CUSTOMER RELATIONSHIP MANAGEMENT

No one company has written the book on CUSTOMER RELATIONSHIP MANAGEMENT. And rightly so, says this author, whose examination of how companies practice this much-talked about discipline led him to develop comprehensive guidelines for enhancing a company’s returns from CRM.

That few companies are achieving the results they expected from their investment in Customer Relationship Management (CRM) is not news. That most companies continue to invest in CRM without a roadmap for increasing shareholder value or even for forging closer customer relationships is also not surprising, since there are few best practices in CRM for companies to follow.

In fact, based on our own research and consulting, and a recent examination of best practices in 35 Canadian and U.S. corporations, we could not find one company that excels in every dimension of CUSTOMER RELATIONSHIP MANAGEMENT. However, we did find examples of one or two specific best practices in individual companies. This article discusses these selected best practices, which, we believe, companies should consider when trying to improve the performance of their CRM initiatives. It also discuss the changing role of senior managers that are developing a relationship-oriented organization
A definition and a vision

There are many definitions for CUSTOMER RELATIONSHIP MANAGEMENT, and best-practice companies adopt one that is shared across the organization. Otherwise, the very term “CRM” will conjure up many things to different people and lead to confusion. These companies see CRM as a series of strategies and processes that support and execute a relationship vision for the enterprise. In their eyes, CRM is a series of strategies and processes that create new and mutual value for individual customers, builds preference for their organizations and improves business results over a lifetime of association with their customers.

With this definition, an organization can focus on developing the only asset of the enterprise that matters in the long term, progressively deeper relationships with valuable customers. By sharing the definition, they can put the customer first and avoid sending their staff into cycles of interminable CRM programming.

These organizations then create a vision for how CUSTOMER RELATIONSHIP MANAGEMENT will change their companies. Some develop the vision according to attributes that are important to both the customer and the company. These include attributes that affect customers’ perceptions of value, how they can bond with the organization, product and company preference and purchase intent.

This vision sometimes changes as the firm gains experience in CRM and as technology makes new things possible. For example, at a major Canadian bank, the vision has evolved. Initially the vision was associated with the development of customer information systems. Personnel then identified five components that the firm built in stages to implement key aspects of the vision. These components were associated with developing a complete, real-time, single and accurate view of each customer.

Simple though it sounds, it took several years to accomplish given the sheer scale of the enterprise. In this example, the vision was initially conceived in terms of a strategic capability, that of customer information. Today, the vision is more focused on the delivery of differentiated value propositions through products to customers. This illustrates that once best-practice companies put a strategic capability in place to enable CRM, they tend to modify the vision to use the capability for customer bonding, a learning relationship and competitive advantage. Strategic capabilities are even more important than specific strategies in best-practice CRM companies. We discuss this below.
A CRM plan

At the outset especially, best-practice companies develop their CRM plans in terms of strategic capabilities rather than strategies per se. This helps to ensure that the company can adjust to a wide variety of marketplace and industry changes without affecting the main thrust of the plan. For example, we recently reviewed the plan of an organization considering what to do with CRM in the wake of the events of September 11. Prior to our involvement, it was debating the merits of various programs while the key strategic capability it needed – in this case, developing an ability to listen and respond to customers in a timely manner – was not identified nor discussed.

Increasingly, best-practice companies base their CRM capability plans not just on technology but also on developing and focusing organizational capabilities in other areas such as CRM processes, people and knowledge/insight. Indeed, we have found that best-practice companies do not first adopt a CRM technology solution and then build their CRM initiatives around it. Rather, they develop a more balanced approach to conceiving and implementing CRM strategic capabilities as described in Diagram 1. There are four main CRM strategic capabilities:

Technology: the technology that supports CRM.People: the skills, abilities and attitudes of the people who manage CRM.
Process: the processes companies use to access and interact with their customers in the pursuit of new value and mutual satisfaction.
Knowledge and insight: the approaches the company uses to add value to customer data so that they acquire the knowledge and insight needed to deepen the relationships that matter.

The scale and scope of these capabilities are affected by factors such as the core customers on which the firm has chosen to concentrate, the leadership and culture of the organization, the channels the company uses for stakeholder communications, transactions and logistics and the firm’s business model, strategy and structure. Diagram1: Balancing CRM Strategic Capabilities
Strategies and tactics

Many companies have CRM strategies that seek to develop additional sales from certain existing customers. Best-practice companies do this, too, and also have strategies that focus on the enablers of the end-customer relationship. For example:

Processes
– Customer collaboration to jointly plan and create new value, differentiated by class of customer.
– Collaboration with distribution channel intermediaries and suppliers to achieve the value each end-customer wants.
– Embedding business rules into CRM databases so that customers’ behaviors trigger appropriate actions
Technology
– Integration of the customer’s various touch points with the company
– Development of a single, real-time view of each customer
– Creating an ability to sell when the customer is ready to buy, and knowing what to offer and how to appeal to each customer
People
– Recognizing that employees have different needs just as customers do, and trying to provide each with the value they want from the company
– Creating a self-serve capability to enable employees to take more control of their careers and career development, including what and when they learn

Be the first to comment

Leave a Reply

Your email address will not be published.


*