1 - Introduction
The author assumes an readership who are either considering the implementation of a CRM system or are attempting to improve on one that has not been as successful as hoped. Such a system represents a significant investment of time and budget, but unless it is understood, supported, and used appropriately, it will garner little return. To that end, it is written to serve as a "playbook" for successfully leveraging CRM.
As with many new technologies, there is the widespread assumption that merely purchasing and installing a system will deliver benefit to the organization without making any changes to the organization or its practices - and therein lies the problem for many firms, who fail to get the value from the investment. They blame the software, try newer or better software, or give up on CRM altogether. In fairness, sometimes the software is rightly to blame - but more often, the software is the least of their problems. The goal of this book is to help readers better understand what is necessary to undertake a CRM initiative - the level of effort needed and the steps that an organization must take to have a chance in success.
Defining CRM
The notion of customer relationship management (CRM) is fairly broad, but is generally meant to indicate that a business considers an ongoing relationship with the people who buy from it, with repeated purchases over time, rather than considering each purchase to be an isolated and independent incident.
For some, it is a reaction to an increasingly competitive environment in which the customer has many options among largely identical products, and the reason customers choose to purchase one brand over another more often pertains to their relationship to the brand rather than to the specific qualities of the product or service they obtain from it.
For others, it is a more proactive approach to gaining more revenue over time by leveraging their knowledge of the customers to whom they have sold in the past - which is to say the focus of their efforts is not a one-time sale, but a series of sales over a longer period of time.
Regardless of the motive, the practice of CRM require the gathering, maintenance, and analysis of data over longer periods of time, which is facilitated by computer information systems.
There are "a profusion of books" written about the features and functions of specific CRM applications, written largely for the technical staff who will maintain the system and perform data entry. This book is instead about the basic principles and practices of implementing a CRM program, regardless of what software is being used. It is intended for non-technical managers who are charged with running a CRM initiative.
Sources of CRM Value
A prerequisite question: why undertake a CRM program at all? Naturally, because it creates value to the enterprise that uses it. To be more specific:
Supporting a Data-Driven, Learning Organization
It's generally accepted that doing business by an established and measurable process achieves better results than flying by the seat of one's pants. Yet without some method of collecting and analyzing data, there is no way to do so: the more detailed the data, the more focused the efforts can be.
When it comes to customer interaction, specifically sales promotion, campaigns are often considered entirely out of context - we have a vague sense of the results achieved by similar activities in the past on the level of a market, but not a specific indication of results achieved on the level of the individual consumer. Prior to CRM, there was no way to track or assess this, and many very important and expensive decisions were made based on vague information rather than empirical data.
From the bumper-sticker school of management: you can't manage what you can't measure.
Addressing Inefficiencies and Increasing Productivity
Understanding your processes, tying together a activities and results, enables us to identify and gravitate toward those activities that are most productive. Some examples of efficiency gains from CRM:
- Improve lead management by feeding web site contact forms to the appropriate staff
- Assign inbound leads to the appropriate rep based on geography, category, etc.
- Automatically escalate service issues based on various criteria to expedite resolution
- Alert management to abrupt changes in buying patterns
- Gather information to profile and rank leads to focuses efforts on the most profitable prospects
- Manage pricing information to enable sales reps to create valid quotes based on all the necessary elements and current pricing information
- Consider all interactions with customers (phone, e-mail, event attendance, etc.) to analyze sales drivers and earn more repeat business.
Case Study: A Sales Process Enhanced by CRM
The author presents a "case" from an anonymous organization that used spreadsheets to sent proposals to clients - the spreadsheets indicated products, prices, and dependencies, and a new sheet was sent out when information was outdated.
Salespeople would often use outdated versions of spreadsheets - or worse, would modify the template to suit their needs and leave out critical information. When errors were identified, they would be corrected on the sheets of the salesmen who knew of the error, not corrected on others, and not updated in the department's database.
In this situation, a CRM application provided a new process that would enable users to access accurate and up to date information and make updates and corrections available to all. In addition to creating more accurate proposals, the system facilitated better order tracking and real-time metrics for management and provided better communication to provisioning and support staff.
