What is CRM?

CRM is perhaps in my mind one of the most misunderstood terms in marketing today. As I as I think about it is a rare event when I pick up a marketing publication and I don’t see something about CRM written and frequently I will see. Let’s call it frustration on the parts of authors at organizations who have missed their objectives as it relates to CRM and I think part of that is because CRM does mean so many different things to different people. So, in my mind customer relationship management is a term that refers to the practices, technology, systems, strategies, associated to manage your customer through the customer lifecycle with the goal of maximizing customer lifetime value and relationships with customers over time.

How do you develop a CRM strategy?

Whenever I think about building a roadmap for CRM It begins with defining those clear business objectives and goals. And in part the goals Well the goals can be associated with short term objectives and long-term objectives. In fact, frequently the driver of CRM is tied to creating the right customer experience over time. And certainly, if we have the right customer experience our customers are going to be more satisfied to tell their friends about their successful relationship with our cars or our products or services. And at the same time, they will buy more from us because they are satisfied. So, it makes sense to orchestrate the customer experience in a way that is best for our customers and frequently CRM is important to allow us to collect the information necessary to understand the current customer experience understand where we are being successful and identifying those areas that need to be improved.

So as part of the three are typically four phases when we think about building a road map for CRM success the first phase is really discovery phase its identifying goals its identifying objectives as we just discussed. It also typically starts with some data exploration just understanding the resources the assets that we currently have so that we can better create those goals so that we can set you know meaningful metrics at this point in time.

And then in that discovery process no matter how small or large the company we frequently have stakeholder interviews in part because it does mean so many different things to people within an organization its important to air those ideas and create consensus around where we want CRM the customer experience the customer relationship to go.

How do you Successfully Execute a CRM strategy?

The marketing department obviously has to be there the marketing department cannot work in a vacuum. We need to have finance involved so that we understand the cost parameters associated with all of the activities that we’re thinking about in the future. That’s fine because we get along so well in those two departments. This is an opportunity for bonding. There’s no question about that. Obviously, we need to be H.R. has to be involved because they can they can serve as referee if need be. We know of course we need our organization because so much of what we’ll be talking about involves technology delivery to help guide these relationships over time.

We need customer service if there’s a customer service organization if there’s a sales organization both of those components need to be there as well. In fact, any place where we touch a customer with communications any department that has that interaction needs to be involved in a CRM initiative. And then finally product people from product need to be involved. So, both those who are managing current products and understand them inside out and those who are developing the next wave of products because as we think about CRM as we think about the future we want to incorporate where the company is going as well as what we’re offering today.

It is imperative that top leadership within a company embrace any CRM initiative. And embrace the goals associated with those initiatives because there are so many different functions that need to work together. Without that leadership from the top the CRM programs are doomed for failure.

Does CRM Mean The Same Thing For All Organizations?

I think this talks to the whole point of CRM means different things to different people. So, if I’m a hammer the whole world looks like a nail in this particular case. If I’m a sales person I might be thinking of CRM as an application like sales force that come where I can keep track of my outbound calls my lists of prospects my lists of customers and any e-mail communications that I may have sent to them in the past to the salesperson. That is a CRM system but to an organization we may be missing a whole layer of other customer touch points that are important or to a retailer where you’re missing interactions that the customer may have had online with our Web site. We may be missing catalog purchases. We may be missing the retail store visits where the customer filed a complaint with customer service. So, in that that’s a good example of where CRM can mean different things to different parts of an organization depending upon what their particular focus is.

After we go through that discovery process where we talk to all of the stakeholders that the second phase of thinking through CRM is to assess where the organization sits today in terms of all of the goals and objectives that we identified in that first set of interviews discussions and in that effort to define clear goals and the goal here is to develop some sort of opportunity assessment around where CRM can make a difference with an organization. So again, it means lots of different things to different people.

We are going to want to lead any new initiatives around our customer experience around managing the relationship in such a way that we have success early. You know one of the lessons that many CRM implementers have found is that without early wins in building out CRM capabilities the path to success becomes much harder.

I have been involved in some CRM implementations and have discovered that early victories are important. There’s so many moving parts and you can always add more to these types of initiatives. You know perfect can really be the enemy of good. I think for some people when they’re trying to do this, and I think that that is such a valuable point. Yes, go do that thing have a long term like you know, soaring goal but it is very strategic if not for the organization for you personally implementing it to make sure that you engineer a few small wins early from this.

Unquestionably it’s basically an axiom for career survival. I have read too many articles in the trades of colleagues leaving organizations due to failed CRM initiatives. And in fact for many CRM still has a negative connotation associated with it. You will hear people talk to them too. The idea is that CRM is soft.

