CRM: Contenders and Pretenders

Though record numbers of corporate executives flock to conferences to learn the latest techniques for customer relationship management, most organizations remain paralyzed in their ability to effectively use information and technology to identify, attract and retain customers.

This problem is not a lack of technology. An impressive array of customer management, sales management and marketing automation software supports processes for marketing, sales and customer service. However, technology alone is not the answer. Too many companies have invested millions in software that has failed to bring them closer to their customers.

This problem is not a lack of information. In almost every organization, customer information is abundant. Unfortunately, the bulk of this information is scattered among numerous databases. Each internal department and external service firm has some information, but no single integrated information source is accessible and shared throughout the organization.

Each day, companies leave millions of revenue dollars on the table because they have failed to develop an enterprise CRM strategy that encompasses the data, processes, people and technology necessary to identify marketing opportunities and deliver the right communication to the right customer through the right channel.

Despite growing awareness of the need to adopt and implement a CRM strategy, most organizations remain paralyzed in their efforts.

Acquiring a new customer costs five to 10 times as much as retaining an existing one. Research analyst Alex Brown estimated that “U.S. organizations lose one-half of their customers every five years, and a 5 percent incremental improvement in the customer retention rate could have the effect of doubling profits.”

Customers Leave

Despite these findings, companies continue to treat customers with indifference.

And how do customers respond? They leave in search of a company that will take the time to understand their needs, problems and expectations – and deliver information and product solutions tailored to their needs.

To determine the “business case” for CRM, companies should start by answering:

• What is the cost of lost opportunities to increase revenue through repeat sales and cross-selling because essential customer information is not integrated in a central marketing database to provide a consolidated view of the business or household?

• What is the cost of sales leads that go cold and customer relationships that are squandered because field sales and customer service representatives – even channel partners – are not connected through an information backbone that enables their selling and service efforts to be coordinated and cohesive?

• What is the cost of marketing campaigns that fail because marketing managers lack the information and technology to identify opportunities and plan and manage marketing programs that deliver the right offer to the right customers at the right time?

What Companies Can Do

If information and technology paralysis is crippling your company’s ability to grow and retain customers, you can’t afford to wait. Correcting the problem requires you to objectively assess your capabilities for developing and managing customer relationships.

To help you plan and implement a successful CRM strategy, consider the


• Define your company’s CRM mission. The better you articulate how information and technology will be used to support marketing, sales and customer service processes for customer development and relationship management, the easier it will be to determine your strategy and implementation plan.

• Get senior management on board and out front. The sooner the company’s senior management team adopts and articulates the company’s CRM vision and endorses a technology-enabled marketing strategy, the quicker this vision will be accepted throughout the organization.

• Form a cross-functional project steering committee. The process of finding, growing and keeping customers is not the exclusive responsibility of the sales force. Designing and constructing systems to support the company’s marketing, selling and service processes must involve representatives from every department that will use or support the systems.

• Align the information and technology strategy with the marketing, sales and service strategy. The best information and technology strategy is useless if linked to a poorly planned marketing and sales strategy.

Marketing and information technology must work together to ensure that the company’s information systems and marketing technologies are aligned to achieve the customer development and management objectives.

• Integrate marketing communication contacts. Plan marketing campaigns that integrate direct communication channels – including direct mail, e-mail and customer service – with indirect communications channels, including print and broadcast advertising, marketing events, retail promotions and the Internet.

• Integrate essential marketing intelligence in a central database. Consolidate essential customer, sales force and sales channel information in a central data warehouse. Create separate data marts to support “customer interaction operations,” including sales force automation, call center and campaign management, and “business intelligence operations,” including query and reporting, customer segmentation and predictive modeling.

• Implement new CRM technology in phases. Implementing new software tools to automate and support marketing, sales and customer service processes requires that the user-adoption process be carefully planned and managed. Remember that technology is only as good as users’ ability to absorb and apply it.

• Teach users how to use information and technology to improve CRM productivity. Don’t underestimate the time required for user training and coaching. Developing expertise in information-based and technology-enabled marketing is an iterative process.

• Teach customers to provide the information you need to serve them. Customizing communications, offers and products to individual customers requires customers to provide the information the company needs.

• Evangelize the CRM mission and strategy throughout the company. Maintain a high profile for the project by keeping people informed about the project’s status. Continually educate management, staff and essential vendors on the strategic vision.

When it comes to making money with information, some companies have emerged as CRM contenders while others are pretenders. The difference is in knowing what to do and how to do it.

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