Focus Your Firm's CRM Strategy
CRM is not a new sales technique or technology. Rather, it is an umbrella term for a broad array of methods and technology tools that give everyone who comes in contact with the customer the kind of real-time information they need to provide individualized marketing messages, improve service and increase responsiveness to the customer.
The objective of CRM is to improve customer retention, increase sales from existing customers, gain more new customers and cut the cost of customer acquisition. In addition, with CRM, companies can capture all relevant customer relationship information and, in that way, build a historical database of what has occurred in each territory and in each account. The customer relationship is then owned by the company, not by the sales representative.
When a CRM solution is deployed correctly, customers get better and faster service that is designed to meet their individual needs. Also, companies can alert customers to new products, new services or special deals.
Companies using CRM effectively tend to be more profitable. Yet, despite the successes, not everyone using CRM is gaining the benefits, and even companies using CRM successfully are generally failing to maximize the opportunity. The technology is not the culprit. Several software companies offer excellent CRM packages, so it is not difficult to find an effective application. The real challenge lies in getting your company ready to adopt CRM.
First, create a CRM strategy. This starts with management defining the customer relationship at every level from the generation of leads to the handling of customer calls to the delivery of products and services. Once management has defined its strategy, it can then apply CRM as a tool to help it achieve its goals.
Resistance to change is the biggest obstacle. That is why senior management has to support CRM and make it clear that resistance will not be tolerated.
The actual implementation can range from simple to sophisticated. The degree of difficulty depends on the amount of integration required with other systems and the condition of the data that must be imported into the new system. Basically, the core technology involves a database or data warehouse where customer data can be stored and analyzed, plus Internet-based systems for capturing relevant data and communicating specific customer information immediately to those who need it.
Deal with customers in real time. CRM gives everyone in the company better and more current information to work with. The key is to have all of this information instantly available. Data are generated every time customers contact the company and every time someone from the company contacts them.
If your company has an enterprise resource planning system, you also can send this data to the CRM system to make it available to field personnel. For example, salespeople can have access to vital information, such as a particular customer's purchase history or profitability as well as late deliveries, returns and payment or credit problems. Such data can help the sales force focus on customers who buy the most and provide the most profit.
CRM can bring wholesale changes in your marketing strategies. For example, the typical direct mail program goes to every name on a mailing list, with no idea of which names represent prospects. By using CRM to identify your best prospects, you can sharply reduce the size of your mailings and get the same number of positive responses. Once you combine CRM with the Internet, you can get even more focused.
According to a recent study by Sybase, Emeryville, CA, traditional direct mail generates a 0.5 percent to 1 percent response, and segmenting customers in a data warehouse can increase responses to 6 percent to 8 percent, but using the data warehouse to communicate with each customer individually can boost the response rate to as much as 50 percent.
Another advantage of CRM is that it gives sales management the ability to provide instant support to sales reps in the field. For instance, if a sales rep tells management that a prospect is asking for more technical data or is balking at the price, management can help the sales rep close the sale by providing the requested data or by authorizing specific discounts.
Measure your success. Once management has worked out its sales and marketing strategies, CRM can provide metrics to determine how well the strategies are working and which sales approaches are proving the most successful. Such metrics help management measure its effectiveness in meeting objectives. For example, many companies have difficulty developing cross-selling between different divisions. With CRM, you can measure the number of referrals each division is giving to other divisions and the number of sales calls each division is making on the other divisions' customers.
CRM also can improve customer retention because customers appreciate the better service. Even when competitors adopt the same technology, customers are predisposed to remain loyal. They do not want to invest time teaching the new company what they have already taught the old one.