Balance boosts CRM success

Customer relationship management (CRM) hasn`t always delivered on the early hype about it - often turning out more expensive and complex to implement than expected and seldom providing that magical 360^0 view of the customer.

Not surprising, really. The initial premise of CRM - the ability to reduce costs in sales, marketing and service by automating activities in those areas - was enormously attractive. Marketing alone usually amounts to 30% of an enterprise`s annual budget. Who wouldn`t want to reduce those costs - or at least optimise the expenditure?

But, an exclusively cost-savings approach is an unbalanced view of what organisations should be doing to improve their interaction with customers - because it unconsciously promotes the attitude that customers are a nuisance or a necessary evil and must be handled at arm`s length and at least cost and trouble to the organisation. So, focusing primarily on reducing costs actually achieves the opposite of what CRM is designed to do. We`ve all heard stories of CRM systems that have alienated significant numbers of customers, or at the very least, soured the relationships they were meant to nurture.

I`m not saying cost reduction is not important, but it should be a natural outcome of a mature, balanced approach to CRM. Just as you can hit your golf ball harder and further if you first get your swing and stance right, you can do more with CRM if you see it as a strategic enabler for your company rather than as a defence weapon with which to keep troublesome customers from bothering you.

Take a step back. Instead of looking at CRM through the lens of your expenditure on customers, look at your business through the lens of CRM philosophy.

I`m not saying cost reduction is not important, but it should be a natural outcome of a mature, balanced approach to CRM.

Tracey Newman, MD of FrontRange Solutions (SA)

First, accept that CRM is not about making your business easier to run. It`s about making it easier for customers to do business with you. Think about that carefully. How easy is it really to do business with your organisation? How many obstacles do you put in the way of your customers - either through your attitude or your contact channels, or both?

Acknowledge that customers drive your business - not only because without them you have no business but because, nowadays, customers expect to be able to use the technologies of their choice to interact with you. If your systems get in their way, they`ll simply go someplace else.

Understand that CRM isn`t about trying to control or manage the relationship with the customer so much as it is about giving customers options.

And, remember, the market is changing all the time. Customers are constantly being offered new technologies - which alter the way they want to do business with you. So you need to be flexible in your approach to CRM. And you need a system that`ll be able to continuously accommodate new technologies and the new kinds of customers they bring in.

So, what is the right sort of CRM solution? Well, it`s the one that will give the most detailed and relevant information about customers - so that you know which products and services to offer to which customers on which channels.

And that brings us back to the question of balance. Because it brings us to the question of integration. Integration of focus, business processes and customer data right across the organisation. If you integrate intelligently all the customer data resident in your organisation - and not just that which resides within your individual sales, marketing or services divisions or, indeed, your CRM application - you get smarter marketing, more effective sales and proactive service. Which gives you a balance between the customer`s power to manage you and yours to manage the customer.

With integrated data, you can target prospects that look like your best customers - and recognise them when they make inquiries. You can target ideal prospects - keeping the sales force focused on the right opportunities and therefore increasing overall close rates as sales maximise their time with qualified leads. And, by understanding your customers` needs and preferences - not just for what they purchase but how they prefer to be serviced - you can dramatically reduce costs of service while enhancing quality, gaining loyalty and promoting cross- and up-selling opportunities.

You`re thinking that while it`s ideal, it`s going to cost you more than you can afford, especially for a small or medium business. Not if you build your business case properly. Cover the following points and you`ll come out on the right side of affordable.

Establish the true total cost of the project - including people costs (such as training), implementation, customisation, integration and other services. Be clear about how the initiative will pay for itself - and how quickly - by defining expected revenue gains, cost reductions, and return on investment percentages and timeframes. Decide whether you will treat the cost of the technology as a capital investment or an expense. Set specific customer metrics (satisfaction, loyalty, service cost, etc) to be improved, and the financial gains expected. Establish a timeframe for change management, the costs of user adoption and training, and the expected impact on current and future staff.

In fact, lack of utilisation by staff is one of the most critical imbalances from which most CRM systems suffer. Since management normally budgets for and approves CRM, their needs are generally fulfilled while the needs of users in sales, marketing and customer service are given less priority - or none. And if the solution doesn`t help the users do their job, they`ll simply bypass it - and it won`t pay off as expected, or hyped.

So, involve users from every affected department in both defining the type of solution that`ll work best and in the implementation process. Whatever you do, don`t leave the choice of solution to the IT department. You do need IT`s input, because IT`s going to have to provide technical support. But IT doesn`t know from sales or marketing, so it doesn`t get to decide on actual CRM functionality.

There`s one other way in which you can save yourself from a lot of unnecessary expenditure and effort. Get the advice of people who`ve been there, done that. External experts can tell you what other companies are doing successfully (and not), facilitate agreement within your organisation, and provide advice and perspective that simply is not present within the company.

In other words, they can help you achieve a balanced view of CRM as it relates to your company - and make the difference between success and failure.