Where business and technology collide.
Posted Mar 1, 2007
Business is not stagnant: Organizations are constantly evolving and changing to meet new customer demands, develop new products and services, adhere to new industry regulations, and much more. The technology that businesses implement must be able to adapt to these changes in order to address and solve an organization's business issues. This intersection--where technology meets the business problems--is where companies will get the most benefit out of their IT investment and will start to achieve their business goals.
For CRM in particular, it is imperative that the solution is not just driven by technology. Since CRM is ultimately about leveraging relationships to achieve business success, it is important for a company to define its business processes, best practices, and organizational needs before selecting a product. Once the desired business goals are addressed, the right technology can be put in place to reap financial, operational, cultural, and customer loyalty benefits for a business.
CRM and KPIs
It is important for organizations to define the indicators specific to their customers, market segments, and business services that gauge business performance. This sounds simple, but it is typically the most difficult and rewarding process an organization undertakes. The process starts by developing a model of the organization's best customers.
At the foundation are questions like:
What customer segments are the most profitable? Is the customer base growing?
What is the cause and impact of customer attrition? What are the early warning signs that one or more of these accounts is in trouble?
What marketing channels result in the highest response rates? Highest profitability? Are they the same?
Which customers are the most resource intensive to serve? Does the contribution from these customers correspond to the cost of providing service?
These questions are easier asked than answered. Through this process organizations come to depend on measurable facts over anecdotal evidence about their customers and their business. Defining the business-customer relationship indicators makes managing the business toward achieving these objectives more tangible.
Technology has come a long way. New products on the market like Microsoft's SQL Reporting Services are making it possible for business users to create their own reports to analyze data and measure business performance against KPIs. These tools are allowing organizations to challenge their long-held anecdotal beliefs regarding which customers are the most profitable, and are enabling their sales and marketing departments to actually target individuals and organizations that are most likely to become profitable customers.
Ultimately, the indicators and analytics are worthless unless the organization is committed to reviewing the results, and making the appropriate course corrections. This may seem to be a labor-intensive proposition. Considering the costs of developing new customer relationships and retain existing customers, this process literally impacts the bottom line in terms of spending on lead and customer generation, as well as overall business profitability.
Business Process Management
Business process management (BPM) is the unification of an organization's core business practices and the underlying systems that are used to support those systems. This is a truly revolutionary step forward for business systems because it enables organizations to radically change their processes to incorporate new business opportunities or to address changes in compliance regulations. CRM vendors have only just begun to incorporate BPM functionality into their products over the last couple of years.
For example, many customers have a process for approving relationships with new clients. Traditionally, customers have developed complex Visio diagrams of their business process, charging their internal IT staff with implementing the process. This has led to gaps in understanding and, after years of changes, the code and the business process ultimately have little in common. BPM solutions enable businesses to document their workflow process, allowing IT to develop the supporting code attached to the workflow elements.
Need to change a new task or introduce a new step? No problem. Simply add the new task and link it in the workflow. These solutions are not limited to the CRM application, offering the ability to access data or even initiate activities in remote applications. Furthermore, the workflows can be versioned and, over time, the code and the process remain unified.
Organizations have been quick to adopt BPM technologies because of the return on investment. Unifying business process and technology reduces the cost of supporting and maintaining the application. More important, BPM is enabling organizations to identify evolving market opportunities ahead of competitors and to react to compliance regulations in a fraction of the time.
Ultimately, CRM is first about relationships and then the technology. Improving data integrity, management-level reporting, and even employee productivity, while important, are secondary benefits of a well-thought-out CRM process. The focus has to start with prospects and customers, since improving the relationship the client has with an organization is the shortest path to developing prospects into customers and customers into repeat customers, thereby increasing revenues, return on investment, and productivity.
In addition, business strategy development does not need to be time consuming or costly. With a skilled facilitator and an active commitment from the participants, the process can be completed in a matter of weeks. Studies have even suggested that the strategy will not be successful unless the organization's executives actively participate in the discussion and empower their employees to lead the charge of the CRM project.
About the Author
Richard Smith is vice president of CRM strategy and a founding partner of Green Beacon Solutions. Please visit www.greenbeacon.com.
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