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CRM as a Sequential Four-Step Process
Dick Lee defines CRM as a sequential four-step process, supported--but not driven--by technology.
Posted Aug 10, 2000
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Technology followed by confusion. That's my take on how the user market is defining CRM. After all, what's the point of spending a gazillion dollars on some thin-client, thick wallet, star-spangled software system before you have a clue as to what to do with it?

According to organizational development guru Bill Brendler, who specializes in rescuing technology implementations, "Companies are racing to embrace CRM technology, but what they don't realize is they've got to redesign their company first. The real opportunity comes from taking the time to rethink their relationships with their customers--to figure out how to put them in charge of their company. Sometimes I really think that business leaders believe the technology is going to figure this out."

No kidding. Software is the ultimate shortcut. So they try software first--and only start asking "What is CRM?" after they fail to create more than misery and confusion. So let's forge a workable definition of CRM.

A Working Definition
CRM is...implementing customer-centric business strategies; which drives redefining of functional roles; which demands re-engineering work processes; which is supported, not driven, by CRM technology. This definition--expressed as four sequential steps, each driven by the step prior this definition--breaks through the technology clutter.

CRM is a four-step process:
1. Implementing customer-centric business strategies.
2. Which drives redefining of functional roles.
3. Which demands re-engineering work processes.
4. Which is supported, not driven, by CRM technology.

Implementing Customer-centric Business strategies
The time to start going "customer-centric" was back in the eighties. After forty unbroken years of sellers' markets, the supply-demand curves had started switching from excess demand to excess supply. In other words, in customers' favor--a direction that continues today with ever-increasing velocity. But most companies continued trying to tell customers how to behave, rather than responding to them (the root of customer-centricity). Feeling increasing customer pressure, they invented "target marketing," which was little more than shriveled up mass marketing with no emphasis on individual customers. Next we embraced database marketing, the same impersonal stuff with fake personalization. Then we came up with the concept of "customer intimacy," which meant little more than sticking both hands in customers' pockets.

But finally, more companies are moving toward customer-centricity. Progressive companies are figuring out how to create "win-win" relationships with customers--then converting these "win-win" opportunities into customer-centric business strategies. And when one leading company in an industry "gets it," others follow. It's what FedX did to UPS and what Nordstrom's did to competing department stores.

This is how CRM starts--with customer-centric strategies adopted by top level executive management. Middle managers, even functional heads, don't have the authority to initiate enterprise-wide, customer-centric business strategies. When CRM starts at the middle management and staff levels it means one of two things: either the company is already customer-centric, which very few are yet, or it's headed down the tubes, at least with CRM.

Redefining Functional Roles
When it comes to customer-centricity "doing it" is proving just as hard as "getting it" because most business organizations and their information systems are organized around internal functions rather than customers. That is why managing customer information across the enterprise, rather than within each department, is an organizational rather than technological problem.

Most companies have a marketing department, a sales department, a customer service department, an accounting department, a credit department, and maybe a product engineering department, each with its own leader and staff--and turf. It's almost impossible to become customer-centric while maintaining this type of organization. But if you leave this organizational structure in places, you'll treat customers the way you always have.

A CRM initiative that starts with customer-centricity requires huge changes in your organization.
• Customer service should unchain itself from accounting and move from the back to the front office.
• Some sales and service functionality should shift to the Internet--and other sales functionality should probably migrate to service.
• Order entry should move out to sales, along with product configuration.
• Product engineering may become a customer contact function, and not strictly internal.
• Product management will almost certainly scale back in importance, replaced by customer segment management.
• Manufacturing might schedule runs according to customer priorities, rather than strictly manufacturing efficiencies, which means they need sales data.
• Accounting will have to push transaction data to sales, instead of hoarding it.
• Legal will have to find accommodation with customers, rather than sticking odious contracts in customers faces.

Had enough? The outcome of making your organization customer-centric is highly predictable, based on the first CRM step you took--developing customer-centric business strategies. The good news is that more and more companies are willing to tackle the organizational changes required by CRM, either because they're forward-thinking or because they're scared.

Re-engineering Work Processes
If you take steps one and two carefully, process re-engineering will flow right out of redesigning functional activities--just as redesigning functional activities flows right out of developing customer-centric strategies. With one big caveat, however.

Until CRM came down the pike, process management was a four-letter word among sales and marketing people. Still is to many. Consequently, front office folks have no front office process model to follow. So they borrow a back office process model called "balanced flow," which is a lower case expression of the "statistical process control" (SPC) approach. But SPC and balanced flow rely on reducing work flow variances to the lowest possible levels.

This doesn't work in the front office where the customer calls most of the shots. Instead we're seeing greater use of a less-popular process management approach called restraints management, which is a lower case expression of the theory of constraints (TOC) model. TOC works by anticipating variable work flow volumes and maximizing throughput under variable conditions for each group of sequential processes. How? By increasing resources at critical bottlenecks that occur when flow increases. In other words, if field sales people can't cover their customers during peak demand periods, you'll do something like cross-train some inside folks to go into the field when needed. Or develop a customer-acceptable alternative to peak sales period coverage. Or simply carry enough sales people to meet peak demand--and cross-train them to do other stuff or accept them being underutilized during slower periods.

Supporting Work Processes (not driving them) with CRM Technology
Almost inevitably, newly defined CRM work processes require more structure and information management support than old ones. And odd as it may seem, you can make CRM software support your work processes, not vice versa.

How? First, take control of the software buying process away from the software sellers (the best of the software companies actually encourage you to take the lead). Then clearly define your needs and ask competing vendors to show you how they're going to meet them. "Proof of concept," it's called. And if a vendor asks you for a contract before showing you how their system will conform to your needs, show them the door.

Be sure to detail both your process control and information management support requirements one step at a time (this is step three driving step four. And don't forget to flush up seemingly minor stuff like, "Field reps need to work offline with full data and functionality" or "Reps don't have access to telephone connections." For example, if either of these crop up, you'll want to wash your hands of "thin client" CRM solutions that relegate remote workers to accessing not only their data but their software functionality over the Internet (or dial-up connection). You'll also want to flush away any thoughts about application service provider (ASP) CRM technology for the same reasons, although those aren't the only reasons to flush away ASPs.

Have you noticed that we've defined CRM without once mentioning the Web? Equating Internet selling, marketing and service with CRM is just another version of substituting tools such as process re-engineering for strategies. Unconvinced? Well, ask yourself this. Does using the Internet inherently build strong, healthy customer relationships? Think of all the e-tail and even eB2B endeavors that now look like bug splat on your windshield, wiped out because they weren't what customers wanted. If we persist in trying to define CRM as Internet stuff, "www" will wind up meaning "we were wrong."

So let's start defining CRM for what it is--and nothing less. And let's start defining it before we try it. Shall we?

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