IDIC MODEL

The IDIC model was developed by the Peppers and Rogers Group as a generic blueprint
for implementing CRM in a variety of situations. IDIC stands for the four stages of CRM
implementation: identify, differentiate, interact, and customize.

Identify
The first step is to identify your customers, which businesses can accomplish by
collecting information like the customer’s name, address, and purchase history at each point of
contact across the company. The goal is to collect as much information or data as you can on
each customer in order to better understand their needs, wants, and purchase behaviors.
Differentiate
The next step is to differentiate or segment your customers based on their current and
projected lifetime value. Remember: Not all customers will have the same value to the business.
By differentiating your customers based on their value to the company, you can prioritize your
customer relationship efforts on the most valuable clients and tailor your interactions to best fit
each segment for optimal profitability.
Interact
The third stage is where you get to apply your CRM plans for interacting with your
customers. Once your customers are analyzed and categorized, you can develop customized
interactions—for example, for valued customers, you might offer loyalty benefits or rewards to
encourage retention and continued spending. Keep in mind, you should be learning from each
interaction to continually improve future interactions.
Customize
After you have documented your customer interactions, you can then analyze them to
develop more customized one-to-one service. The goal is to ensure that your customers’ needs
and expectations are met and that you have pinpointed them individually (or very narrowly).

CRM STRATEGY FRAMEWORK

Strategic Perspective Customer Relationship Management (CRM) is concerned with
creating improved shareholder/owner’s value through the development of appropriate
relationships with customers. This requires an integration of people, operations and marketing
capabilities. It is enabled through superior use of: information, technology and applications.

