Why CRM?

A company's ability to manage it's customer interactions, from prospecting, to service, to retention of loyal customers, will determine the strength of it's customer relationships and ultimately it's success. Success can only be achieved if every phase of customer contact is handled with the customer's experience in mind.

If a relationship is good, customers will buy additional goods and services. It is harder to distinguish offerings purely on the basis of quality or price, so customers will usually return to the business that listens to their needs, responds quickly, with the right information, and provides excellent service and support.

This was the driving force behind the development of customer relationship management (CRM) solutions. If you have heard anything about CRM systems the chances are that it will not be all good! You might have heard that it is expensive, or it never gets fully implemented or it's only suitable for big companies - all criticisms that can be leveled at CRM.

Given all of the above how is it that CRM investments are still delivering firms good returns in today's challenging economy? The firms that succeed believe CRM builds a solid platform for future growth while concentrating on today's most profitable customers. Also, new systems and implementation methodologies mean that CRM is now highly achievable, and cost effective for small to medium sized businesses.

Consider the following:

• Most companies spend 70-80% of their time, effort and resources with those customers that represent only 20% of their revenues.
• The typical business loses half of its customers within 5 years.
• It costs 7 to 10 times more to gain a new customer than to retain an existing one.
• A 5% increase in the retention of a company's best customers can result in an astonishing 25% to 75% increase in profits. Source: Bottom Line Business

Here are ten steps a business can take to get started with CRM:

1. See CRM for what it really is

CRM is not a product, a software category, or a specific technology. It's a business ethos with clear objectives to improve your customer's experience wherever possible. Jonathan Richards, MD of Centurion Management Systems Limited defines it this way: "CRM is not just a theory nor is it just technology. CRM is a mindset that combines both factors, to provide the best possible customer experience. It's not a question of buying a piece of software, implementing it and assuming the business will then profit. Cost cutting and increased sales, while important, are tactical objectives. CRM's true goal should be strategic - the end goal is helping to build customer relationships."

2. Drive CRM from the outside in

Let customers drive the way to redesign business processes based on how they perceive your business. 70-90% of CRM implementations fail to meet objectives because businesses cling to their old approach! There is often too much of an inward focus, rather than concentrating on a better customer experience. Today's customers have more information at their disposal and expectations are rising. CRM success starts by talking to your customers and developing solutions that improve their efficiency.

3. Don't See CRM as a separate business issue

Everything customer related is CRM. Sales force automation and marketing, supply chain integration and order management which can all greatly improve efficiencies and profit.

4. Set clear, measurable goals

Conduct a focused initial program before launching a full CRM solution. Implement and monitor in a single business area with well-defined goals and objectives to identify areas for improvement. CRM should be driven by a clearly defined strategy that can answer the following questions:

• What is the desired goal for the customer?
• What internal processes need to be changed to achieve this goal?
• Does the company's current organisation and management system support it's customer strategy?

Answering these questions will highlight any internal changes that are required. Companies often automate poor internal processes instead of changing them to improve customer relationships.

5. A poor economy is not a good time to strangle CRM

If it's true that 20% of a business's customers produce 80% of its profits, then this is the time to improve customer focus. Managing customer relationships is an 'inexpensive' strategy that directly improves results through more repeat business, less customer churn and increased efficiency.

6. Gently does it, start small and think big

A step by step approach to a CRM implementation, with a long-term vision, builds a solid base, ensures its viability and sets a solid platform for growth. Early successes gain quicker organisational acceptance, thus smoothing the path to business practices that are tested and perfected as needed.

7. Small is beautiful

Many large businesses have some unmanageable CRM problems and often implement a mix of 'best of breed' CRM systems from different suppliers or a number of same system installations. It is important for an SME to select a powerful but reasonably priced application suite that can be customised to meet specific business needs. These suites tend to be quicker to implement and learn, with lower purchase and operational costs. As a result, the time taken to ROI is increased.

8. Don't over look data standardisation

One common complaint from CRM users is that the data is out of date or just plain wrong. Before a newly implemented CRM system is used it is important to gather existing information for cleaning and importing. After importing the data, it is essential to develop rules for data input and use. These rules ensure that no important information is omitted and that the quality of data is up to a certain standard. Shortcuts here are a major cause for failure of CRM projects.

9. Understanding your data

Ensure that all data is gathered from every conceivable source i.e. from the customer, internally and externally. Achieve a 360 view of your customer. This should be made available to every employee who interacts with the customer. Translate this research and analysis into a marketing effort that will have an effect on customer behaviour. Customers now demand reliable and accurate information about all of their business exchanges. And that doesn't stop after the sale, customers require companies to manage support relationships. A unified customer view across all departments is essential in order to provide competitor beating customer support.

10. Don't forget your employees

Without their support, you'll never build a close customer relationship. Studies have shown that a major hurdle to CRM success is the resistance to change by employees.