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CRM Technology Decisions: Peppers outlines vertical limits

Just because you carve out a nice, industry-specific niche, that doesn't guarantee success. Noted consultant and author Don Peppers advises businesses to find an even greater differentiator.

ATLANTA -- Marketing guru Don Peppers shot down the myth that industry-specific solutions deliver CRM results. Instead, he urged businesses to identify their core differentiator and then exploit it.

Peppers, the noted author and founder of CRM consultancy Peppers & Rogers Group, told attendees at TechTarget's CRM Technology Decisions conference that customers want the best product, delivered at the lowest price and accompanied by excellent service. It's a tall order that few can meet. That's why successful customer strategies hone in on the one segment in which the business excels, he said.

Peppers' recommendations: if your company offers a wide variety of products, deploy a CRM strategy that provides real-time customer feedback to get new products to market quicker. If low prices are your bread and butter, use CRM to cut operational expenses and identify low-value customers, driving prices down even further. If your firm excels at service, strive for even greater customer intimacy.

"Even in the same industry, companies need different CRM solutions," he said. "But partnering and networking are almost always critical."

As an example, Peppers cited retailer Nordstrom Inc., which has long been famous for getting to know its customers. While its strategy accentuates a commitment to service, provider partners like Donna Karan International Inc. clothing subsidiary DKNY focus on product life cycle management tools that assemble real-time customer information to establish product innovation and leadership. In turn, DKNY's manufacturer, A.V.R. International in India, deploys supply chain and ERP applications that help it make clothing even cheaper.

Each meets its customers' needs, Peppers said.

Peppers, however, stopped short of rejecting industry-specific CRM software. In fact, he called vertical applications a step in the right direction, just not the complete answer.

The CRM software giants -- like Siebel Systems Inc., PeopleSoft Inc., SAP AG and Oracle Corp. -- have all touted their vertical offerings. Siebel, in fact, has different application sets for 20 different markets.

Attendee Rick Flagg, manager of the application department at Aurora Casket Company Inc. in Aurora, Ind., said his company knows it can't truly compete with the market leader in terms of product breadth. Yet Aurora has traditionally differentiated itself through pricing.

Flagg is now transitioning toward a customer service-centric model, deploying a homegrown Lotus Notes-based CRM and e-commerce system that lets customers buy when they want to. Since rollout, he's witnessed a spike in Web site activity in the wee hours of the morning, when many funeral directors are awake preparing for intakes. Sales have also jumped since the site went live.

Along with that success comes the need to make sure the back end of the company can "deliver what the front end tells you the customer wants," Peppers said. And he cautioned that technology isn't always the answer. He highlighted one Peppers & Rogers client that saved $8 million when allocating customer IDs from legacy systems by changing business processes instead of rolling out new tools.

"We think in terms of the supply chain and the demand chain but, in reality, it's just one value chain," he said.

Any organizational or technology changes also have to overcome intrinsic adoption problems, Peppers said. He put the onus on top-level executives to champion change management.

Linda Bulmer, vice president of management consulting for Fujitsu Consulting in Fredericton, New Brunswick, said her clients notice that the collaboration "bar is raised" higher these days in order to deliver total value.

"To do that, you have to make sure your partners are intimately involved with your customers' needs," she said.

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