Strategy Development
Process
This process requires a dual focus on the organization’s business strategy and its customer
strategy. How well the two interrelate fundamentally affects the success of its CRM strategy.
Business Strategy 
The business strategy must be considered first to determine how the customer strategy should be
developed and how it should evolve over time. The business strategy process can commence
with a review or articulation of a company’s vision, especially as it relates to CRM (e.g.,
Davidson2002). Next, the industry and competitive environment should be reviewed. Traditional
industry analysis (e.g. Porter 1980) should be augmented by more contemporary approaches
(e.g., Christensen 2001; Slater and Olson 2002) to include competition (Brandenburger and
Nalebuff 1997), networks and deeper environmental analysis (Achrol 1997), and the impact of
disruptive technologies (Christensen and Overdorf 2000).
Customer Strategy 
Whereas business strategy is usually the responsibility of the chief executive officer, the board,
and the strategy director, customer strategy is typically the responsibility of the marketing
department. Although CRM requires a cross-functional approach, it is often vested in
functionally based roles, including IT and marketing. When different departments are involved in
the two areas of strategy development, special emphasis should be placed on the alignment and
integration of business strategy. Customer strategy involves examining the existing and potential
customer base and identifying which forms of segmentation are most appropriate. As part of this
process, the organization needs to consider the level of subdivision for customer segments, or
segment granularity. This involves decisions about whether a macro, micro, or one-to-one
segmentation approach is appropriate (Rubin 1997). Several authors emphasize the potential for
shifting from a mass market to an individualized, or one-to-one, marketing environment.
Exploiting e-commerce opportunities and the fundamental economic characteristics of the
Internet can enable a much deeper level of segmentation granularity than is affordable in most
other channels (e.g. Peppers and Rogers 1993, 1997).
In summary, the strategy development process involves a detailed assessment of
business strategy and the development of an appropriate customer strategy. This should provide
the enterprise with a clearer platform on which to develop and implement its CRM activities.
Value Creation Process
The value creation process transforms the outputs of the strategy development process
into programs that both extract and deliver value. The three key elements of the value creation
process are (1) determining what value the company can provide to its customer; (2) determining
what value the company can receive from its customers; and (3) by successfully managing this
value exchange, which involves a process of co-creation or coproduction, maximizing the
lifetime value of desirable customer segments.
The Value the Customer Receives
The value the customer receives from the organization draws on the concept of the
benefits that enhance the customer offer (Levitt 1969; Lovelock 1995). However, there is now a
logic, which has evolved from earlier thinking in business-to-business and services marketing,
that views the customer as a co-creator and co-producer (Bendapudi and Leone 2003; Prahalad
and Ramaswamy 2004; Vargo and Lusch 2004). These benefits can be integrated in the form of a
value proposition (e.g., Lanning and Michaels 1988; Lanning and Phillips 1991) that explains the
relationship among the performance of the product, the fulfillment of the customer’s needs, and
the total cost to the customer over the customer relationship life cycle (Lanning and
Michaels1988). Lanning’s (1998) later work on value propositions reflects the co-creation
perspective. However, a more detailed synthesis of work in this area is needed in further
research. To determine whether the value proposition is likely to result in a superior customer
experience, a company should undertake a value assessment to quantify the relative importance
that customers place on the various attributes of a product. Analytical tools such as conjoint
analysis can be used to identify customers that share common preferences in terms of product
attributes. Such tools may also reveal substantial market segments with service needs that are not
fully catered to by the attributes of existing offers.
The Value the Organization Receives and Lifetime Value
From this perspective, customer value is the outcome of the coproduction of value, the
deployment of improved acquisition and retention strategies, and the utilization of effective
channel management. Fundamental to this concept of customer value are two key elements that
require further research. First, it is necessary to determine how existing and potential customer
profitability varies across different customers and customer segments. Second, the economics of
customer acquisition and customer retention and opportunities for cross-selling, up-selling, and
building customer advocacy must be understood. How these elements con-tribute to increasing
customer lifetime value is integral to value creation. Customer retention represents a significant
part of the research on value creation. For example, Reichheld and Sasser (1990) identify the net
