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CRM: The Essential Guide

Supplier: Aptean
22 January, 2013

Five Principles for CRM Success

Without customers, a company cannot survive. So it’s no surprise that customers influence the way companies in every industry conduct business. The challenge is how to effectively manage interactions to best serve customers and prospect while staying aligned with evolving business goals, including growth and profits. The customer-centric companies achieving the greatest cusses today use flexible customer relation management (CRM) solutions to manage the customer-facing process of their business and implement their customer-centric vision.

This guide provides insight to help you take a more customer-centric view of your business. It walks you through how to weigh and consider your CRM options, answering questions such as:

  • How can CRM address customer-facing processes unique to your industry?
  • How can CRM work with your company’s specific business processes?
  • What CRM capabilities are available that will help you keep pace with rapid changes in your business and market?
  • How can CRM deliver quantifiable results?
  • Are there CRM implementation approaches that mitigate the expense and risk of your business?

Companies need to take a strategic and informed approach to their customer relationships and CRM selection. Over the years, some companies have spent large sums on CRM only to have it fail to deliver the results they had hoped for. When CRM deployments do not meet expectations, it is often due to a lack of clear business strategy or executive sponsorship, poor technology fit, inadequate planning, or a combination of these factors. As explained in this paper, CRM is first and foremost a strategy, and CRM technology enables and supports this unique business strategy not the only way around. To avoid common pitfalls, it’s important to be aware of this and other core CRM success principles discusses in this gude.

With an ever-increasing number of factors to consider in CRM system selection, it can be difficult to navigate technology options with confidence. One of the best ways to learn how to achieve CRM success is to look at how other companies have made it work for them. Our customers and prospects continually provide us with insight that we’ve used to refine our CRM solutions to better fit their needs. with the complexity of CRM system evaluation in mind, we’ve gathered a combination of our customers’ success stories, research, and our own CRM insights to create this guide to help companies like yours take a considered approach to CRM evaluation, informed by real-world success.

The guide distils insights from customers, prospects, industry analysts, and the press down to five key principles for CRM success. Use these five principles as a guide for selecting the right solution and ultimately, deploying CRM successfully. These principles will help you develop a CRM strategy that is executable, measurable, and aligned with your company’s strategic goals.

Among the companies profiled in this guide, one call CRM that “glue” that holds their business together. Another describes CRM as their “backbone.” One more states CRM “has opened many doors.” For all of them, CRM is fundamental to their business success.

Principle 1: CRM is not a software purchase it’s a strategy

No technology, no matter how sophisticated can be successful without a strategy to guide its implementation and use. Business strategy and technology must always work hand in hand to bring a customer-centric plan to fruition.

CRM solutions can help you get to know your customers better, understand their needs, and respond to those needs to create a valuable customer experience. But without a solid CRM strategy based on clear goals and a particular vision of the customer experience, technologies alone will fail to achieve a customer-centric outcome. As Gartner Research advises, companies evaluating CRM options should “keep in mind that CRM is and will continue to be a business strategy that requires the proper alignment of people, business processes and technology to create long-lasting profitable relationships.” Consequently, before your company even considers assembling lists of requirements or evaluating available solutions, it should take the time and effort to clearly articulate its CRM strategy and goals.

With this understood, how should you embark on defining your CRM strategy?

Companies looking to become customer-centric must develop CRM strategies that make customers-more than products, process, or even profits-the focal point of their business. Start by looking at how your enterprise can build value through stronger customer relationships and improved customer loyalty. Then define the full arc of the experience you want your customer to have: an experience distinctive, consistent, and positive enough to cement deeper relationships and enhanced loyalty. Above all, it is this experience-from first encounter through post-sales service- that will determine whether your customers buy more, stay longer, or recommend you to theirs.

In the words of Gartner Research, a customer-centric CRM strategy “aims to effectively manage the customer life cycle from election and acquisition through retention and cross-sell.” It takes its direction from the company’s business goals and aligns those goals with the company’s customer-facing channels and processes.

