defined as a "strategy" but rather a system-based approach to manage resources. Somewhere along the line CRM became a strategy but still at its core CRM is also a system-based approach... focused on customer information rather than internal resources.
If you think CRM is a concept, strategy or whatever, that's fine. No harm done and you're entitled to your opinion. But ask around and you'll find that most think of CRM like ERP -- systems that can be used to support a business strategy, but not a business strategy in and of itself.
You'll need ERP+CRM (and a customer-centric strategy driving them) to deliver the full value package that will earn your customers' business and loyalty. CRM is not enough. If you are truly interested in becoming a customer-centric business, you need to factor ERP into your thinking. Are you?
Your P&C
DC*
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