present value profit improvement of retaining customers, and Rust and Zahorik (1993) and Rust,
Zahorik, and Keiningham (1995) outline procedures for assessing the impact of satisfaction and
quality improvement efforts on customer retention and market share. More recently, research has
emphasized customer equity (e.g., Blattberg and Deighton 1996; Hogan, Lemon, and Rust 2002;
Rust, Lemon, and Zeithaml 2004). Calculating the customer lifetime value of different segments
enables organizations to focus on the most profitable customers and customer segments. The
value creation process is a crucial component of CRM because it translates business and
customer strategies into specific value proposition statements that demonstrate what value is to
be delivered to customers, and thus, it explains what value is to be received by the organization,
including the potential for co-creation.
Multichannel Integration Process
The multichannel integration process is arguably one of the most important processes in
CRM because it takes the out-puts of the business strategy and value creation processes and
translates them into value-adding activities with customers. However, there is only a small
amount of published work on the multichannel integration in CRM (e.g., Fried-man and Furey
1999; Funk 2002; Kraft 2000; Sudharshan and Sanchez 1998; Wagner 2000). The multichannel
integration process focuses on decisions about what the most appropriate combinations of
channels to use are; how to ensure that the customer experiences highly positive inter-actions
within those channels; and when a customer inter-acts with more than one channel, how to create
and present a single unified view of the customer.
Channel Options
Today, many companies enter the market through a hybrid channel model (Friedman and
Furey 1999; Moriarty and Moran 1990) that involves multiple channels, such as field sales
forces, Internet, direct mail, business partners, and telephony. There are a growing number of
channels by which a company can interact with its customers. Through an iterative process, we
categorized the many channel options into six categories broadly based on the balance of
physical or virtual contact (see Figure 2). These include (1)sales force, including field account
management, service, and personal representation; (2) outlets, including retail branches, stores,
depots, and kiosks; (3) telephony, including traditional telephone, facsimile, telex, and call center
contact; (4) direct marketing, including direct mail, radio, and traditional television (but
excluding e-commerce); (5)e-commerce, including e-mail, the Internet, and interactive digital
television; and (6) m-commerce, including mobile telephony, short message service and text
messaging, wire-less application protocol, and 3G mobile services. Some channels are now being
used in combination to maximize commercial exposure and return; for example, there is
collaborative browsing and Internet relay chat, used by companies such as Lands End, and voice
over IP (Internet protocol), which integrates both telephony and the Internet.
Integrated Channel Management
Managing integrated channels relies on the ability to uphold the same high standards
across multiple, different channels. Having established a set of standards for each channel that
defines an outstanding customer experience for that channel, the organization can then work to
integrate the channels. The concept of the “perfect customer experience,” which must be
affordable for the company in the context of the segments in which it operates and its
competition, is a relatively new concept. This concept is now being embraced in industry by
companies such as TNT, Toyota’s Lexus, Oce, and Guinness Breweries, but it has yet to receive
much attention in the academic literature. Therefore, multichannel integration is a critical process
in CRM because it represents the point of co-creation of customer value. However, a company’s
ability to execute multichannel integration successfully is heavily dependent on the
organization’s ability to gather and deploy customer information from all channels and to
integrate it with other relevant information.
Information Management Process
The information management process is concerned with the collection, collation, and use
of customer data and information from all customer contact points to generate customer insight
and appropriate marketing responses. The key material elements of the information management
process are the data repository, which provides a corporate memory of customers; IT systems,
which include the organization’s computer hardware, software, and middleware; analysis tools;
and front office and back office applications, which support the many activities involved in
interfacing directly with customers and managing internal operations, administration, and
supplier relationships (Greenberg 2001).
Data Repository
The data repository provides a powerful corporate memory of customers, an integrated
enterprise wide data store that is capable of relevant data analyses. In larger organizations, it may
comprise a data warehouse (Agosta 1999; Swift 2000)and related data marts and databases.
There are two forms of data warehouse, the conventional data warehouse and the operational
data store. The latter stores only the information necessary to provide a single identity for all
