Software vendors have been searching for the next big thing ever since Enterprise Resource Planning (ERP) turned out to be a lot tougher to implement than advertised. They seem to have found it in customer relationship management (CRM), the buzz phrase du jour at e-business expos and sales conferences. Interface with customers across functional silos in real time! Leverage the customer-centric paradigm for strategic advantage! Convert clickstream into revenue stream! Siebel Systems, PeopleSoft, EDS and hundreds of other companies are pushing products that promise to ignite sales, engender loyalty and leave CRM-less competitors in the dust.

Amidst the frenzy, it's worth keeping in mind that CRM is just technology, not a talisman that can create an immediate, lucrative bond with customers. No technology, no matter how many customer "touch points" it encompasses and how well it integrates with existing systems, is of any use to a company that can't envision how it wants to interact with current and prospective customers. And humans, by definition, must remain an integral part of any attempt to automate those interactions. Computers don't engage in relationships (at least at this stage of cyber-evolution); people do.

So what do customers really want?

Many companies are so busy grappling with CRM selection and deployment (see Taking on CRM) that they don't consider their overarching customer relationship strategy--just what they're trying to accomplish with CRM technology. All too often, an off-the-shelf or custom-designed CRM package is used to automate existing processes rather than enable new, innovative approaches designed to deliver what customers actually want.

"There are a lot of wonderful tools, but if you don't know what you want to do with them, you're going to waste them," says Ronni T. Marshak, senior vice president of the Patricia Seybold Group, an e-business consulting firm in Boston. "You're going to implement it for a small tactical reason and ignore the larger strategic value that you can achieve by really creating a strategy and using technology to implement the strategy."

Marshak advises CEOs, CIOs and marketing chiefs to set out specific CRM goals--reduce the cost of acquiring new customers, cross-sell and up-sell to existing customers, target more lucrative markets, close more sales--and then create the conditions that make those goals obtainable. Most of those conditions have nothing to do with CRM technology itself, she adds; a company that wants to become truly customer-centric rather than just paying lip service to the notion may have to reengineer fundamental business processes and change prevailing attitudes.

Salespeople, for example, normally have little incentive to improve the customer experience by entering data such as product preferences, buying motivations and pet peeves into a computer. That's why so many sales force automation systems have turned out to be a colossal waste of money. Why sit there typing when there's another commission to be made? CRM systems that attempt to net information from sales reps and field service personnel would be a lot more successful if the compensation of those employees was partly based on customer satisfaction.

Developing a coherent customer service strategy shouldn't involve months of planning (during which time your customers up and leave); it's a recursive, ongoing process of implementing new business processes and technologies, gauging return on investment, and hewing ever closer to a strategic ideal.

Back in 1996, executives at National Semiconductor, the Santa Clara, Calif.-based chip maker, realized that the key to boosting sales of components for power modules in electronic devices was getting in customers' faces at a crucial stage in the design process. The Internet provided a way to do that, says Jeff Perry, Internet marketing manager for National's line of Power products. "We said, 'What is the Web valuable for?' Information delivery is step one, but how do we save or customers time? For the last three years it's really been about saving our customers time, and figuring out a way to get there."

Top-1000 customers who register at the company's Power products Web portal gain access to utilities that allow them to design an entire power supply online, in a fraction of the time it would take using real parts in a lab. Hardware engineers can also request part samples, test their virtual designs in an electrical simulator, and order a prototype kit manufactured to their exact specifications. Those features are the culmination of steady enhancements based on customer feedback, Perry says.

Cookies track customer activity, feeding page-view data into a Sybase database. Combined with registration information, covert intelligence generates e-mails loaded with all sorts of information that a sales rep might find useful in closing a sale or cross-selling to other National product lines.

Breaching the Web wall

One lesson to be drawn from National Semiconductor's experience is that the Web, properly harnessed, can be an enormously powerful tool for strengthening and streamlining customer relationships. Another is that people--in this case the sales reps that strive to establish and sustain a working relationship in follow-up calls--must remain in the loop, working in harmony with technology, for CRM to have the desired impact on the bottom line. We crave human contact in our commercial intercourse--except when it's unsolicited, as in a telemarketer's call at the dinner hour.

That realization is driving the development of CRM software that melds digital and "meatworld" communication, bringing an unprecedented level of interaction to Web tools for e-commerce and B2B collaboration.

WebTelecom, a startup based in Pleasanton, Calif., recently released version 2 of its Live Contact Service. According to it's marketing literature, it's "the first fully comprehensive human-to-human (H2H) Internet communications solution delivering text-chat, co-browse, voice, video and document sharing tools for real-time Internet communications." Designed for e-commerce Web sites, Net markets and workflow applications, Live Contact summons a human to direct the user to the right Web pages, explain shared documents, or engage in conversation via text, audio, or desktop videoconference.

"The Web now is a wall," says John Wranovics, WebTelecom's director of brand marketing. "Your screen is a two-dimensional barrier between you and the human entities who you're trying to have a transaction with." Tools such as Live Contact, which can be rented on a per-seat basis or purchased as a client-server application, render that wall transparent, or at least translucent.

In a similar vein, National Semiconductor plans to launch a live online help system next month. Clicking on an icon opens a text box for real-time chats with a customer representative.

Usability is another aspect of CRM that is getting a lot of attention from consultants and system designers. Employees on the front lines of the customer experience can't engage in meaningful dialogue if they can't figure out how to work the software. Meta Group, a Stamford, Conn.-based IT research firm, predicts a backlash this year by enterprises against complex, expensive CRM packages, partly because using them is too difficult or time-consuming.

If CRM tools were more intuitive and tolerant of human foibles, they'd be used more consistently across the enterprise, making it easier to determine whether in fact the technology does expand customer bases, foster loyalty, and stimulate sales. A reliable means to measure return on investment is what's still missing in CRM, again because of the human element. How do you know, without somebody posing the question, why a particular customer chose to buy from you, or if they plan to ever again?

In the last 18 months traffic at National Semiconductor's Power portal has surged from 80 to 800 users per day, but the company has no idea how many of those visits translate into sales. "[That information] is lacking, because the person on the Web may not be responsible for the buy," Perry says. By tying its lead-generation software into SFA tools, National hopes to track leads over several months, to see whether they pan out.

It should work fine, as long as someone can convince the firm's sales reps--the flesh-and-blood component of CRM--to sit still at their computers for 10 minutes.

Phil Davies is senior editor of ComputerUser.com.