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CRM Overview: What is CRM?
What is CRM?
CRM is an enterprise wide business strategy designed to learn about customer’s
needs and behaviors to organize and manage Customer relationships to maximize
profitability and minimize expenses. A well planned CRM can be viewed as a
strategic process merging strategy and system to amalgamate information from
across the company (sales, marketing, finance, accounting, etc.) to offer a
complete view of the customer and develop stronger relationships with them.
Information gained from all internal and in some cases, external, sources allows
the company to complete a full 360 degree view of their customer in real time.
CRM allows customer facing representatives of the company to have all the
information they require to ensure the best customer experience in interactions
with your company and opportunities to increase revenues through increased cross
and up selling opportunities to competitive positioning tactics.
CRM is focused on the customer from first contact to continued interaction, to
gain insight with which to learn their needs and behaviors to ensure revenue
maximization through relationship selling (upsell opportunities, customer
ranking, etc.).
CRM helps the marketing departments identify and target their best customers and
best prospects by sharing information throughout the system with all branches of
the organization. Marketing can use CRM to manage campaigns with clear
objectives and goals for sales lead generation. Through sharing information
across departments, the organization can improve all aspects of sales and
marketing by optimizing shared information amongst employees and streamlining
processes.
The end benefit is a closer, individualized, relationship with customers:
improving customer satisfaction and profitability. By offering your most
profitable customers the highest levels of service, CRM helps maximize
profitability. Additionally, CRM provides employees with the information and
processes they require to know their customers and understand their needs to
build a relationship between the company, it’s front line people and their
customers and partners.
A successful CRM implementation must have buy in from the staff at all levels.
Prior to the first piece of code being written, or the first package installed,
the business process must be analyzed from top to bottom to ensure you are
bringing in a new methodology, not just enhancing an inefficient system.
A CRM system requires a team from all functional areas of the business to map
out the business process and re-define the existing business process. CRM isn’t
about installing new software, it’s a better way of doing business. One has to
look at the customer interactions and information obtained from start to finish
to create a system that can detect patterns and help the company act upon
these. CRM must be considered a customer-centric philosophy. CRM can be
considered the heart of the company that allows customer relationships to grow
and thrive. True CRM is a continuously updated system focused on furthering
your companies understanding of your customer needs and behavior and refining
it’s own best practices.
CRM and the midsize business
Since 2001, the cost of bringing full featured CRM to the small to mid market
has dramatically fallen. Fully featured and customizable CRM which can be
molded to the business have become less costly and more refined and accessible.
The end result is that small to medium sized businesses can now have what “the
big boys have”, without the crippling costs in money and time. These CRM
systems, one of which being Sage CRM, allow your company to work with strong
analytic tools to reach the goals of CRM previously enjoyed by larger
companies.
Smaller businesses can also have the abilities for remote access to their core
system which was not available in the past. For example, your sales team can
now access your main CRM system from the road, without having to wait until
their return to the main office to synch their information. Marketing can run
campaigns constructed from detailed database queries that target specific groups
of customers in a rapid manner without expensive one off data mining.
Increasing sales and reducing the decision making time of both business and
customer decisions.
The goal of CRM:
CRM's goal is to
helps business use technology and human assets to gain insight into the
behavior of customers and the value of those customers. Using this CRM
strategy, a business can increase revenues by:
- providing promotions, services and products that are exactly what your customers
are looking for
- offering better customer service
- cross selling products more effectively and
quickly
- helping sales staff close deals faster
- retaining existing customers and discovering new ones
This goal can be reached and CRM made effective
by starting with the business first understanding who its customers are and what their value is
over a lifetime. The company must then determine what the needs of its customers
are and how best to meet those needs. For example, many companies keep track of customer's
life stages to offer products to fit their needs as they reach milestones in
their lives.
Do I need CRM?
You need CRM when it is clear
you don’t have an accurate view of who your customers are and what their needs
or desires are or will be at any given stage in their lives. If you are losing
customers to a competitor, that’s a clear indication that you should improve
your understanding of your customers. Cost and integration time vary by project.
