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Many people have asked what Demand Chain
Management is and how it compares with CRM, SFA, the Supply
Chain, and other recent fads. Read on for a definition.
In later issues, we'll address some reasons why you should
pay attention to the Demand Chain, and some examples of
Demand Chain Management in practice.
Definition: The Demand Chain is the customer facing
corollary to the Supply Chain focusing not solely on what
the company can provide but on what prospects and customers
need and will purchase. If the Supply Chain were the epitome
of cost-cutting, the Demand Chain is the embodiment of acquiring
new and retaining existing customers to generate new revenue.
The Demand Chain is a limitless business philosophy that
puts the customer at the center and focuses on developing
long-term relationships with customers by proactively creating
and delivering solutions that profitably meet continually
evolving customer needs. Companies focusing on the Demand
Chain focus on growth potential rather than on cutting costs,
know their customers better than anyone else (including
their competitors and perhaps even their customers) and
integrate customer thoughts, attitudes, needs, and desires
into everything they do.
Compared with CRM/SFA/and other fads
The Demaind Chain is an umbrella business process that
enables businesses to create long-lasting, meaningful, and
profitable customer relationships and guides businesses
in providing products and services that customers need,
want, and are willing to pay for. As such, it encompasses
CRM (customer relationship management), SFA (sales force
automation), database marketing, etc..
CRM
The principles behind CRM can be a step in the right direction
and can help develop good relationships but they almost
never go far enough. As one person put it, "CRM is simply
a means to sneak up on your customers and sell them something."
Due to the aggressive selling of some of the key CRM vendors,
CRM has become equated with a technological silver bullet
promised to improve ROI, customer acquisitions, and a plethora
of other metrics. Unfortunately, there is a lot of research
showing that the majority of the CRM implementations fail.
While there are many reasons for these failures, perhaps
the biggest is that a technology was brought in to simply
automate flawed processes.
I recently spoke with one CRM software vendor about their
attempts to integrate business process re-engineering into
their sales process. The vendor told me that they originally
tried to follow the path of helping their customers rework
their business processes in order to get the most from their
implementation but had to give it up. Companies would agree
to the CRM software purchase but would retreat as they realized
the scope and extent of business process re-engineering
that needed to take place before implementation. As a result,
this particular vendor no longer recommends re-engineering,
but instead simply sells software and automates existing,
sometimes faulty processes.
Another major vendor of marketing automation software I
spoke with takes a slightly more honorable approach. In
conjunction with their system integrators have identified
a handful of best practices supported by their software
that they implement as part of the initial integration.
Although the best practices are good, they may not be as
easily applicable to every company.
SFA
SFA or Sales Force Automation is another subset of Demand
Chain Management. As the predecessor to CRM, it focused
on automating and streamlining the sales function from generating
leads, nurturing prospects, to closing the deal. In large
part, SFA is still mostly a software emphasis and addresses
varying degrees of contact management. Basic software programs
such as Goldmine and Act are contact managers. Some of the
larger software packages integrate proposal generation,
partnership management, as well as some automated functions
to reach new prospects or keep in touch with existing prospects
While SFA attempts to gather customer information, its sole
purpose is to gather just enough information to enable a
sales team to close the deal, get paid, and move on.
Clearly, there is much more to developing a long-term,
profitable relationship than tracking customer behavior,
writing marketing campaigns, or buying a round of golf.
A relationship implies a two-way street, a critical component
of which is mutual trust and sharing. I observed a men's
clothing salesman speaking with a customer who had on an
ill-fitting suit. The customer and his wife knew it wasn't
properly fitted, yet the salesman continued to assure him
that it looked perfect on him. As the customer and his wife
began to get more frustrated and consider leaving without
the suit, the salesman further condemned himself as he tried
to go for the close by asking if he wanted socks to go with
the suit. The customer left in disgust--most likely never
to return to this major retailer.
Unfortunately, what many people are calling customer relationships
is in no way a relationship--it is simply a deal to be closed.
Within the Demand Chain, top-tier, successful companies
spend significant time and energy cultivating long-lasting
relationships with their customers. They add value to their
customers by spending time with them, striving to clearly
understand their customers' pain--and in creating solutions
to assuage this pain.
Successful companies have found that the real value in
the customer relationship lies in the two-way sharing of
information to help one another become more successful--rather
than in simply closing another deal.
For examples of how top-tier companies are using the Demand
Chain to increase revenue, both in the short and long-terms,
visit predictiveconsulting.com.
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