The Best CRM Article Ever Written

When the issue of value comes up in the CRM world, I find myself thinking back to the old Wendy’s commercial where the little old lady opened her burger from a competitor and asked “Where’s the Beef?” As I’ve thought through this question over my years in this business I’ve come to a conclusion that is quite different from my peers. Each to their own, I say. But, I’d like to share my view of the CRM world with you.

When all you have is a hammer, every problem looks like a nail

Software vendors build products that purport to have features that will transform your life. The contradiction occurs as soon as they begin talking about all of the customization tools their application brings to the table. Let’s think about that a minute. If everyone is the same, a set of well designed features could certainly improve your condition. On the other hand, if they also show you the customization toolset, that implies that you might be different. Lest you think this is an unresolved question, I would point out that as soon as you’re sold, your consultant begins with a requirements analysis.

Shouldn’t you have told the vendor, and the consultant, your requirements up front? I think they gotcha!

I look at these investments with simple equations. One the left of the “=” sign, we have the inputs. On the right of the “=” sign, we have the outputs. In the typical CRM investment, isn’t it true that we’re focusing on the inputs? For instance…

1. We need to purchase software

2. We need to install software
3. We need to customize software

Isn’t it also true, that when we focus on the left side of this equation you, as the buyer, we are focusing solely on “how much is this thing gonna cost?” The word thing is important. Why? Because if you don’t know what it is yet, and you don’t know what it’s going to do for you. You are ripe for buyers remorse and I will do my best here to ensure that you never spend your money this way again.

Software + Customizations = Unknown Value

The thing that typically occurs here is that a line manager, or maybe the CEO of a smaller company, has decided they need CRM software. They’ve even gone to great lengths to visualize how the forms and buttons need to work. The features the software doesn’t have that they simply gotta have! So, what’s the problem with that?

The value the manager receives is a personal thing, which delivers no tangible value to the customer. The customer’s perpetual desire for the best experience will never change. However, John the Sales Manager will be replaced with Dick the Sales Manager next year. And then…the investment cycle will begin all over again, since these two people have different personal needs to fulfill.

It’s the Customer Stupid!

Let’s try looking at this in a completely different way. Let’s start on the right side of the equation…the results. What is the ideal outcome your are looking for as a business? Certainly, properly installed software isn’t a business outcome, is it? Let’s try focusing on some other silly things, for a minute.

1. You would like to reduce customer churn and attract new customers at the same time
2. You’re profit margins are well below industry averages and you’d like to change that
3. You would like to penetrate your market more deeply with innovative products and services, but don’t know how to do it

4. You’d like your teams to work together better

These are just simple things that any business owner or executive might be losing sleep over. Certainly, we can get granular, but why try to address ever y possibly scenario. That tends to shift our thinking toward the left side (the inputs) at which point we begin focus on cost again, and not the return we should be seeking. But let’s refine the way we look at the outputs just a little bit. The ones I mentioned, I think, are things that everyone can nod their head over. But, they are internally focused,or inside-out in nature. That is the biggest trap that businesses fall into.

Do you believe value is a 2-way street? If you don’t, you probably won’t be in business long. If you do, ask yourself if you really believe that your product or service is delivering value. Are you constantly under pressure to reduce your prices, or do your customers just laugh at your lower priced competition? What I’m leading up to is a discussion on successful customer outcomes. At the end of the day, doesn’t it make sense that customers who have had an incredible experience either buying, using , or seeking help about your product feel that this is a more valuable relationship than the one with your competitor, who is offering a discounted price bundled nicely with shoddy workmanship and impatient customer service?

Delivering value to your customer in a way that delivers value to your company – The definition of CRM by Dick Lee

Now let’s look at those results again in terms of our customers.

1. Do we have friction in the customer experience that is pushing our customers away?

2. Is the cost of new customer acquisition, which we’re doing because we continue to lose customers, driving our margins down?

3. Do we have compelling new ideas that we learned by understanding the jobs our customers are doing that expand our opportunities in current markets, and/or create new markets?

4. Do we look like one company to our customers, or a series of disconnected non-communicating silos?

I think you’ve probably already figured out that software + customizations will not equal any of the results I’ve just highlighted – the first set, or the modified set. The first set is rarely evaluated, at least not with the CRM consultants who are focusing on software. While a better focus than the vast majority of CRM implementation, the second set of results is by far more powerful. It’s Outside-In thinking and the basis for a move to customer-centric business design – which, if you weren’t reading about CRM in the late 90’s, is what CRM was supposed to be all about in the first place.

The result of Customer-centric design is dramatically greater than the sum of the inputs

I think we can all agree that the wants and needs of specific internal people or departments will always change. Your people are transient. They get replaced. Does it make business sense to continually look for an improved condition by hiring the next available sales manager, or controller, or whatever? I’m suggesting that the only thing that remains the same is the expectation by your customers and prospects that they receive the best possible experience available. If you’re not providing it, they will be going elsewhere. It’s the customers need that you must continually be aware of as an organization – not your sales managers personal need for a customized form. That may sound harsh, and if you said this when you were called in to talk about software, you’d be asked to leave, more often than not. So why aren’t consultants seeking out businesses that are facing the challenges above? You’ve got me! Trust me, there are plenty of them out there.

Building the Customer-Centered Business is the Key to Effective CRM

If you don’t feel you have time to do it right, you’re probably right. It’s too late! On the other hand, I would rather spend my last days doing things right, than continuing the downward spiral and learning nothing from it. So, let’s take a look at how simple this all is.

1. The first thing you need to do is identify successful customer outcomes. Do this in a way that you can measure. Do it in a way that you can align real dollars to it. Be prepared to hold yourself accountable to these goals as you move forward. But most importantly, look at this through the eyes of your customer

2. Evaluate your business processes from your customers viewpoint. You will quickly discover ways to re-align this to reduce friction, and you’ll also find areas where you need to seek innovative technical solutions to help you.

3. Do this in a fashion that incorporates a cross-functional team of key players, not just managers. If they can see the whats, the why’s, and be part of the solution, they are owners of it. Change management is never easy. It’s much harder if you force it down people’s throats

4. Embed this process into your culture going forward so you are continually assessing changes in the customer landscape.

5. Assess the outcomes of your realignment and select only the technologies that will directly support your specific needs.

6. Measure the outcomes, not the inputs. If you’re customer lifetime value matrix is shifting to the upper right, you’re on track. Whatever the measures are, make sure you hold yourself accountable to them.

This approach is sustainable. The approach of a specific line manager or department is not. This approach gets your organization centered on your customers, not on your products or services. Customer-centric organizations are agile. They don’t beat a dead horse. If the needs of the customer change, the product or service changes, or gets replaced. Their customers are receiving value that exceeds the competition because the company is acutely aware of who there are, and what they need – even if they can’t express it.

Here’s the bottom line. If you’re focused on the inputs, and the relative cost of those inputs, you are going to miss the real value and thus, the wildly dramatic returns on investment (and return on customer) you could otherwise experience. You simply don’t get there accidently. You don’t get there by developing products that you think are cool. It requires change. It’s not the process your parents taught you. But, your grandparents, that’s another story. Become agile like their general store. These places knew what their customers needed, and delivered it.

Lastly, I’d like to apologize for the attention getting headline and the homemade infographic. Also, I’d like to point out that I’m not suggesting you become a general store