The aspects of CRM implementation: People Process and
Technology
People:
CRM must be implemented starting with a solid plan
involving the people throughout a company-from the CEO to each and every
customer service representative. Each person must buy in to and support CRM.
CRM will not succeed unless your staff are involved in the process and that
CRM will benefit them. The right team must be chosen to help implement CRM
across the organization, choose which information should be automated, and the
best process for each system.
Further to analyzing business needs, in the article “Getting to Know them (http://www.cio.com/article/108409/Getting_to_Know_Them)”, Meridith Levinson detailed some successful CRM efforts
at many of America’s top companies. The writer found that “All of these
companies' efforts to extract value from their customer data were supported by
strategic corporate initiatives. They first identified a business need, and then
developed their systems”
"'Before the data warehouse, the person who yelled the
loudest got the best service. Now our most valuable customers get the best
service,' says Alicia Acebo, Continental's data warehousing director."
"Altendorf says the response rates for Ace's marketing
campaigns run between 6 percent and 20 percent. The average response rate for a
target marketing campaign is between 2 percent and 3 percent, according to
industry averages."
"Since building its new system, the airline reports
earning an average of $200 in revenue on each of its 400,000 valuable customers,
and an additional $800 in revenue from each of the 35,000 customers it places in
its most profitable tierall because it accords them better service."
The organization must look into
all of the different ways information about customers comes into a business,
where and how this data is stored and how it is currently used. One company, for
instance, may interact with customers in a myriad of different ways including
mail campaigns, Web sites, brick-and-mortar stores, call centers, mobile sales
force staff and marketing and advertising efforts. CRM systems link up each of
these points. This collected data flows between operational systems
(like sales and inventory systems) and analytical systems that can help sort
through these records for patterns. Company analysts can then comb through the
data to obtain a holistic view of each customer and pinpoint areas where better
services are needed.
Process:
A company's business processes must be reengineered after a thorough analysis to
bolster and support the CRM initiative, from the view of how this can help the
customer and the firm’s efficiency.
Technology:
A CRM implementation must select the right technology to
drive these improved business processes, provide the best information to the end
users, and be easy enough to operate to keep people using the system.
CRM: Challenges and Advice for CIOs in 2007
http://www.cio.com/article/27802/CRM_Challenges_and_Advice_for_CIOs_in_2007
Determining which areas to
focus on and which to bypass can make or break your business. Global management
consultancy Accenture recommends several steps you can take that will help
distinguish your business from your competition.
"It’s clear the CRM
landscape is evolving rapidly," says Woody Driggs, managing director of CRM at
Accenture. "Keeping up with the changing customer environment is a real
challenge."
To remain competitive,
Driggs says, "CIOs have to be ahead of business needs on architecture. They need
to focus on what processes and capabilities the business should be rolling out.
Translate that insight into foresight; what technologies do you need to give
customers what they will need?"
Accenture’s CRM
recommendations for companies overall include:
- Striking a balance in how they use resources to market to the most valuable consumer segments;
- Distinguishing themselves through customer interactions that support a branded customer experience;
- Pumping up sales productivity by mapping processes to new technologies;
- Setting sales goals and establishing rewards for meeting them; compensating the sales team
consistently;
- Narrowing the gap between customer expectations and the actual service experience;
- Using analytics tools to gain a deeper understanding of the actual intentions of customers in their own
words.
- "CIOs in particular need to
understand business analytics and focus on what the business will need to take
it to the next level," concludes Driggs.
What are the keys to successful CRM implentation?
Develop your customer-focused CRM strategy and complete your business process review prior to deciding what kind of technology you
need to purchase.
Is CRM Dead? – Allen Bonde, CIO
http://www.cio.com/article/print/16346
“ First, there must be a core
driven by business rules and even knowledge management, rather than just a
database. Second, solutions must address all modes of interaction, whether with
an agent or salesperson, on the Web via self-service, or peer-to-peer via user
forums and other collaboration techniques. Third, solutions must be adaptive, by
applying analytics and personalization approaches, so that organizations can
anticipate customer needs, proactively push out solutions, recommendations or
offers based on who the user is, their skill level, what their preferences are,
etc. “
Map out your CRM project down into manageable pieces with test systems and manageable milestones.