customers. Anenterprise data model is used to manage this data conver-sion process to minimize
data duplication and to resolveany inconsistencies between databases.
IT Systems
 Information technology systems refer to the computer hard-ware and the related software
and middleware used in theorganization. Often, technology integration is requiredbefore
databases can be integrated into a data warehouseand user access can be provided across the
company. How-ever, the historical separation between marketing and ITsometimes presents
integration issues at the organizationallevel (Glazer 1997). The organization’s capacity to
scaleexisting systems or to plan for the migration to larger sys-tems without disrupting business
operations is critical.
Analytical Tools
The analytical tools that enable effective use of the datawarehouse can be found in
general data-mining packagesand in specific software application packages. Data miningenables
the analysis of large quantities of data to discovermeaningful patterns and relationships
(e.g.,Groth 2000;Peacock1998). More specific software application pack-ages include analytical
tools that focus on such tasks ascampaign management analysis, credit scoring, and cus-tomer
profiling.
Front Office and Back Office Applications
Front office applications are the technologies a companyuses to support all those
activities that involve direct inter-face with customers, including SFA and call center manage-
ment. Back office applications support internal administra-tion activities and supplier
relationships, including humanresources, procurement, warehouse management,
logisticssoftware, and some financial processes. A key concernabout the front and back office
systems offered by CRMvendors is that they are sufficiently connected and cocoordi-nated to
improve customer relationships and workflow.
CRM Technology Market Participants
Gartner segments vendors of CRM applications and CRMservice providers into specific
categories (Radcliffe andKirkby 2002), and Greenberg (2001) and Jacobsen (1999)provide
detailed reviews of CRM vendors’products. Thekey segments for CRM applications are
Integrated CRMand Enterprise Resource Planning Suite (e.g., Oracle, Peo-pleSoft, SAP), CRM
Suite (e.g., E.piphany, Siebel), CRMFramework (e.g., Chordiant), CRM Best of Breed (e.g.,NCR
Teradata; Broadvision), and “Build it Yourself” (e.g.,IBM, Oracle, Sun). The CRM service
providers and consul-tants that offer implementation support specialize in the fol-lowing areas:
corporate strategy (e.g., McKinsey, Bain);CRM strategy (e.g., Peppers & Rogers, Vectia);
changemanagement, organization design, training, humanresources, and so forth (e.g.,
Accenture); business transfor-mation (e.g., IBM); infrastructure building and systemsintegration
(e.g., Siemens, Unisys); infrastructure outsourc-ing (e.g., EDS, CSC); business insight, research,
and soforth (e.g., SAS); and business process outsourcing (e.g.,Acxiom). The need for
comprehensive and scalable optionshas created scope for many new products from CRM ven-
dors. However, despite their claim to be “complete CRMsolution providers,” few software
vendors can provide the full range of functionality that a complete CRM businessstrategy
requires.The information management process provides a meansof sharing relevant customer and
other information through-out the enterprise and “replicating the mind of the cus-tomer.” To
ensure that technology solutions support CRM, it is important to conduct IT planning from a
perspective of providing a seamless customer service rather than planningfor functional or
product-centered departments and activi-ties. Furthermore, data analysis tools should measure
busi-ness activities. This kind of analysis provides the basis forthe performance assessment
process.
Performance Assessment Process
The performance assessment process covers the essentialtask of ensuring that the
organization’s strategic aims interms of CRM are being delivered to an appropriate
andacceptable standard and that a basis for future improvementis established. This process can
be viewed as having two main components: shareholder results, which provide amacro view of
the overall relationships that drive perfor-mance, and performance monitoring, which provides
amore detailed, micro view of metrics and key performanceindicators.
Shareholder Results
To achieve the ultimate objective of CRM, the delivery of shareholder results, the
organization should consider how tobuild employee value, customer value, and shareholdervalue
and how to reduce costs. Recent research on relation-ships among employees, customers, and
shareholders hasemphasized the need to adopt a more informed and inte-grated approach to
exploiting the linkages among them. Theservice profit chain model and related research focuses
onestablishing the relationships among employee satisfaction,customer loyalty, profitability, and
shareholder value (e.g.,Heskett et al. 1994; Loveman 1998). Organizations alsoneed to focus on
cost reduction opportunities. Two means of cost reduction are especially relevant to CRM:
deploymentof technologies ranging from automated telephony servicesto Web services and the
use of new electronic channels suchas online, self-service facilities. The development of
modelssuch as the service profit chain has been important inenabling companies to consider the
effectiveness of CRM ata strategic level in terms of improving shareholder results.

