In today’s ever-changing, interconnected global economy, CRM is often a hot topic on the corporate agenda. CEOs are demanding more sound, practical approaches to building customer loyalty and lifetime value to maximize company growth, revenues, and profits and to stand apart from the competition. Striving to become a more customer-focused company, many businesses invest in a new CRM system.
As Jack Welch, the former CEO of GE, said,
There are only two sources of Competitive Advantage:
1) The ability to learn more about our customers faster than the competition and
2) The ability to turn that learning into action faster than the competition.
While short-term results and enhancements with CRM are certainly attainable, it is important to keep in mind that investments in CRM systems are strategic and for the long-term. Implementing CRM will directly impact employees, operational processes, and technology now and ongoing.
In other words, CRM is a voyage and a continuous journey.
Roadtrip!…Who’s coming with me?… Shotgun!
I couldn’t resist. It was too easy. Sorry about that. Back to reality…
Prior to implementing a new CRM platform, firms must recognize that the success of CRM does not rest solely on the technology, the core features and functionality, or the bells and whistles. CRM is a business strategy enabled by an underlying technology platform.
A successful CRM strategy starts first with Senior Leadership creating a client-centric organizational culture. Missing, half-hearted, or inconsistent executive sponsorship of this renewed client focus will lead to a breakdown and ultimately a failure in CRM strategic initiatives.
All employees must be motivated to dedicate themselves to client loyalty and satisfaction and be encouraged to develop a more analytical attitude towards examining client behaviors, interests, preferences, and moods. Such a mindset transformation and new-found commitment will result in enhanced client service levels and better use of R&D funding for products and services that are more suitable to meet client needs. Executives must also ensure that the right people with the necessary skill sets are in the right roles with the proper incentives to make employees, the company, and the CRM strategic initiatives successful.
Based on a firm’s overall strategic goals, strengths, and weaknesses, the business objectives of the CRM implementation should be clearly defined for both the short-term and the long-term. Firms must formulate and communicate specific, measurable, and time-oriented goals that offer far more insight and details than the following vague examples, which are far too common on CRM engagements:
- “to use CRM to increase sales”
- “to reduce sales cycles”
- “to maximize customer share of wallet with cross-selling and up-selling”
- “to target more lucrative markets”
- “to lower the cost of acquiring new clients”
The preceding sweeping examples could be improved by adding deadline dates, actual goal percentages or counts, and certain targeted customer segments. For instance, the CRM objective of “to lower cost of acquiring new clients” could be restated as “to lower acquisition costs in auto insurance by 2% within 6 months by December 31, 2020.” Business objectives containing well-defined tactics and measurements will help employees better understand the firm’s mission, instill accountability throughout the organization, and pave the way for the successful execution of a firm’s CRM strategy.
To accomplish the firm’s new CRM strategic objectives, fundamental business processes and practices will have to be re-engineered, standardized, documented, and shared amongst relevant employees. In particular, department heads must pay special attention to processes that impact, integrate, and overlap with other departments or units and provide training as needed to ensure maximum user adoption of the CRM system.
Once companies move from the design to the actual execution of their CRM strategy and implementation of their CRM system, they will experience significant performance improvements. As sales and productivity increase, companies will have higher client retention rates and conversely lower customer attrition and defective rates.
An often overlooked result of a successful CRM strategy is that the ensuing higher revenues and profits can actually be reinvested back into other robust systems to enable employees to work even more efficiently. Making their jobs easier with better, intuitive, and more technologically advanced CRM systems can actually have a positive effect on employee morale, which can lead to a decline in turnover. Thus, recruiting and training costs can then also be lowered.
None of these resulting benefits would have been attained, though, without first clearly formulating the company’s CRM vision and strategy.