Better Customer Experience
Given that many companies offer similar products and services, providing customers with "the most satisfying and effective interactions possible" has become the key differentiator.
A significant factor in the mind of the customer is corporate memory: each representative they interact with should have access to the organization's past interactions with the same customer - whether they are handed off from one person to the next on the phone or are handled by different people on different days, they should not have to repeat themselves - even better if the representative they interact with should have knowledge of the details without having to be told.
Another significant factor is convenience: the customer expects to use their own preferred mode of interaction (phone, store visit, e-mail, text message, etc.) or even different modes at different times, and the company will have knowledge of the previous interactions in any channel.
The author uses retail banking as an example: it was not too long ago that most interaction was done at the location and time the bank was willing to deal with customers. The author notes that drive-through banking, ATM locations, Internet banking, and mobile banking, were all done to improve customer service in an increasingly competitive industry where services were undifferentiated. (EN: In most instances, an innovation was motivated by a desire to reduce operating expenses rather than improve service - the fact the customers liked it was a happy accident. Being service-focused is not unheard of, but neither has it historically been the primary motivator for most banks.)
A CRM system is critical to providing customer service - without it, there is no central source of information to draw upon when interacting with customers at different times, through different channels, and by different employees.
Informing Business Decisions
Aside of providing better on-the-spot service, CRM enables businesses to aggregated data about customers to a greater extent, and in greater detail, than ever before, and make better decisions as a result. For example, if you can identify the products, services, and promotions that a given customer has responded well to in the past, you can make a better prediction of what might be successful in future.
Business decisions have historically been made on executive opinion, "gut" feelings, and anecdotal evidence, and such decisions are often wrong. Even when they are correct, they are effective only for a small number of customers and ineffective (and perhaps even harmful) to the majority. Even as data systems improved, customers were aggregated into broadly-defined groups., With a good CRM system, each customer can be treated like an individual.
Some potential uses of CRM are listed:
- Sales forecasting - Using granular data about customers and prospects to make more accurate predictions of sales volumes
- Sales management - Determining which messages and salespeople are most effective, and where improvement is needed
- Product planning - Determining what products each customer purchases, when they are purchased together, and what other products might be beneficial.
- Staffing - Discovering the times and channels customers use to determine patterns in volume, to adequately, but not wastefully, provide support when and where it is needed.
- Campaign Planning - Determining which lead sources have been most productive in the past, as well as the profile of the most likely buyers and the channels that have been most effective.
The author also sees the emergence of social media as a greater opportunity to learn about customers and prospects who have not yet interacted with the firm: opinions and needs can be learned from blogs, social media sites, and other venues in which people share their opinions with others, not considering that businesses may be listening.
Preparing for CRM
To be successful, a CRM initiative must have the full support of the organization - the software alone will not result in success if it is not leveraged. To this end, the author considers various factors that, in his experience, have been critical in determining success:
A data-driven culture in necessary to CRM success. The firm must gather data, analyze it, and act in a methodical and process-based approach. Where decisions are made at a whim and operations are run by the seat-of-the-pants approach, CRM can contribute little to nothing.
Executive support will be necessary, as CRM will likely involve a significant change from business as usual, and it will take campaigning to gain acceptance and change management to facilitate adoption and use. Without executive support, the initiative will be disregarded.
Communication about CRM, both as a change and after the system is in use, is critical to gaining and maintaining interest and support. The author presents a communication planning spreadsheet that identifies communication needs (audience, information need, purpose, method, frequency, owner) so that plans/procedures for maintaining communication can be developed and executed
Training is an obvious need that is often overlooked. Employees must be trained to use the new system, and receive regular updates. When training is not done, employees do not know the value of the system or how they must act to contribute to and benefit from it.
Having a feedback system is also very helpful in successful adoption: users of the system can indicate how their work is impacted, positively or negatively. Provided you are open in accepting feedback (no retributions) and demonstrate a willingness to consider implementing suggestions and corrections, it will be instrumental in identify needs for training or information or system improvements that can be made to increase effectiveness.
The author also suggests planning a way to give recognition (public praise, perhaps incentives) to employees for utilizing the system, as a method for demonstrating the company values use of the system as well as showing others, by positive example, that the system is beneficial to the users.