So what is CRM? Simply put, CRM is putting your customer at the heart of your business. Today it is more important than ever to build better relationships with your customers as, in this day and age of social media
, they now talk to 130+ people at a time. They have a megaphone, making it easier for positive and negative messages to spread fast and wide.
With the support of technology, the goal of CRM is to have a 360-degree view of the customer which will enable you to improve the quality and satisfaction of each customer interaction and maximize the profitability of your customer relationships... a win/win for both you and your customers. Depending on how you look at it, CRM can be practiced in companies at different levels. It can be practiced at the organizational level (ideally). It can be practiced at a customer facing level - anything that has to do with interactions with customers, marketing, sales and service. Or It can be practiced at the very functional level, like in a call center within a sales force, etc. While we can look at CRM on many different levels, our definition of CRM is at a strategic level i.e. an organizational level.
CRM is similar to customer loyalty and relationship marketing in that the goal is to move your customer from a transactional interaction to an emotional relationship. The two components most often missing from loyalty and relationship marketing being: a) technology and b) the management of relationships with other members of the business network: affiliates, branches, employees etc. - i.e. recognizing your customer as a customer through any channel.
The term CRM, arguably, was first put into the public domain around 1993, when Tom Siebel came up with it. So it is closely connected to Siebel Systems - an IT company. Hence the problem. Many executives are under the misconception that CRM is principally an IT implementation... which explains many of its failures -- and there have been many of them. If technology is applied to a faulty business strategy, all that is going to happen is that the company is going to become more efficient at doing the wrong things. If the core business strategy isn't put right first, you'll have failure. As we view CRM more as a strategy than a process... get the business strategy right first. Decide which customers or segments to target. Develop sensible customer acquisition, retention and development plans. Sort out the channel strategy first (direct or indirect) then sort out which products, services, bundles of value to offer the chosen customers. Once that's in position, then start looking for IT to support it -- but not until then.
We spoke earlier about putting your customer at the heart of your business. Part of that process involves developing a "relationship" with your customer. How your customers define that relationship will vary. As the CRM marketer, it is up to you to find out what's important to that customer. At the end of the day, you want to be able to answer the question: "What’s the “one thing” that is distinctive about my customer relationships?
As we are in a business of one sort or another, our goal as marketers, is to have CRM help us acquire, grow and retain profitable customer relationships to create a sustainable competitive advantage.
Without a doubt, customer loyalty is a key driver of profitability. Creating customer loyalty must be an integral part of your organization's strategy - particularly in a time of industry consolidation. Understanding customers' requirements is fundamental to business success.
"It's incredibly arrogant for a company to believe it can deliver the same sort of product that its rivals do and actually do better for very long. That's especially true today, when the flow of information and capital is incredibly fast."
-- Michael Porter
The most important basis for strategy development, however, is a comprehensive understanding of what drives customer loyalty and how strong those drivers are. The key to understanding what drives your customers' loyalty lies in finding answers to the following questions:
- How does our business define customer loyalty?
- Are our customers loyal? To what extent or intensity?
- How do we create, build or earn customer loyalty?
- How can we use customer loyalty strategically and tactically for positioning?
The first step in answering these questions is to measure both customer satisfaction and customer loyalty. In working toward a thorough understanding of your customer, begin by looking at why your customers leave. Profitable CRM projects start by understanding customer needs.
"If growth is what you're after, you won't learn much from complex measurements of customer satisfaction or retention. You simply need to know what your customers tell their friends about you."
Great service and customer recommendations alone are not sufficient for relationships. If you give poor service you won't have a relationship. And if you give great service, you might not have a relationship if you don't take care of that relationship, knowing your customers' preferences. It is essential to have a solid grasp of which factors in your business relationship with your customers are most important to them. Listen to your customers and then begin developing your CRM strategy because if you don't satisfy your customers, they won't come back. And remember:
a) CRM isn't CRM unless it affects the customer's experience
b) CRM is a strategy, not a project
c) CRM should improve ROI
d) Technology is a means, not an end
e) You want a 360-degree of your customer
Consider the checklist below. We believe that these strategies will enhance your likelihood of long-term CRM success.
1: Get sponsorship from the top brass. If management doesn't believe in the new approach, why should the employees? Implementing CRM requires working across organizational boundaries and breaking down long-term siloed behaviors and attitudes. You can't do that by yourself! Many times the difference between a successful CRM strategy and a huge waste of money is backing from the executive suite.
