Logo
BodyBGTop
What CRM Isn't--But Could Be
CRM is not about cost reduction, it's about creating customer loyalty that helps increase profits over time.
Posted May 26, 2003
Page 1
Click here for full-size image
Click here for full-size image



Many CRM initiatives are motivated and measured by cost reduction. Although successful CRM programs may reduce costs, cost savings alone should never be what justifies a CRM initiative. Instead, to paraphrase Harvard Business Review, CRM should focus on building customer loyalty and increasing profits over time through business processes that are well-aligned with customer strategies. To achieve the full promise of CRM, organizations would do well to consider these nine principles: 1. Investment versus return Before you even begin, quantify the expected value of the CRM program as measured by your estimated return on investment (ROI). Although this may sound obvious, many companies fail to do this and have no way to measure success going forward. The potential value may be immense, but unless you can convince senior management that the CRM initiative will develop customer loyalty and increase profits, you're not likely to get the support and funding you need to reach that potential. In calculating ROI, include the true and complete cost of the CRM program, not just the cost of the technology. Don't overlook the sometimes-substantial costs of training and coaching, change management, process realignment, root cause analysis, and ongoing program management. If you minimize the investment, you may not have the infrastructure to achieve the potential benefits. 2. The make-it-happen program manager CRM initiatives are programs, not projects, which means they have life beyond implementation. They are designed for the long term, and for that reason you need a program manager who owns it. As with most new programs, success depends on someone who can make things happen, someone who understands the goals and how to achieve them before, during, and after implementation. 3. The three-prong strategy To achieve a CRM vision of acquiring and retaining customers for increased profitability, you need a three-prong strategy that encompasses customers, support teams, and the individuals in your group. 1) The customer strategy includes processes and actions designed to give customers a better experience, such as:
  • Actively notifying customers of news, events, products, and services that might interest them based on their personal history with you.
  • Offering new support channels, such as wireless and truly effective self-service via the Web.
  • Capturing a consolidated, accessible, and ongoing view of the customer so that customers don't have to reintroduce themselves each time they contact the company.
  • Regularly communicating service improvements and their benefit to the customer.
    2) The team strategy should include processes and actions designed to build commitment and ongoing participation, such as:
  • Providing the time and resources required to develop customer strategies and align business processes around them.
  • Conducting competitions that motivate teams to adapt to, participate in, and succeed with the new initiative.
  • Certifying teams for their ability to execute the aligned strategies and processes.
  • Measuring customer satisfaction improvements for each team as the program proceeds. 3) At its best CRM is a people-driven program. If the individuals don't willingly embrace the new strategies, processes, and enabling technologies, all your efforts are for nothing. The individual strategy, therefore, should include things like:
  • Automated, personalized reports for each individual that document such achievements as resolving issues more quickly, escalating fewer calls, and/or acquiring new customers.
  • Frequent public recognition of each individual's contribution to, or execution of, the new customer goals, realigned business processes, and enabling CRM technology.
  • A higher level of responsibility for individuals who show performance improvements as a result of the new initiative. 4. Implementation versus continuum This three-prong strategy must include a continuum of activities that can sustain success over the long haul. This means post-implementation plans that identify resource requirements, roles, and responsibilities; lines of authority; risks and risk management approaches; and ongoing timelines, complete with dependencies. 5. Senior management support Successful CRM programs require the genuine support of senior management at the outset. To get it you need proof of CRM's value, which entails showing them:
  • the expected ROI
  • a well thought out strategy that addresses the needs of customers, teams, and individuals
  • a long-term, executable plan that covers both implementation and a continuum of activities
  • ongoing reporting to show how and to what degree goals are being met 6. Cultural shift and support One Gartner analyst says, "Botched CRM is usually a victim of politics," which usually translates into a corporate culture that isn't built around the customer. To create an organization that actively believes in and contributes to a CRM program focused on developing customer loyalty for increased profitability, you'll need:
  • consistent communication with management and all levels of staff
  • a well thought out and executed change management strategy that addresses the concerns of all participants
  • a performance management strategy that includes incentives, rewards, and recognition
  • improvement strategies to address areas of weakness
  • an adequate training program and ongoing coaching for continuous improvement 7. Incentives, rewards, recognition As mentioned above, it takes real people to successfully integrate new technology and processes to meet your CRM goals. If they're like most human beings, your staff will need incentives to help the CRM program succeed at the start-up phase, through full-scale implementation, and even after it has become a natural part of their workflow. In the early stages both reward and recognition are essential; once CRM becomes a way of life, ongoing recognition will sustain their commitment. 8. Measurement and metrics If the success of your CRM program isn't visible, it will be forgotten by everyone who isn't directly involved, including those who approve budgets. To continue to gain the support you need for ongoing success, you should measure the results and regularly report your findings. Senior management reports might include:
  • trend charts showing the reduction in ticket escalations
  • trend charts showing the reduction in the average time to relief for tickets (as defined by the time from which the ticket was opened to when a probable answer was provided, somewhat different that the actual close time)
  • trend charts showing the increased use of Web-based self-service by customers
  • trend charts on the dollar value associated with achieving these results Using a scenario that includes a knowledge management system integrated with a call tracking system, team and/or individual reports might include:
  • percent of tickets that used a solution from the knowledgebase to resolve the issue
  • percent of knowledgebase solutions that are being reused
  • volume of knowledge updates 9. Effective Technology Just because companies make the mistake of focusing their CRM program on new technology to reduce costs doesn't mean that technology isn't important. No company will be able to realign its business processes to build customer loyalty and increase profits without the right enabling CRM technology. Ideal attributes include the following:
  • it is easy to use
  • it integrates well with existing systems
  • it captures every customer interaction, aggregates the interactions for a consolidated history of each customer, and learns from these interactions over time
  • it offers integrated support via multiple channels (phone, email, Web, wireless) 24 hours/day, seven days/week
  • it is scalable, reliable, and maintainable
  • it returns the investment quickly About the Author David Stanley-Jones, director of service quality for Primus Knowledge Solutions, is an expert in applying CRM, knowledge management, and Web self-service technologies to solve customer service and support problems. At Primus, he has helped guide more than 100 companies to effective knowledge management and a quantifiable ROI. Previously Stanley-Jones implemented enterprisewide knowledge bases at SHL Systemhouse and at Halliburton Energy Services. In senior management positions at Cities Service Oil and Gas Corporation, he traveled extensively to explore customer needs and contractor capabilities. He received his B.S. in Geophysics from the University of British Columbia.
    Page 1
    To contact the editors, please email editor@destinationCRM.com
    Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
  • Search
    Popular Articles
     

    BodyBGRight
    Home | Get CRM Magazine | CRM eWeekly | CRM Topic Centers | CRM Industry Solutions | CRM News | Viewpoints | Web Events | Events Calendar
    DestinationCRM.com RSS Feeds RSS Feeds | About destinationCRM | Advertise | Getting Covered | Report Problems | Contact Us