CRM And The Customer-Driven Demand Chain.

Much has been written about cost savings from supply chain management, but we believe greater benefits can accrue from creating a customer-driven demand chain. The demand chain covers all the business-to-business (b-to-b) partner relationships, touch points and business processes used to market, sell, service and distribute products to the end customer. By putting customers at the center of the demand chain, and using information about customer needs to drive it, companies can rower costs, boost revenues and greatly increase customer satisfaction.

Why the urgency for a customer-driven demand chain? The main impetus is the growing complexity of the marketing, sales and customer service environment. New channels such as the Web, b-to-b marketplaces, wireless, IVR and kiosks, and new global and e-commerce competitors, are increasing the complexity of managing customer relationships in the demand chain. Effectively managing these relationships can be a major challenge. Technologies like the Internet empower customers, enabling them to compare prices more easily and switch vendors. Business-to-business marketplaces aggregate products and threaten margins. In many industries, a complex, multi-tiered ecosystem of channel partners, such as distributors, wholesalers, VARs and resellers, "owns" the customer. A customer-driven demand chain helps lock-in b-to-b customers by proactively delivering custom products and services and personalized support at every touch point in every channel. A well-managed demand chain can balance channel-partner needs with direct cu stomer relationships, reducing channel cannibalization and increasing revenue.

Information technology has a key role to play in optimizing the customer-driven demand chain. Using the Internet for universal connectivity and customer relationship management (CRM) technology to pull, consolidate and analyze data from both direct and indirect sales channels, enterprises can construct a single view of the customer and gain an intimate understanding of their own demand chain.

Such intelligence allows business managers to "see through" the channel to identify customer demand and analyze sales partner effectiveness. When connected via a shared CRM solution, manufacturers, distributors, resellers and retailers can more easily leverage end-customer data to collaborate in product development, sales, marketing and service initiatives -- and move functions to the channel partners best equipped to perform them. They can also interact more consistently with customers across channels and touch points, presenting a consistent face for the enterprise to improve sales, marketing and service satisfaction. Additionally, CRM can hasten the "insight to action" cycle to accelerate sales and help managers respond quickly to market shifts.

CRM In The Customer-Driven Demand Chain

The CRM solution for a customer-driven demand chain consists of two parts: analytical applications for gathering and gaining business insight from information, and action-oriented applications such as campaign management, sales force automation, customer service and partner relationship management for managing customer interactions. Note that an integrated solution produces best results, as the analytical application feeds the other elements.

Analytics. Most companies start with extraction, transformation and loading (ETL) technology that aggregates data from the extended enterprise in a data mart or warehouse. If your company already has a data mart, the CRM solution should pull data from it. If you do not have a data mart, be sure the solution can access all relevant sources, such as transaction systems, ERP, the Web, sales force contact center, partner management or any system that stores customer and partner information. Some solutions are optimized for a single touch point, such as the Web or ERP, but nor the contact center. With such systems, you may not know the customer well enough to make critical business decisions.

Using data mining, OLAP and other analytical techniques, the analytical solution should offer prepackaged and custom reports for the business managers in marketing, sales, partner management and customer service. Report output will be based on business metrics such as quarterly sales and sales forecasts, marketing return on investment, sales by partners and market demand trends by product lines. When evaluating solutions, be sure to check the ease of use -- you don't want IT staffers running SQL queries every time a business manager needs a report. Also evaluate the degree of granularity. In the b-to-b space, companies must often deal with a small number of very important customers. You will want to drill down to a fine level of detail, such as the attributes that predict product interest for the top 10 companies to which to pitch a new marketing campaign.

Campaign management. Moving to action-oriented applications, campaign management uses offline business intelligence to analyze customer interactions, segment them and then execute multichannel marketing campaigns via e-mail, direct mail and through call-center contacts. A key feature for demand-chain optimization is synchronization: Unless you synchronize the campaign among all customer touch points, campaign management software may do more harm than good. A customer receiving a promotion via e-mail, for instance, may want to discuss it with a sales or customer service representative, who should be in the marketing loop at all times.

