As I outlined in a previous article, there is a lot of hype and misunderstanding surrounding customer relationship management. CRM is a philosophy, a “process discipline” that is not much different from maintaining personal relationships.
The mistake that many people make is getting caught up in the technology and the hype of CRM. Many people attack the problem through their information technology departments, through technology, forgetting that CRM is really about the process of maintaining relationships with the people who buy your products and services.
The technology is there to support that process. To design and implement a successful CRM system, companies must first embrace a customer-centric philosophy. That philosophy will be the guiding force behind decision-making, software purchases and system building, and, in the end, will lead to good customer relationship management.
Defining the problem. One mistake that some companies make in implementing CRM is blindly building databases and collecting data. “Build it and they will come” does not work in CRM.
First you must define the business problem that you want to solve. In terms of dealing with your customers, where is your organization now and where should it be? You must define the reasons why customers do business with you, why they keep doing business with you and what will motivate them to grow their relationships with you. If you understand these motivations, you can develop an understanding of how to provide services to your customers profitably. In the end, if you cannot provide services profitably, you cannot continue to serve your customers.
Your entire CRM initiative must revolve around your business needs but focus on your customers’ needs. This requires you to have the information to understand those needs. If you do not, your company will end up like many companies that are data rich and information poor. They do not identify what they are trying to collect, so they end up with garbage – garbage in, garbage out. You can avoid this by defining your needs and knowing what you are going after. By doing this, you can build a structure that will transform the data that you collect into actionable information.
Building the system. To build the optimal system for your CRM effort, you must communicate your business needs to your IT people or the outsourced consultants who will build your system. This is sometimes where the entire process breaks down. Marketers want to be creative, and IT people work from specs. Even consultants, in many cases, do not understand the marketing process.
The technology end of your CRM initiative must know where to mine for data, how to pull it together from multiple access points, what to look for when cleansing and sculpting data and what it needs to look like when presented to marketers, salespeople and service associates. It does not matter how sophisticated the technology end of your CRM initiative is if it cannot turn the data into actionable information that the rest of your organization can use to retain or acquire your customers.
Creating a customer-centric culture. Implementing a CRM process is a huge undertaking that many companies are not ready to make. Many organizations are ill-equipped for structural change. That is why it is so easy to say, “Buy the software,” or “Change the technology.”
Companies are looking for a panacea, a quick-fix solution. Quick solutions rarely work. You can “eat the elephant in small bites,” by segmenting the work and managing against a plan with short-term goals. You must keep the endgame in sight and work with a plan that will get you there. Going in, you must know that the creation and maintenance of a good CRM program is a lot of work. You should learn to crawl before you walk and walk before you run.
You have to ask whether your organization is ready for this. Is your company customer-focused or product-focused? Is everyone too worried about the end of the quarter rather than the value of customers over time? What incentive programs do your salespeople work with? Do they support the CRM program or work against it? Is management ready to create and pass down a customer-centric philosophy? Are you willing to shift your budgets to accommodate the new program? Are you prepared to shape your organization to better handle the needs of its customers? There must be a balanced view of culture, process and technology, with the technology as an enabler and not the driving force behind the program.
Measuring and refining. The new mantra in marketing is, “If you can’t measure it, don’t do it.” As time goes on, your CRM program should allow you to perform analytics to understand the results of your programs. This will help you serve your customers optimally, letting you know what works and what does not. Which are the most effective channels to reach your customers? What messages work best? What is the most profitable customer segment or even individual customer? This constant stream of feedback will help you decide how to allocate your marketing budget. You will be able to make adjustments as you go along. This makes sense, as your customers will not adjust to your system; you must adjust to their habits and needs.
In addition, a good CRM program will let you test scenarios before implementing them. In this way you can follow the mantra “If you can’t measure it, don’t do it.” A successful CRM program will provide high accountability for your initiatives before, during and after implementation. In the current economy and in what is being referred to as the second round of CRM, accountability is a major factor. Your CRM system must allow for measurement, and it must be flexible enough to incorporate any changes that those measurements may suggest.
Successful CRM programs have tremendous return on investment. With the right program in place, each customer touch point can become an opportunity to provide personalized communication to your customers. You will understand how each customer prefers to interact with your business, his buying habits, which messages work and which do not. You will be able to perform ROI analysis on your program regularly, and you will be able to make adjustments that will add to your bottom line.
One thousand percent ROI improvements are not unheard of with specific CRM initiatives. Most companies would settle for marginal improvement in overall profitability. A properly designed and implemented CRM program will bring you closer to your customers, optimizing your entire business and driving your profits.