2: Build a team. Prior to developing your CRM strategy or selecting your CRM software, form a CRM team with representatives from each department to make sure colleagues' needs and concerns are addressed. Too often companies neglect to include the correct stakeholders, and the initiative fails to meet the needs of those tied to its results. Pick your CRM team wisely - everyone will need to own the customer experience. Remember in forming the team, consider people, process, and technology as all will be affected.
3: Define your business objectives? Your CRM strategy must be designed with your business objectives and customer requirements in mind.
4: Identify who your customer is. Is there agreement on definition of "customer?" - The marketing department of an automobile company might consider a "customer" to be a dealer, but the call center might consider it to be a driver. Have consensus on this and other key definitions. Can you identify your customers across multiple touch points (retail, call center, mail, catalog, web and e-mail)?
Consider life stages
. According to the U.S. Census Bureau, there are roughly 75 million baby boomers (born between 1946 and 1964), more than 49 million gen Xers (born between 1965 and 1979), more than 72 million gen Yers (born between 1980 and 1999), and 40 million millennials (born between 2000 and now).
5: Differentiate. Identify your customer segments - your high-value and high potential customers. Know who you want to serve. Understand what that customer wants? Prioritize. What is the customer worth and what is their potential worth?
6: Understand your Customers - what they want, and how they want it from you.
7: Agree on desired customer behaviors - build consensus on how you want customers to behave differently and what the customer experience will be... from the customer's perspective. Design a different customer experience for each customer segment.
8: Define customer experience goals. Articulate the customer experience. How should your experience feel? Identify important business interactions e.g. high volume or high cost. Identify interactions that are important to the customer - high involvement and high perceived importance. Evaluate performance: How are these interactions currently handled by your company? Are there opportunities for improvement? Focus on hot spots: Identify the areas that require your greatest focus and will provide the greatest potential return.
Many companies don't have a good connection with customers. That's why firms should consider developing a systematic approach for incorporating the needs of customers into the design of customer experiences - ideally led by a senior officer who will act as the voice of the customer. The key to developing a successful new customer experience is to develop a response to a customer need that is unique, compelling, and adoptable. A response so attractive that customers are willing to change long-standing, often deeply ingrained behavior.
9: Have an integrated customer strategy. Today interactive marketing is a fragmented discipline in which marketers work with many different vendors to develop and execute marketing programs. Recognize that disparate databases of customer information prevent companies from gaining a holistic view of the customer throughout the organization. Break down those silos. Line of business managers are often employing tactics that address products and not customers. That is because they are still looking at accounts on file, rather than at customer relationships e.g. banks that send two offers within a short time span - one that recommends consolidating their debt into a home equity loan and the other that offers a balance transfer for their credit card.
10: Define and map data requirements - You'll need to know what customer data is necessary and from what system it will originate. See your customer through the same lens. A firm understanding of the level of customer data - account or household level - is critical. Do you plan to append external data? If so, what types: household size, income, psychographics, ZIP, real estate information etc.
11: Standardize data. Various departments in your organization may see your customer quite differently from another. Using one integrated set of analytical data throughout the company can help executives to make key decisions about how much to invest in a particular customer.
with your customers. Have a clear (and realistic) picture of who you are in the matter of serving your customer. What do you value? What are you really selling them (are you reliable? Are you the most creative?)? It's not just a list of products, you need to focus on what you're trying to be to your customers. Make sure individuals are recognized at all contact points. Have you truly defined your privacy
policy? Understand your company's boundaries for using data about your customers. And ask customers how they want to interact with your company.
Keep your promises. Remind customers of promises kept and take responsibility for promises unfulfilled. Respond quickly to customer queries. Whether they send an email or leave a message, or come to the service counter, customers' time is precious.
13: Get personal. Customers hate to feel like the sales agent is reading to them from a script. Learn your customers' personal needs and profiles and target your service to each individual. It will make them feel important and that you value the relationship. In order to do this effectively, you need to staff and empower your talent pool appropriately to deliver on the customer experience. To do this effectively, focus on people, process and tools.
14: Develop success metrics - How will you know if your CRM program has been a success?
15: Create customer engagement programs (acquisition, growth and retention). Customer engagement is a process, not an event. Too often retention is treated as a project, rather than a guiding principle.
Move your customers through the lifecycle... to maximize their value. Utilize business rules: