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. Customers now talk to 130+ people at a time through social media. 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. CRM can be practiced in companies at different levels, such as the organizational level (ideally), the customer facing level, or at the functional level, like in a call center. Our definition of CRM focuses on the organisational 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. recognising your customer as a customer through any channel.
The term CRM, arguably, was first put into the public domain around 1993, by Tom Siebel. 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, the company becomes more efficient at doing the wrong things. Businesses need to 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.
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. Creating customer loyalty must be an integral part of your organisation’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?
“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.”
— Frederick F. Reichheld
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:
- CRM isn’t CRM unless it affects the customer’s experience
- CRM is a strategy, not a project
- CRM should improve ROI
- Technology is a means, not an end
- 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? 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.
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. Understand your customers – what they want, and how they want it from you.
5: 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 millennial’s (born between 2000 and now).
6: 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?
7: Define customer experience goals. Articulate the customer experience. How should your customer experience feel? Identify interactions that are important to the customer. How are these interactions currently handled by your company? Are there opportunities for improvement? Identify the areas that require your greatest focus and will provide the greatest potential return.
Firms should consider developing a systematic approach for incorporating the needs of customers into the design of 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.
8: Have an integrated customer strategy. Disparate databases of customer information prevent companies from gaining a holistic view of the customer throughout the organisation. All too often, companies employ tactics that address products and not customers. That’s because they are still looking at accounts on file, rather than at customer relationships.
9: Define and map data requirements. Know what customer data is necessary and from what system it will originate. A firm understanding of the level of customer data – account or household level – is critical.
10: Standardise data. Various departments in your organisation 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.
11: Dialogue 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? It’s not just a list of products, you need to focus on what you’re trying to be to your customers. Ask customers how they want to interact with your company.
12: Keep your promises. Remind customers of promises kept and take responsibility for promises unfulfilled. Respond quickly to customer queries, 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.
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. Retention a guiding principle.
16: Collect Data. Collect and use information from each customer interaction to make your chosen customers more valuable to your enterprise. Can you identify behaviors, attitudes, needs, propensities or intentions? Plan to clean your data regularly.
17: Test, test, test. Troubleshoot with test customers before making your services generally available. Focus on ROI. Experiment with your marketing.
18: Monitor the customer experience. Keep your eye on the prize. Measure the results and soothe the inevitable hiccups. Walk a mile in your customers’ shoes by going through the typical customer experience.
19: Automate processes. Having customers enter their personal information on a Website versus providing it to an agent over the phone reduces the potential for human error.
20: Empower staff. Give front line staff the ability to please the customer. Too often they can’t make timely decisions nor can they present relevant offers – effectively facilitating customer dissatisfaction and defection.
21: When buying any new CRM system, keep it simple. Don’t buy what you don’t need. The fewer bells and whistles, the less time and money you’ll need to devote to training. People don’t like change as it is; keeping things simple only makes the switchover that much easier. Train early and train often.
22: Communicate your successes to the rest of the organisation. Identify quick wins. Tackle the smallest, easiest task straight away and save the hard stuff for later. Success early on gets the ball rolling and motivates employees. Success can be contagious.
Too often, relationship programs are set up with the arrogant assumption that consumers should be happy in a relationship where they just sit around and receive marketing messages. This is a mistake. There needs to be a feeling of reciprocity by both parties (not to be confused with economic parity). At the end of the day, you will want both the customer and the business to perceive that they are getting more from the relationship than they are contributing. While the company is most likely defining its benefits and costs in purely monetary terms, the customer is more likely to be weighing more intangible aspects of the interaction. In any event, there is satisfaction in both camps and the relationship is likely to go on. A win-win situation.
If you would like to know how you can improve your Customer Relationship Management strategy, processes and software, and are interested in working with consultants that are local, guaranteed and deliver solutions that are simplified, get in contact now to book an obligation-free appointment on +61 6102 7284.