To develop a solid CRM strategy, you must understand the market, industry, and customer drivers that influence the selection and use of your company’s products and services. You should also understand your competitive environment and consider how your firm can differentiate itself from competitors through the customer experience. You should carefully consider the impact and requirements of your strategy across different geographies, languages, markets, and channels.

Developing your CRM strategy is one of the most difficult building blocks of CRM success, because it cannot merely be based on a simple set of rules or mirror another company’s strategy. Your CRM strategy must be informed by your company’s goals, customers, conditions, and environment as such, it must be unique. If you asked ten of your customers to describe their CRM strategies, you would likely get ten different answers, which merely goes to prove that when done right, CRM helps create differentiation across firms, not uniformity.

Though each CRM strategy is unique, there are ofthen similarities in the kinds of goals companies are looking to achieve. Gartner surveyed mid-sized businesses to learn about their CRM goals and objectives. Not surprisingly, top CRM objectives among these firms included a desire to obtain a 360-degree customer view and to automate and manages sales-related processes. Other common goals include reducing cost of service, improving collaboration and efficiencies, accelerating the sales cycle, managing leads more effectively, and deriving greater insight into sources of value and opportunities for cross-selling and up-selling within the customer base.

Beyond just benefitting customer, a successful CRM strategy must be congruent with an organisation’s greater business goals. As Gartner Research notes, “CRM benefits come from using customer insight to deliver relevant, value-added products and services that benefit the organisation making the investment as well as the customers affected. “3 Companies need to define their business needs first to ensure their CRM investment aligns with the people processes that support their objectives.

Our most successful customers have been those that have taken this principle to heart and taken a strategic approach to CRM. Their experiences show a close correlation between CRM vision and business strategy.

Principle 2: CRM must fit the way you work today and tomorrow

New software often brings new benefits, but it can also bring new inconveniences, if it forces you to change the way you work to fit the software. In addition to being disruptive, if rigid new software is “imposed” on your employees, this can breed resentment against the new tools and hinder user adoption. With CRM where success is closely tied to user receptivity, this can present a significant obstacle.

Furthermore, your business processes have often been built up over years of experience and have been honed and refined over time in many cases, they are part of your competitive differentiation. In this light changing the way you work to fit software system is not just a nuisance it can be seriously detrimental to your operations.

CRM needs to work the way you do the way your employees work and the way your business operates without changing the process that make you unique. Your employees should have access to all the customer data they require, whenever they require it, and in their preferred view and it should make it easier to do their jobs. While CRM may bring about process refinements and new efficiencies, it should still mold to the unique characteristics of your business processes.

Business processes, however, are not static. In fact a company’s ability to reconfigure processes quickly in reaction to changing needs, priorities, and external factors can produce a significant competitive advantage. A CRM solution built on a flexible technology platform can easily be modified to suit your current workflows and business needs, while also providing the flexibility to respond quickly to future events and evolving demands. By prioritising flexibility in your software selection, you can support a more adaptive, agile enterprise.

Deploying the right CRM solution should enable you to bring all of your existing, time-proven customer-facing processes and procedures, from lead management through quote and contract generation, the ales process, and customer service, under the umbrella of a single, integrated system that makes your processes more adaptable, not rigid.

Principle 3: Define Measurable CRM business benefits

Many enterprises measure the outcome of their CRM strategies only as an afterthought. They understand that a CRM system is a necessity for business, and thus fail to set out quantitive goals or metrics for tracking hard results. The unfortunate consequence is that many enterprises can’t prove their success or that they met their original, intended objectives. At some point, most organisations have a need or desire to measure the success of their CRM implementation. Goals and metrics must be quantified and benchmarked right from the start to ensure that the right data is captured and processes put in place to properly quantify results down the line.

To determine the impact of CRM on your organisation, baselines for key business measures need to be established as a starting point that can be compared against once the solution is in place. This also helps ensure that benefits are correctly attributed to changes effected by the CRM system, rather than other factors. For example, increased cross-selling, cost reduction, customer satisfaction scores, or changes in first-call resolution could be used in the return-on-investment (ROI) analysis for a project.

