Fighting Internal Resistance to CRM

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A major national financial institution produces and executes a successful credit card direct mail campaign, resulting in numerous applications for new credit cards. The very next week, the company's home equity department sends appeals to the same customers, urging them to cut up their credit cards and consolidate their debt with a home equity loan.


Couldn't happen? Without an integrated customer relationship management focus, it did happen.


Where companies were product-focused with their marketing efforts and sales initiatives, it was far too often the case that customers received mixed marketing messages. Departmental silos, as they are known, were concerned primarily with how a single product's sales contributed to the bottom line and whether the salespeople were meeting the volume goals established, rather than focusing on the long-term, overall customer relationship.


The financial institution saga is common in many businesses, not just the financial industry. Internal cultural barriers are inhibiting communication and coordination among divisions and thereby defeating marketing objectives. Strategic rethinking by management and transforming sales and service behaviors are key to the success of a strategic customer relationship management program.


With the push toward a more customer-centric focus, organizations find they no longer can look at a consumer from a specific product perspective but must encompass the entire customer relationship to fully understand that client's profitability.


The technology component of CRM offers organizations a more comprehensive understanding of its customers through data analysis and predictive modeling, therefore enabling the development of more accurate sales and marketing strategies. However, technology alone cannot ensure a successful CRM initiative. Key organizational changes are critical to facilitate true CRM value.


An overall strategic buy-in from all divisions, changes in management practices and a transformation in sales and service personnel behaviors are crucial to align all departments with corporate CRM objectives.


The strategic buy-in requires a company not only to set a strategic CRM direction but also to communicate thoroughly the value of this customer-centric strategy to all its employees. To help break down departmental silos, executive management needs to hold itself accountable for overall customer profitability. To do this, data and key metrics from different departments need to be made common and integrated.


In another example with a financial institution, the credit card division of a bank decided to charge a user fee to all of its unprofitable customers to increase the profitability of its credit card portfolio. Not surprisingly, the notification of this new fee resulted in many of these unprofitable customers closing their credit cards.


Initially, this sales strategy was deemed a success because the unprofitable customers either left the bank or became profitable for the bank with the payment of the new fee.


However, imagine the bank's distress when it took a comprehensive view of the customer relationships and realized that the unprofitable credit card customers who left the bank were, in fact, the most profitable customers of the bank. These were the customers with large mortgages, savings and stock portfolios who paid off their credit card balances each month.


To break down departmental silos, product managers must, to some extent, be held accountable for overall customer profitability in addition to the profitability of their specific product.


To facilitate organizational changes in management practices, and sales and service behaviors, companies must set goals and implement incentive plans focused on customer value, not just sales volume. This shift also requires a new measurement and inspection system aimed at selling to the complete customer relationship. By focusing activities and systems on relationship building and coaching the primary contact personnel on relationship-selling, organizations begin the process of true CRM.


Exemplifying this concept, a toy company found that it was more successful in sales initiatives by training and coaching its sales employees to interact with customers by asking questions, such as: What age child are you buying for? Is the child a boy or girl? What do they like to do? Armed with this knowledge, the company was better able to recommend appropriate toys for its customers. Therefore, it had reduced returns of merchandise and improved its profitability.


Bottom-line profitability is associated with an integrated, customer-focused total CRM strategy. Using CRM technology combined with the necessary cultural changes leads to better decision support and improved cross-selling ability, which ultimately increases offer acceptance and profitability.


Financial institutions, insurance brokers, e-tailers and telecommunications companies alike are finding that by refocusing internal operations and overcoming inhouse resistance to change, they can effectively execute a strategic CRM plan


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