Performance Monitoring
Despite a growing call for companies to be more customer oriented, there is concern that, in
general, the metrics used by companies to measure and monitor their CRM perfor-mance are not
well developed or well communicated. Ambler’s (2002) research findings raise particular
concern; he finds that key aspects of CRM, such as customer satis-faction and customer
retention, only reach the board in 36%and 51% of companies, respectively. Even when these
met-rics reach the board level, it is not clear how deeply they are understood and how much time
is spent on them. Traditional performance measurement systems, which tend to befunctionally
driven, may be inappropriate for cross-functional CRM.Recent efforts to provide cross-
functional measures,such as the balanced scorecard(Kaplan and Norton 1996),are a useful
advance. The format of the balanced scorecardenables a wide range of metrics designs.
Indicators that canreveal future financial results, not just historical results,need to be considered
as part of this process. Standards,metrics, and key performance indicators for CRM shouldreflect
the performance standards necessary across the fivemajor processes to ensure that CRM
activities are plannedand practiced effectively and that a feedback loop exists tomaximize
performance improvement and organizational learning. A consideration of “return on
relationships” (Gummesson 2004) will assist in identifying further metrics that are relevant to the
enterprise.

GARTNER COMPETENCY MODEL

In this Spotlight, we drill down into

the Eight Building Blocks of CRM — vision, strategy, valued customer experience,
organizational collaboration, processes, information, technology and metrics — providing more
detail and fleshing out the framework.
1. Vision: Successful CRM demands a clear vision so that a strategy and implementation can be
developed to achieve it. The CRM vision is how the customer-centric enterprise wants to look
and feel to its customers and prospects — the customer value proposition (CVP) and the
corporate brand values are key to the CRM vision. Without a CRM vision, the enterprise will not
stand out from the competition, target customers will not know what to expect from it and
employees will not know what to deliver in terms of external customer experience. A successful
CRM vision is the cornerstone to motivating staff, generating customer loyalty and gaining a
greater market share. "Creating a CRM Vision" (TG-14-9470) defines a CRM vision, outlines
the key steps and challenges in creating it and discusses its role in creating a successful CRM
program.
2. Strategy: A CRM strategy is not an implementation plan or road map. A real CRM strategy
takes the direction and financial goals of the business strategy and sets out how the enterprise is
going to build customer loyalty — that "feel-good factor" of customer connection with an
enterprise that means customers stay longer, buy more, recommend the enterprise to others and
are more willing to pay a premium price. The objectives of a CRM strategy are to target, acquire,
develop and retain valuable customers to achieve corporate goals. "Developing a CRM Strategy"
(TU-14-9475) discusses the steps involved in the development of the CRM strategy.
3. Valued Customer Experience: Customers' experiences when interacting with the enterprise
play a key role in shaping their perception of the enterprise — the value it provides and the
importance it places on the customer relationship. Good customer experiences drive satisfaction,
trust and long-term loyalty. Poor customer experiences have the opposite effect and, because bad
news travels faster and further than good news, they harm the enterprise's ability to create new
relationships with prospects. No amount of internal "second guessing" can simulate what it's
really like to be a customer. "Customer Experience: The Voice of the Customer" (TG-14-9567)
focuses on the need to seek and act on customer feedback to create and maintain a successful
customer experience.
4. Organizational Collaboration: Many enterprises believe that implementing CRM technologies
makes them a customer-centric organization. They forget, ignore or deliberately avoid the
necessary changes to the enterprise itself. True CRM means that individuals, teams and the
whole enterprise must become more focused on the needs and wants of the customer. The term
"organizational collaboration," described in "True CRM Requires Organizational Collaboration"
(DF-14-6658), highlights the many facets of the customer-centric internal change needed to
deliver the required and desired external customer experience. As a critical part of a CRM
program, it will involve changing organizational structures, incentives and compensation, skills
and even the enterprise culture. Ongoing change management will be key.
5. Processes: Past efforts to re-engineer processes were primarily driven by the desire to improve
the efficiency of an enterprise and reduce costs. The beneficiary was the enterprise, not its
customers. The rise in CRM has led to a focus on reworking key processes that touch the
customer and asking customers which processes matter to them. We call this customer process
re-engineering (discussed in "Customer Process Re-engineering: Talk to Your Customers,"
DF14-8380). Enterprises frequently do not realize that their functionally fragmented processes
often mean that the customer has a poor experience and receives less than the expected value.
Successful re-engineering should create processes that not only meet customers' expectations, but
also support the customer value proposition, provide competitive differentiation and contribute to
the desired customer experience.
6. Information: Successful CRM requires a flow of customer information around the
organization and tight integration between operational and analytical systems. Having the right
information at the right time is fundamental to successful CRM strategies, providing customer
insight and allowing effective interaction across any channel. Unfortunately, most enterprises'
CRM information capabilities are poor — the result of numerous and fragmented departments,
initiatives, databases and systems. Enterprises that establish a business plan for sourcing,
managing and leveraging their customer information assets are more likely to achieve their CRM
goals and objectives and gain a competitive advantage (see "Customer Information Is the
Lifeblood of CRM," DF-14-9264).
7. Technology: For most technologists, CRM is all about technology. CRM technologies are an
essential enabler for any modern CRM business strategy, but they are just one piece of the
puzzle. Gartner has a wealth of ongoing research into CRM technology issues and "Technology
Decisions Are Key to Enabling CRM Strategies" (DF-14-8082) looks at the key decisions that
enterprises have to take in three areas: CRM applications, architectural issues and integration. In
many CRM projects, integration issues start as a relatively low priority, and then rise in
prominence (cost and time) as enterprises realize that true CRM requires seamless customer
centric processes, supported by integrated technology across the enterprise and its supply chain.
8. Metrics: The other seven building blocks depend on performance targets and metrics to gauge
their success, and enterprises must set measurable CRM objectives and monitor CRM indicators
to successfully turn customers into assets. Without performance management, a CRM strategy
and associated program is destined to fail. "Getting the Best Out of CRM Performance Metrics"
(DF-13-1433) introduces a framework for measuring an enterprise's success with CRM by
creating a hierarchy of performance metrics with four levels, namely: corporate, customer
strategic, operational and process, and infrastructure input metrics. These metrics have an
internal and an external focus and link operations to strategy and corporate financial benefits.
Each enterprise will have a unique set of metrics applicable to their situation.

