The term CRM program is used indistinctly and erroneously to refer to the strategy and the software that allows us to manage the experience and relationships with the customer. And it has been said so many times that CRM isn’t a software application that we seem to have gone to the other extreme and believe we can just do without the technological tool. Just so it’s clear, whenever we refer to a CRM program in this chapter, we are talking about the information technology, namely the software application. Otherwise we will use the terms CRM strategy or philosophy or customer relationship management.
We consider CRM to be a business strategy , therefore, with the ultimate purpose of learning about customers in terms of what they have “told us” to give them what they want, how they want, so that they don’t even consider going to a competitor, or as Tom Siebel once said, “We’d got used to telling the customer how to do business with us and now there’s nothing for it except to do business however the customer wants.”
Having made the distinction and going back to the issue of whether or not it is a software application, the answer is a categorical: “of course not, and of course I can’t dispense with one if I want to roll out a successful strategy, which the customer perceives at the end of the day with higher quality in the service and based on a truly memorable experiential sensation.”
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But, more specifically, we ask ourselves what role the CRM system plays in a customer relationship management strategy and the answer has a number of angles, some of which we will try to expand on throughout this chapter.
To begin with, to understand that when companies aren’t wholly owned by a parent entity, we can’t believe that information on customers can be shared without using a CRM software application, which processes the information from a single database; regardless of how well we get on with the members of the organization or if we are people who understand the value of sharing information, it’s not really a question of attitude, but a business issue. As customers we quickly realize when an organization is being run as a cluster of airtight compartments, as, amongst other things, they ask us the same questions every time we ring and we speak to a different employee from the one before. Sharing information affords numerous advantages for the customer and the company and just to mention a few of the most significant, let’s take a look at both perspectives:
From a customer perspective:
• When the customer communicates with the company, it doesn’t matter who the employee happens to be: The conservation continues from where it left off the last time and of course maintains the necessary coherence beyond the origin or cause of the contact.
• The customer feels appreciated and perceives that he or she acts according to his or her needs, requirements, tastes and preferences.
• Receive personalized messages, not just individualized ones. The belief that starting a communication by mentioning the customer’s
name is “personalization” is completely wrong. Customers want to be contacted about issues that interest them, not which the company thinks they should be interested in.
• Receive better service in terms of what the customer considers “good”
and the intelligence applied to customers enables us to understand that is “good” for each individual.
• In short, it is a customer who looks for total satisfaction in terms of our service and beyond our basic product.
From a company perspective:
• Increase revenue coming from existing customers through cross-selling channels: buy A, but not B.
• Develop customers: we want them to buy our products only and not use up their budgets on our competitors.
• Pinpoint opportunities for underlying business.
• Improve customer service, optimizing the available resources. Doing things better doesn’t always mean spending more money or time.
• Precise segmentations to invest the necessary and appropriate effort in each customer.
• Decrease the customer drop-out rate.
• Raise barriers to competition.
In short, CRM as total integration between systems and strategies contributes to the company’s overall profitability, as no matter what activity you are engaged in, it is highly likely that you spend too much on getting customers and too little on keeping them.
And what’s the best CRM system or software?
This is probably the question most often repeated at the end of each seminar.
And the answer is as simple as it is complex. There are many very good ones, but in your company it won’t make any difference and the challenge is to find which system suits each company. Let’s take a look at some of the features we should be considering when it comes to choosing the best option for our company:
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User-friendly: The system shouldn’t disrupt our day-to-day work too much.
We have seen in some cases that one reason for a failed implementation of CRM technology, and with it of course a failed strategy, is the simple fact that the software just isn’t user-friendly enough. Let’s not forget that in many cases, we are implanting a very strong cultural change and if we don’t do it in a simple way at least from a visual point of view, we are just making things more complicated than they need to be.
By user-friendly we also mean that we need simplicity in the procedure, in the loading of data, in the general operation. Remember that at first there is a lot of opposition from people whose working methods will change and if we give them the excuse, even unintentionally, that it is tedious and complicated, we can kiss goodbye to the whole project.
Easy to implement: As far as possible, of course. We’re not suggesting that just by running a file our CRM software will be up and running in a few hours, working as if it was just a simple spreadsheet. Here we mainly mean that it shouldn’t be so complicated to implement that it takes years, otherwise our interest wanes before the program is even in operation. A good alternative is to organize it in stages so that users get to learn as the process advances, rather than one day after months we are told, “the CRM is up and running, start using it tomorrow please and forget everything you did before.”
Easily assimilated: Unless the company is new, there’ll be a wide variety of systems in existence. The ERP, logistics systems, of human resources management, spreadsheets on each pc in the company and who knows how many other systems we’ll find that are related to the customer in one way or other. The CRM system should interact with the company’s formal systems in place, that is why it should be easily assimilated with them. The decision should also be taken regarding what to do with the information that goes through informal channels, such as those files that everyone in the company creates and in which information is stored that is essential for the organization as a whole. We should probably move this data to the integrated systems, and tell people to stop using files which start out as temporary and end up as final, albeit for a given individual only.
Personalizable: The software must fit the business, not the other way around.
