Customer relationship management the emperor has no clothes
1. Customer Relationship Management:
The Emperor Has No Clothes
BY STEVE BANKER DECEMBER 12, 2001 ARC INSIGHTS 2001-053E
Keywords
Profitable-To-Promise, Customer Relationship Management, Supply Chain
Management
Summary
The holy grail of order promising is Profitable-To-Promise (PTP). The ques-
tion should not be “can we meet the customer’s requirements?” But rather,
“should we?” Because PTP involves a customer touch point surrounding
the sales process, it is a Customer Relationship Management (CRM) appli-
cation. Traditional CRM solutions cannot tell you how profitable your
customers are. Profitability, however, should be the central focus of man-
aging customer relationships.
Analysis
First came Available-To-Promise (ATP), which allows product to be prom-
ised if there are sufficient quantities in the warehouse. Then came Capable-
To-Promise (CTP), which allows the Make-To-Order (MTO) manufacturer
to check production capacity and see if the customer order date can be met.
But the holy grail of order promising is Profitable-To-Promise.
The time cost of each process
The question should not be “can we meet the customer’s re-
step required to sell and deliver
an item must be accounted for.
quirements?” But rather, “should we?” How profitable is this
customer? How profitable will this order be?
The new generation of CRM has evolved from a set of largely unconnected
internal tools to a more integrated suite with a workflow infrastructure.
The new CRM is designed and personalized for a wide range of networked
constituents - from channel partners out to end customers, and from inter-
nal customer care personnel to field service reps.
However, the new generation of CRM solutions suffers from a key draw-
back of the older generation. CRM did not, and does not, tell you how
profitable your customers are. But this should be the central focus of man-
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