The major focus of any customer relationship management (CRM) project for discrete manufacturers should be on better serving existing customers, and consolidating disparate data to enhance understanding of them.
Discrete manufacturing is the production of separate items, such as toys, gadgets, or cars, where tooling and the production line changes regularly. The opposite of this is process manufacturing, where the production plant is continuous, such as in the production of petrol or oils.
If the investment is to yield returns, CRM implementations in the manufacturing environment must be about improving processes to sell into, and support, the installed customer base.
"Traditional CRM focused on companies that have millions of customers, and have therefore lost track of them," says Bruce Jones, sales manager for the Commercial Sector at SAS Institute SA, the leader in business intelligence. "These companies can no longer see what customers want, their buying patterns, or their profitability.
"CRM in the past also tended to focus on customer acquisition and market share, believing these to be more important than servicing existing customers appropriately."
Jones believes, however, that CRM should focus on existing customers for good return on investment.
This view is backed up by a December 2002 AMR Research Report, "CRM: Inflicting Pain or Profit?" December 2002, which states that discrete manufacturers should concentrate on their installed bases to gain a return on their CRM investments.
Writing for bettermanagement.com, the authoritative Internet resource for business management information, Marc McCluskey makes the point that many CRM projects follow the attract-sell-serve model. These projects begin by looking at attracting customers first. However, successful discrete manufacturers should approach a CRM strategy in the reverse order by starting with serve, particularly in a down economy.
McCluskey says that this way manufacturers start with the existing customer base which represents the biggest opportunity for developing immediate returns and introducing process improvements with CRM. In addition, companies already have a record of the relationship with existing customers, from which to build on and deliver value.
AMR Research discovered that, on average, 25% of revenue and 45% of profits come from services when working with an installed base and existing products.
Commenting on the research, McCluskey says: "The difficult part of the equation is collecting and managing the information in the various forms of customer records.
"To understand how to manage the information, companies must look at the business processes that are enacted when managing the customers and associate customer information accordingly.
"Through the association of 300% more customer account information, one user was able to increase per customer revenue significantly."
However, two major challenges face discrete manufacturers trying to implement successful CRM. The first is trying to combine all the disparate data about the customer to get to one version of the truth. The second is associating and managing the blend of structured data, such as the bill of materials, and unstructured data, such as product manuals, associated with each customer.
"In discrete manufacturing, integrating data across the organisation is becoming more of a challenge," says Jones.
Discrete manufacturers need to invest in a data warehouse that consolidates disparate data, with the intention of understanding customer needs, satisfaction and profitability better.
"They need to establish one version of the truth regarding the installed base," says Jones. "This intervention can be enormously valuable to manufacturers."
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