COSO Internal Control—Integrated Framework

Internal control is a process, effected by an entity’s board of directors, management, and other
regarding the achievement of objectives relating to operations, reporting, and compliance.

The COSO Internal Control Cube

It begins with objectives along the top relating to operations, reporting and compliance,
representing the cube’s columns. Every organization establishes relevant objectives and
formulates strategies and plans for achieving them. The side of the cube, as shown below, depicts
that objectives may be set for the entity as a whole, or be targeted to specific divisions, operating
units and functions within the entity (including business processes such as sales, purchasing, and
production), illustrating the hierarchical top-down structure of most organizations. On the face of
the cube are the five components of internal control, representing the rows of the cube. Similar to
the 1992 framework, these components support the organization in its efforts to achieve its
objectives. The five components are Control Environment, Risk Assessment, Control Activities,
Information and Communication, and Monitoring Activities. They are relevant to an entire
entity, meaning they operate at the entity level, as well as at all divisions, operating units,
functions, subsidiaries or other subsets of the entity.

All told, the cube depicts the direct relationship among the organization’s objectives
(which are what the entity strives to achieve); the components of internal control (which
represent what is needed to achieve the objectives); and the operating units, legal entities and
other structures within the entity (which are the levels of the organization where the components
of internal control operate). Each internal control component cuts across and applies to all three
categories of objectives.

The Five Components of Internal Control

The five components of internal control are about as broad as you can get. The 1992
version explained each component, and the supporting application guidance incorporated much
of the explanatory material into the various evaluation tools that users of the original framework
leveraged to design their own customized tools. The New Framework now organizes explanatory
material under the 17 principles arrayed under the five components. While people can call it
what they want, the desired end result is to help users better understand what constitutes effective
internal control so they are positioned to apply informed judgment when evaluating
effectiveness.
Furthermore, there are three main types of internal controls: detective, preventative and
corrective (Furlong, 2019).

Detective internal control is designed to highlight any problems within a company’s

accounting process. These are commonly used for things such as fraud prevention, quality
control, and legal compliance. Examples of detective controls include an inventory count,
internal audits, and surprise cash counts. Detective internal controls protect a company’s assets
by finding errors when they occur so that business owners can minimize their impact on the
company.

Preventive internal controls are put into place to keep errors and irregularities from
happening. While detective controls usually occur irregularly, preventative controls usually
occur on a regular basis. They range from locking the building before leaving to entering a
password before completing a transaction. Other preventative controls include testing for clerical
accuracy, backing up computer data, drug testing of employees, employee screening and training
programs, segregation of duties, enforced vacations, obtaining approval before processing a
transaction and having physical control over assets.
 Corrective internal controls are put into place to correct any errors that were found by
the detective internal controls. When an error is made, employees should follow whatever
procedures have been put into place to correct the error, such as reporting the problem to a
supervisor. Training programs and progressive discipline for errors are other examples of
corrective internal controls.