Some best practices to follow:

  • Define CRM success for your organisation at the outset
  • Pre-set corresponding metrics and data requirements
  • Determine the business processes required to capture the data
  • Determine user interface implications and accessibility requirements
  • Plan for end-user training, especially if you are making changes to existing processes
  • Consider data hygiene-ensure the data that’s captured is clean
  • Scope The CRM project clearly and budget for all costs
  • Secure management buy-in for any expansion to the original scope of work

Comparing actual results to established metrics will enable you to determine whether your CRM strategy is working, and how effectively. If results aren’t as expected, then further analysis should enable enterprises to determine why an approach isn’t working and quickly make alterations to improve performance. It also will enable companies to evaluate whether the original goals were realistic and to reset goals if needed.

Every organisation has a different vision for their CRM project. Every vision brings with it a variety of business value propositions that can be attached to bottom-line results. In the following examples from CRM requests for proposals (RFPs), it’s easy to see the difference in emphasis between the companies’ CRM projects and the metrics they will need to define and measure.

Principle 4: Consider total cost of ownership (TCO) carefully

There’s good reason why industry analysts commonly use time horizons of at least three years when helping CRM vendors and customers set expectations for the total expense of a CRM project. Few organisations have unlimited budgets, and in most cases, CRM is not a one-time cost. It’s important to understand the full costs of CRM implementation to help plan, budget, and select systems appropriately.

Enterprise application software investments can be prohibitive to some companies, because the majority of expenditures are “up front,” in license fees, services, and training, all of which are incurred before the software demonstrates measurable business fact; we have estimated that costs in the first year are typically more than 60 percent of the overall project costs. This can seem very risky to companies that want to see results committing too great a sum.

In order to manage cost expectations over time, total cost of ownership (TCO) analyses should be conducted with a clear view of the overall strategic expectations for a CRM project. A sound framework for measuring results over the life of the project must be stated at the outset. Given the complex interdependence of typical enterprise technology environments, TCO can be difficult metric to obtain for a single enterprise software system. Key CRM lifecycle costs are less about licenses and much more about the extended costs of owning a CRM system. Leading industry analysts have estimated that up to 90 percent of CRM lifecycle costs are associated with customisation, integration, deployment, and ongoing administration (support and maintenance) of the CRM system.

Industry-analyst research has shown that software costs typically account for between 30 and 38 percent of the total first year costs of owning a CRM system. Services costs usually associated with customising and integrating the CRM system, come in at between 34 and 47 percent of the total first-year costs. Maintenance and support account for 7 to 10 percent of first-year costs, and hardware costs made up the remainder at between 8 and 18 percent.

The up-front costs of implementing a CRM system have driven the popularity of on-demand and software-as-a-service models for CRM, which are often priced on a per-user monthly fee basis. While less prohibitive up front, research has shown that over the course of time, these solutions can prove more expensive than on-premise solution.

Principle5: Thin beyond features: Pick the right partner

Finding a CRM solution that fits your needs is about more than just a checklist of features and technical requirements. Implementing and supporting a CRM system is an important and sizeable project and the factors in its success extend beyond the system itself to the CRM company you partner with and the kinds of supporting services they offer.

When selecting a CRM solution, it’s common for companies to focus on the initial implementation, every company encounters new needs or challenges – whether they’re minor support incidents, resource constraints, or a need to modify, extend, or upgrade their CRM solution.

When selecting a CRM system, consider the kinds of services you will need to achieve your project goals. These can range from assistance developing your initial CRM evaluation criteria through implemtation and customisation services right through to post-implementation maintenance and support. If you do not have the in-house resources to maintain or customise the CRM system after implementation or would prefer to leave it to the experts find out whether the CRM vendors you are considering offer remote systemmanagement services, which can help keep your specialised staffing costs down. Having a good sense of your internal resources and capabilities will help you ensure that you can leverage the right internal resources while also taking advantage of specilaised resources and skill-sets from your CRM vendor or service provider.

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