Real-time personalization. When customers are on the Web site or interacting with a customer service representative, they are providing information the company can use to improve service and boost revenues. Real-time personalization technologies will proactively recommend a product or service that fits the customer's needs exactly -- especially important in b-to-b, where customers in long-term, high-volume relationships expect personalized service.

A real-time analytical engine will work in real-time, analyzing Web clicks or sales rep interactions and matching them with past purchasing history to make product recommendations -- such as a new router that fits the customer's IT infrastructure, an open purchasing order and previous price preferences. With real-time personalization, manufacturers and suppliers could collaborate to present jointly constructed campaigns to end-customers. Manufacturers would gain deep insight into previously unattainable end-customer product interests from their responses.

Customer service. Business-to-business customers expect a high level of customer service. Meeting their needs requires a customer service application that is aware of all inbound and outbound events, communications and transactions. Each touch point, whether e-mail, the Web, voice or fax, should be armed with the customer's complete story, providing the same personalized level of service whether customers are talking to a contact center representative or using a self-service option.

Sales force automation. Many sales force automation (SFA) systems focus on sales management metrics, helping managers manage the sales reps. Such systems are only as good as the data entered by the sales reps; unless SFA truly helps the reps make more sales, it is unlikely they will use it. For an optimized, customer-driven demand chain, the SFA solution should give reps immediate access to relevant customer information, such as order history, recent service calls and problems and the real-time personalization technology mentioned earlier. Also consider how sales reps will use the system -- a wireless connection to a PDA, for instance, can greatly increase sales productivity.

Partner relationship management. In our increasingly complex ecosystem of channel partners, partner relationship management (PRM) software is crucial to an optimized demand chain. A base level of functionality helps manufacturers understand partner behavior and define rules of engagement, but the future is partner collaboration. By sharing information and managing workflow, PRM can help trading partners collectively target customers, coordinate and collaborate on marketing campaigns, and define the most promising customer segments.

Getting It Done

With the benefits so clear, using CRM to create a customer-driven demand chain might seem like a "must-have" solution. A common objection, however, is the complexity of so many applications working together. This objection can be overcome by realizing that the entire solution does not need to be deployed at once.

Most companies start with analytics, the key to understanding the technology's benefits and discovering demand-chain opportunities. An example comes from one of the world's largest professional service firms: a company that uses CRM analytics to understand its top 200 clients. Real-world benefits include increased availability of performance data and strategic insight, faster account decisions due to better data access and business insight, more proactive marketing and improved troubleshooting and account monitoring.

Some companies find it makes sense to deploy other elements first, such as a customer service solution, when building a new contact center, or real-time personalization on an e-commerce site. A major auto manufacturer, for instance, uses real-time personalization to speed up the sales cycle by presenting the most appropriate offer to Web-based buyers. Leads are then routed to dealers, prioritized by "affinity to buy" scoring performed by the personalization engine.

Whatever CRM applications you deploy, it pays to get the business managers involved early. Once they see the value of increased access to customer data or the value of immediate business insight that accompanies detailed analytical reporting, their buy-in will help push the project forward. Additionally, their input is needed to help IT understand the critical sources and locations of customer and partner data. Partner buy-in also is a must. This can be problematic due to "channel conflict," the fear of giving manufacturers access to partners' customers. The antidote is convincing partners that in return for sharing, they will receive valuable insight and best practices for increased sales success. History has shown that channel partners will favor manufacturers that are dedicated to providing such support.

For all the reasons mentioned, using CRM to optimize a customer-driven demand chain can be a boon for manufacturers, channel partners and customers alike -- as well as for IT executives whose job, increasingly, is to create business value.

Stephanie Langenfeld is director of business-to-business marketing programs at E.piphany (www.epiphany.com), a San Mateo, Ca1ifornia-based provider of intelligent customer interaction software for business-to-business and business-to-consumer companies.