This ensures you can test your CRM prior to a large launch. For smaller companies, this may mean giving employess
access to the new CRM system at different periods to test. Your CRM should be developed with a scalable framework that can grow with your company.
Look for the best solution: Integrated packages from one vendor, or merging the best items from multiple vendors.
You will collect a great deal of data, and your system must be built to handle present and future requirements. You
must also consider which data to choose, to avoid storing useless data.
Who should be involved in implementing CRM?
The biggest returns come from working as a team with input from all departmets accross the organization and ownership from
the department(s) who will use the softwar the most.
What causes CRM projects to fail?
Many things. From the
beginning, lack of a communication between everyone in the customer relationship
chain can lead to an incomplete picture of the customer. Poor communication can
lead to technology being implemented without proper support or buy-in from
users. For example, if the sales force isn't completely sold on the system's
benefits, they may not input the kind of demographic data that is essential to
the program's success. One Fortune 500 company is on its fourth try at a CRM
implementation, because it did not do a good job at getting buy-in from its sale
force beforehand and then training sales staff once the software was available. Quoted from "ABC: An introduction to CRM" by Thomas Wailgum , CIO
(http://www.cio.com/article/print/40295), March 06, 2007.
CRM has had a history of spotty implementations since the early 1990’s before it
became mainstream. Thomas Wailgum noted in a review of a Forrester Research
survey that many executives noted their CRM system failures could be attributed
to not speding sufficient time on defining data requiremanents and managing data
quality, with another survey indicating that 64 percent of respondents did not
have a formal strategy for using customer data they had collected. The
solution is to sit with top management and staff to determine goals to achieve.
Quoted from "The Quest for Customer Data Integration" – Thomas Wailgum , CIO (www.cio.com/article/print/23507).
This can be exemplified by a concise review of the 4 perils of CRM, as noted by
the Harvard Business Review.
The HBR 4 perils of CRM: How a proper CRM system and
21CRM Systems can overcome these issues
Peril 1: implementing CRM before creating a customer strategy
If your company does not have a plan for how they
want to increase customer service, sales and productivity by using CRM, the
project will most likely not succeed. Unless you know where you are going, your
choice of how to get there is secondary. 21CRM systems begins each project with
a thorough business process review to help the company define where it is, and
wher it wants to go.
Peril 2: rolling out CRM before changing your
organization to match
If your staff are not part of the process and have
this thrust upon them, pushback is almost guaranteed. The organization must
also change towards a customer centric viewpoint as a whole, rather than a 180
degree turn in an instant.
Peril 3: assuming that more crm technology is better
A CRM solution is about people, training and
process; not just technology. CRM must be thought of as a customer focused
philosophy, not just technology.
Peril 4: stalking, not wooing customers
A well built CRM system can offer customers
items/services they may be interested in based on past sales history, wooing
them with your knowledge of their buying preferences. Spamming customers, or
sending mass mailings to your entire list regardless of interest is an excellent
way to drive customers away. You must use the information wisely to communicate
properly.
CRM Success:
Companies with high level sponsorship, strong end user adoption and user
friendly systems have the best success at employing CRM in their organization.
Without a clear focus and introspective analysis of a business’ needs CRM will
not succeed.
From the Forrester research report "Forrester reveals CRM's best
practices" (http://searchcrm.techtarget.com/originalContent/0,289142,sid11_gci1152406,00.html)
Some best practices include:
- Build strong executive sponsorship of the program.
- Have business units lead CRM with support from IT.
- Put in a governance structure that fosters accountability and decision making.
- Define your objectives and processes first then apply the right technology.
- Follow a realistic pace for the rollout.
- Define data requirements and data quality approaches early.
- Foster user adoption.
- Place a high priority on software usability.
- Simplify the CRM platform.
- Actively manage the vendor relationship.
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