Back to the Future of CRM - Part 4

By Enabliser Howard

This is one of a series of discussions about CRM projects which were successful and the lessons we can draw, including avoiding failure.

In Part 1, we looked at starting small and focused, rather than trying to save the world, and the strategic questions to ask. In Part 2, we looked at focusing on the big picture, the strategic issues. In Part 3 we discussed focusing on pain, or targeting the low hanging fruit. We with the third and fourth strategic questions to ask.

Do We Need Perfect Data?

An early promise of CRM used to be real time information. But the cost is high, to collect, disseminate and fine tune. Why collect real time data for processes which customers don't value, or managers cannot rapidly adjust? A hotel manager needs real time data on room availability, but not customer feedback on the curtains. A cable TV company may need real time data on service failure but not the profitability of a program.

The approach of an office equipment distributor selling printers illustrates this. They had a high rate of product returns. A primary cause, they believed, was poor service from the call centre. With products becoming more sophisticated, customers needed more help. But the call centre was only answering 46% of queries from purchasers, and the quality of help varied widely.  Operators could not answer questions about problems. To find answers, staff had to search folders for information. Disgruntled customers were returning their products to the retailer. This was disastrous.

Management saw that here they needed "perfect" information. A CRM system was rolled out in stages, starting with one product, with others at 2 to 4 week intervals. This allowed the system and training to be refined as they went.  It was impressive. When customers call, they are identified, showing the purchase records and giving standard responses to common questions. Call times were reduced substantially, saving up to $600,000. With call centres subsequently handling 140,000 calls per month, customers were left on hold on average for less than 5 minutes. Training time was also cut, while product returns were reduced by one third, from 5% to 3.4% the next year.

Benefits flowed wider than this. By capturing data on the nature of calls, the company had new insights into customers' needs and behaviour. This improved their ability to tailor marketing programs, including surveys and newsletters to market segments. Knowing the most common questions allowed answers to be disseminated in advance. This reduced the number of calls. This data is also used in product and customer satisfaction planning to improve product satisfaction.

Real time information helps companies cope with high levels of complexity in their operation, helping prioritise.  A global electronics manufacturer had many customers and a huge pipeline of potential orders. For years, emails and spreadsheets were used to try to keep track of the pipeline worldwide. Data were often weeks out of date. It was hard to assess those with the highest potential. With a worldwide operation, different locations could all be working on similar deals for the same customer without knowing it.

A CRM system was installed to manage the order pipeline. For the first time, staff up to the CEO could see opportunities in real time, not just a few times per year.  Gains were immediate. Better order management, more precise sales targets, better coordination of inventory and pricing between regions. Since CRM, the number and value of potential sales have climbed significantly. Opportunities have been shared earlier. The goal was a 5% increase in revenue, which the company met.

Afterwards, management realised this data could be used for budgeting. The pipeline is now the basis of the revenue part of the budget and for supply chain management also.

A narrow focus CRM system reveals additional opportunities, often resulting in a broad ranging CRM system later. What makes it different from earlier unsuccessful implementations is that each step is a carefully planned, well defined strategic step.

Smart CRM users don't keep still. They analyse their data to identify new opportunities to extend the technology's power.  This may mean extending to other divisions, or to suppliers and customers. 

Business Before Technology

The technology is dependable, but how it is implemented may not be. There should be a strong focus on business needs, and on what CRM can do, not what it should do. By setting priorities, making sure they are guided by customer strategy, highly disciplined CRM efforts will have greater impact, with lower investment and less risk. Like any valuable management tool. The keys to success are strong leadership, careful strategic planning, clear performance measures and a coordinated program combining organisation and process changes. No longer a black box, CRM is a basic building block of corporate success.

Where CRM Was Implemented. One Minute Summary

  • Sales staff organisation/automation, order entry, linked to order and credit history
  • Quotations, ordering, forecasting
  • Help Desk Product Call Centre with knowledge base, campaign management
  • Detailed forecasting, managing prospect pipeline, lead management

All the CRM features discussed were using normal features of good CRM (customer relationship management) systems. At Enabling this is our business, we do it every day. Perhaps you have issues which this solves too?

This is a summarised review of an article in the Harvard Business Review, November 2004 by DK Rigby, GD Ledingham,  CRM Done Right.



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