To CRM is no longer a question...its a must!
Customer Relationship Management hit the marketing world with great fanfare in the 90’s, but for many it didn’t live up to its promise and often times today it still doesn’t. As familiar as CRM may appear to be, ask 10 people to define it and you will get 10 different answers. Just as likely you will hear a few success stories, but you are even more likely to hear stories of disappointing results.
The reasons for less than stellar CRM implementations are many. Years of experience and much research that has been conducted point to what I believe to be the biggest obstacle to CRM success. Implementing a successful CRM program doesn’t start with software. It starts with a strategy!
Customer Relationship Management is based on a philosophy that building and maintaining deep meaningful relationships with customers enables companies to capture maximum value. It is a basic lesson in sales that people do business with people they “know, like, and trust”. That means establishing an ongoing positive “relationship”. That is a tall order. It is also one that the simple installation of the “right” software can’t address. If building those relationships is a company’s CRM goal, then it is important for management to take a deep look into three things: the nature of its relationships with its customers; how might a CRM initiative foster those relationships; and the ultimate end goals. In other words, it means coming up with an overall CRM strategy.
As the old saying goes, however, “the devil is in the details.” There are usually a number of stakeholders involved with CRM game plans. Identifying them and soliciting their input and support is paramount. Marketing and sales management are obvious stakeholders and with different needs and agendas. The sales force has a place at the table since ultimately they will feed much of the data to the system and have needs of their own. Don’t forget to include production. Does the CRM program need to interact with an ERP system? How about the IT department? Will they be involved in supporting the program once it is in place? Programs can rarely be all things to all people and it doesn’t take long to see the potential for tension between stakeholders. If it is successful, who will claim the glory? If it fails, who will take the fall?
But that is no reason to throw up one’s hands. Together the stakeholders must work to identify the issues important to them and distill from all of the input the key elements that would make for a successful CRM implementation. It is easy to be impressed with the comprehensive aspects of software applications that can do “everything” and the “bells and whistles” can be impressive. But at this stage, it’s not about the software. It’s the strategy.
It can help to begin the conversation by asking what makes a good customer for your firm?
- Is it annual sales volume?
- Lifetime value?
- Margin and profitability?
- Ease of servicing?
- Up sell/Cross sell potential?
It can seem like heresy to some, but not all customers are necessarily good or valuable customers. Some are high maintenance and low margin. (We all want fewer of them and more high margin, easy to support customers.) Implementing a CRM system that will enable a company to focus its attention on its best customers and seek out others like them is important.
The next strategic question is, in what ways can a company foster or cultivate it’s relationships with customers and prospects for maximum customer “wins” and value? What information needs to be communicated to and solicited from customers and prospects to foster the relationships? Who within
the company is the owner or driver of that information? What is the definition of the ideal customer relationship? The answers to these questions lead to the formation of the general CRM objectives and strategy. Next come the tactical means necessary to effectively implement the strategic plan. Is it special offers, terms or discounts and/or providing special support and services? Is there specific information that must be communicated to customers on a regularly scheduled basis via newsletters, email campaigns, direct mail or telemarketing? Is it important to ensure that phone calls or face-to-face visits are made on a regularly scheduled basis to top customers? Additional strategic and tactical questions include: What tools are needed to execute and track the necessary CRM activities? How will the marketing communications support the CRM strategy and what will it look like? Will an email campaign management program be necessary and how might it be used? Will an interactive customer portal/website prove a vehicle for improving the customer relationship? What type of campaigns might be targeted to customers and prospects? What information will be required of the stakeholders, the sales force in particular, to track and measure outcomes? The answers to these types of question lead to the formation of the CRM strategy and understanding of needed tactics and tools. And software hasn’t been looked at yet.
It is easy to understand that for many “success” is simply measured by increased sales and profitability. But that can happen as a result of factors not attributable to actions by a company. (A good economy can lead to increased sales, as would a competitor going out of business. It is a fool’s errand to claim credit for increased sales driven by a good economy and than blame the economy when sales are off, but it happens all the time.)
Driving success means establishing targets and goals and executing deliberately in efforts designed to achieve those goals. The question becomes one of how success is measured. Is it market share and margin? Is it increasing sales from existing customers or generating new customers? How about all four? How will you measure the “success” of your CRM effort?
Only after determining the answer to this question should a company begin looking at software tools. And this effort is not for the faint-of-heart. Should a company buy, install and support a program or write its own? Subscribe to a hosted solution? Journey into “Cloud” computing? Determining the right system is a journey unto itself.
To some this may all seem obvious and rather simplistic. To others overly complicated and possibly intimidating. For some, simply having a computer program like ACT or Goldmine, or using a web-based tool like salesforce.com that gives them the ability to capture information about customer contacts in ways that were previously unattainable is enough. While maintaining good and complete information about a customer is clearly a good thing, that alone does not CRM make. (It surely will not in itself lead to an automatic increase in business.)
But the costs can be high, not just for program implementation and support, but in lost opportunities and user disenchantment with the CRM concept. For example, seat licensing for Microsoft CRM, is not inexpensive and support even more so. With Salesforce.com’s per user subscriber fee running some $100 per month, the expense can prove staggering and impossible for small and medium sized companies. CRM can be an expensive proposition, though it doesn’t necessarily need to be. It can also be painful to learn six or twelve months down the road that you’ve spent a lot of money on a CRM “program” your people aren’t using and your company has little to show for it.
In some places, a failed CRM implementation can be a career killer.
Successful CRM starts by asking the “what are we really trying to accomplish” questions, developing a strategy, determining how success will be measured, and then… and only then… examining tactical options (like email campaign management) before determining the right tools for executing the plan. By approaching CRM in this way, management may discover that it doesn’t need some of the tools it originally thought it did. (For example, some companies don’t need CRM programs they need Sales Lead Management programs.)
It may also discover that it already has some of the tools that it needs and that other less expensive options can help it achieve its CRM objectives. To expend the time and expense of buying and setting up software or an online set of tools without establishing a clear strategy and game plan will in all likelihood lead to costly disappointment. Sound strategy makes implementing a successful CRM program becomes far more likely.
What strategies, tactics, and tools does your company need to implement a successful CRM initiative?
Pull your team together and start probing. When done right, a CRM program based on sound strategy can make the difference between wasting valuable time, money and opportunities and taking your business to new heights.
