Eight ways to boost business practice with CRM

Like their counterparts around the world, South African companies will have to make greater use of CRM techniques to focus on the development and retention of higher value customers, and change their marketing thinking and tactics towards customer acquisition and retention.

There is also the realisation by management that customers are increasingly looking towards improvements, not only in products, but also in satisfaction from their service encounters with their suppliers. The following eight points show areas where the adoption of CRM can enhance organisational practices:

There are always new opportunities to implement CRM-based approaches - witness the shift from mass marketing to one-to-one marketing, renewed emphasis on customer care and service, and changing work practices to reflect customer focus. In a perfect world in which businesses embrace the marketing concept and customers are satisfied, it is assumed that both parties will commit to strengthening their bonds.

The reality is that this is an imperfect world. Different rates of development in economies and markets, in competitors` activities, and in lifestyle changes plus fickleness in end-users` choices will ultimately force changes in strategic directions for companies, creating gaps in competitive armour that can be exploited using CRM-based approaches.

Find new ways of collaborating with others to build strengths and contacts. From the company intranet to the global Internet, it is possible to draw upon the core of knowledge and expertise that exists across the company and its business partners, suppliers and distributors.

Humans and not technologies are the most important assets. In applying the principles of strategy there is a need to rely on the knowledge, skills and expertise of company personnel. So companies need to develop good working environments and incentives for their personnel in order to retain good managers and their staff.

Knowledge is power and getting people to share knowledge can be difficult. Standardisation for IT protocols, buying systems and processes, and better use of internal communications systems can help to avoid duplication of efforts. Just as customers like the familiarity of brand names that encapsulate notions of quality, so they like the familiarity of company Web sites, ease of access and navigation on and around them.

The Internet provides cost-cutting opportunities combined with the potential of mass customisation to reach very large numbers of people. A CRM strategy relying on integration of different databases should aim to develop efficiencies in accessing and analysing data.

The "garbage in, garbage out" principle applies, so companies need to avoid being swamped by increasing amounts of information from databases. An efficient and standardised CRM system is necessary to apply the guidelines and practices for those involved in sorting out what is crucial and directly relevant when faced with a vast array of information from databases.

The CRM focus is not only on new and more cost-effective ways of keeping customers. There is a need to distinguish between efficiency in day-to-day operations and effectiveness in delivering applications to create benefits in the implementation of CRM strategies. There are compelling reasons for developing new ways of looking at CRM or new CRM business models to improve dramatically "the customer experience" for consumers.

New media and channels of delivery can be found for business customers by reducing relationship marketing, transactional and logistical costs via new business applications. Customers also reap real gains from common practices in procurement, such as cheaper prices.

Customer satisfaction and company profits are often closely related to the speed of solving problems. A CRM strategy should use the analytical techniques of data mining. Data mining helps to identify trends, patterns and relationships of data, such as prediction of customer value.

Customer satisfaction and company profits are often closely related to the speed of solving problems.

Doug Leather, MD, REAP Consulting

The revenues from implementing e-CRM systems must be greater than relationship management costs. There is, therefore, a need to examine closely two major groups of customers. The first group consists of those buyers or customers who are relatively undemanding in their relationships with their suppliers for various reasons, eg where trust has been built up over a number of years or where the immediate costs of switching suppliers are greater.

The second group consists of other types who are more demanding, requiring their suppliers to reduce prices while at the same time expecting continual innovation to sustain their own competitive positions. Both groups of buyers are essential to the generation of significant revenues for their suppliers.

The art of CRM is to keep both groups and to retain their business. A modified CRM strategy to adapt to the needs of both groups is potentially more enriching than one strategy for all. It is important to identify such customers with the possibility of de-selecting others who generate poor revenues, add to costs and take up a lot of time.

What was accepted in the past as relevant may now require new solutions in a dynamic and competitive world where technologies, processes, information, products, services and customer need are constantly evolving or proliferating.

In the case of CRM, customers` expectations and experiences have changed, and they want to manage their relationships with their suppliers much more smartly. What does this all mean? It means that analysing the causes of CRM failure - and success - and what companies need to do to ensure their investment in CRM pays off is not a waste of time.

Viewed historically, early adopters who fail with CRM (between 30% and 50% according to different consultancies) failed not due to adoption of the wrong product innovation for their process innovation, but for inappropriate application of the product innovation.

Companies that are having trouble with their CRM implementation should look carefully at why it failed, and what they can do to reduce the chances of failure next time.

In particular, it is important to consider where the company might have failed to address the factors most closely associated with CRM success - people, processes and day-to-day customer management activity, while over-investing in the factors which are, after all, only CRM-enabling systems and data.