Every process surrounding the interaction between the business and its customers must of course be scrutinized. But this review need not mean that we are invariably doing everything wrong; it just means we can sometimes improve.
One of these vital properties must be that the system should be promptly synchronizable. Customer data update constantly, and our knowledge of the customer is accordingly changing all the time. Ideally, updating should be in real time. The technology now available on the market makes this readily doable.
Flexible and scalable: However much we might plan - and we should plan - we’ll always have to make changes along the way, because reality is never a perfect fit with how we imagined it would be. We therefore need to be sure that our software is not so rigid that, once we start moving, any deviation from our plan becomes a real problem.
In addition, our software must be scalable: this means that a system - whatever it may be - can be made larger without any loss in service quality. The scalability of a system requires that it be carefully thought through from the outset.
CRM software: the moving parts
It is common to hear the words “we need CRM software,” but we never hear a reference to a specific module. What does this mean? Simple: operational CRM, collaborative CRM and analytical CRM. Until these three modules are operating an integrated way, we cannot say that our strategy has been properly implemented, nor can we realistically hope that our efforts are ready to be monetized.
Operational CRM supports the business processes of the sales and marketing departments; collaborative CRM, however, integrates the various channels of communication with customers, outside of sales and service representatives’
personal calls and visits. Communication can be implemented over a website, by e-mail, IVR, or less conventional but increasingly used channels, such as Twitter.
Finally - though this module is frequently bypassed by companies - analytical CRM is, simply put, the technology component that enables us to transform data into knowledge. Specifically, it comprises analysis of a customer’s data for multiple purposes, especially predictive analysis. Objectives can range from marketing campaign design and implementation to special niches and campaigns for specific customers, customer behavior analysis in aid of decision-making on goods and services, and business rulemaking to guide actions in the face of specified events and customers.
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The importance of system integration
We spend so much time talking about CRM that we end up imagining that ERP (Enterprise Resource Planning - centralized information software that records and integrates most business processes) is out of fashion or has been superseded.
This is far from the truth. Though widely different, CRM and ERP are strongly complementary tools. It is vital to understand that both tools must be integrated and work together like the two blades of a pair of scissors.
To put it differently, let’s imagine that our goal is to arrive at a business destination called “total performance control,” which involves the company’s total success in terms of shareholder value and total satisfaction for both internal and external customers. To visualize this concept, we could say that our path takes us along a “highway:” the first stretch of the highway is called ERP, the homestretch is called CRM. Obviously, we need to go along the entire path, travel both stretches of the road, in order to reach our goal.
Much of the data handled by our CRM technology must be supplied by our ERP system. If not, we shall be doing little more than operating a powerful contacts and activities diary. Picture a sales representative who obtains a full history of communications with a customer via the CRM system. He is fully aware of the latest issues - e.g., a late delivery - and how they were resolved.
He can see the customer’s weighting in terms of multiple variables. And the activities management module tells him that today is a good day to visit this customer. As he arrives, he greets the customer by his first name, asks after the customer’s children by name, and mentions various details making for perfect personalized treatment. So far, so good. The customer places an order, but asks for a special cash payment discount. The sales rep is pleased to comply. But since the ERP system is not integrated with the CRM technology, the sales executive is unaware that the customer still owes three bills past due, one of which carried a discount for payment in cash, which the customer obviously failed to honor. You can probably imagine what ought to have happened when the customer placed his order, and what the sales rep ought to have done, and the implications of this in financial respects. Two days later, the sales representative tells the customer that his order was (quite rightly) rejected. The incident creates unnecessary handling costs and harms the relationship with the customer, regardless of who was at fault.
This is a simple example of how failure to integrate can hurt you, and it happens all the time. Failure to integrate means that instead of having a 360° view of the customer, we only get a patchwork of partial views, and make “partly right”
decisions, so to speak. Operating as a cluster of airtight compartments does no good to customer relationships or to the health of business.
When the supplier of a given system tells you that ERP need not be integrated with CRM, be wary. And if someone promises to resolve the integration issue with an interface that is yet to be developed, make sure the interface really happens before starting a project that might grind to a halt before reaching its destination.
Software is crucial, but companies must continue to enhance the design of integrated strategies before they make the decision to purchase any given IT technology. Tactics must not come before strategy; don’t put the cart before the horse.
Source of competitive edge
To conclude this chapter, my aim is to convey the insight that investing in CRM - in terms both of strategic planning and implementation via the right software - is the only source of competitive edge that is still left. It is here that you will achieve a better knowledge of your customer and will start to offer him or her better experiences with your business.
Remember that competing on price is easy, and not very smart. Nor is it a strategy that is likely to see you through long term. If you lower your prices, so can your competitors - straight away - and in the end it is a zero-sum game.
Competing on the basis of the benefits of a given product will not garner a long-term edge, either. Even as you read this, somebody in China or elsewhere is disassembling or reverse engineering the components of anything remotely innovative, so that they can make the same thing: quicker, possibly better, and certainly cheaper.
But the one thing nobody can plagiarize is the relationship you have built with your customers and the experience you offer them. Your competitors can’t copy what they can’t see. And what they can’t see is in your database - a smart repository of relationships built painstakingly over time, brick by brick.