There’s really no card benefits associated with it and people will say that where would they gravitate towards if they’re anti CRM. You know what is. What is the alternative? Failure. Ultimately it is failure.

Benefits of CRM

I think people who make that claim frequently see the challenge of some of the lofty CRM goals and the challenge of making many parts of a large organization work together because it is challenging and without high level sponsorship within an organization sometimes it’s very difficult to create some of these goals and you know one of the challenges is you’ll frequently hear in CRM planning stages of the goal of creating a 360-degree view of the customer. So, I want to understand every touchpoint I want to understand every e-mail exposure every open every click every conversion.

Customer Identification

I want to understand every time somebody walks into my retail store I want to understand every time customer service was called the one to understand returns. I want to know if the product is tied to multiple returns or if this is just a single event for this person. Is this person a chronic return we can begin to go down that rabbit hole very quickly? But when you paint a very lofty vision you know and it’s important to have a goal at the end of the rainbow.

I truly believe that it can seem daunting. It can seem unachievable which is why that notion of early wins is so important which is why that notion of phasing in capabilities in a meaningful way that moves the ball along for the organization is absolutely critical. And all of these pieces need to be managed with the long-term goals of the company in mind of course. So, and then quickly people begin to glaze over  because the question is all right.

All of that stuff is great, but I have to meet my numbers this quarter right. So that’s the real world right. So, finding the benefits quickly associated with CRM initiatives are about better understanding who the customer is and how to talk to them better.

Customer Acquisition

Integrating all of the information that we have about our customer across systems that might not be talking to one another today. All of those benefits really are huge long term. Yes. And phasing them in in a way that allows the initiative and the company to move forward is critical to the success.

So we talked about discovery. We started talking about really assessing where we are in terms of our current state of capabilities. So, you know we may have goals to develop the ideal customer relationships and yet we may be constrained today by our current capabilities so we take an honest look at what our technology what our customer service what our sales capabilities are.

And then we compare those against what I’ll call the future state. So when we create goals in the very beginning of this process in order to achieve those goals we can envision some future state so that future state may involve a new database that integrates all of the different databases that we might have in an organization for example that new database might include information that we don’t have today we might need to have new levels of customer service and that may require different types of customer service reps than what we have today or we might not have any and we might need to develop a new capability there. So, we define what our ideal future state of capabilities might be. And we also when we do that we also look at what the competition is doing. So are some of our competitors doing things better than we are.

Do we wish to be doing as well as they are or even better? So, we look at that future state. We compare it to the current state and of course we’ll see differences we’ll see gaps. So, our fourth step of this process is to look at those gaps and figure out how to close them. So, we have we have business goals we have objectives we now know what we need to go to long term. We take a look at where those gaps are today. We ask ourselves you know where are the gaps that we can fill short term. What are those early wins that we think can contribute to the customer experience today.

And what are the capabilities that we’re going to build on to gradually provide that future state capability that we’ve painted with the organization. And then we put together a phased plan to be successful in delivering this thing we’re calling customer relationship management.

Is CRM a Continuous Strategy?

So how do you know when you’re done? You did the CRM and a great question you know is the cake baked yet is what you’re asking. Yes, the test for that. Well first of all you’re never really done.

But you can celebrate the first cake when it comes out of the oven. And you can enjoy the benefits of that hopefully without gaining too much weight. Right. But the goal here really is to show wins in terms of better understanding the customer to put infrastructure and capabilities in place that make the customer experience better that drive more revenues. And as we get to better know our customers as they become more engaged with us it opens up new opportunities for us to evolve over time that we would not have had otherwise. And that talks to the ongoing process of improving customer relationships because you can never have customer relationships that are too strong.

You always want them to get stronger. And if you build this capability correctly you have an ongoing feed of new information that allows your company to evolve.

Are There Types of Organizations Where CRM is Not Effective?

I think all organizations can benefit by better customer relationship management. So, you know it’s almost like I don’t know, can you drink too much good wine? Well you probably can. You can you can probably over indulge. But you know that’s probably a terrible analogy.

I think companies need to be careful about how they refer to initiatives as customer relationship management initiatives. So, you know anything that helps us better serve customers is awesome. We want more of that. It improves the customer experience and we know when customers are more satisfied when they are more engaged when customer engagement is higher. They tend to purchase more from us.

Customer Database Marketing

This little company called Amazon that gets a lot of press without my adding to it. And in fact, they’re changing the world of retail as we know it. But I think that the lesson from Amazon is an interesting one, so I’ll share my perspective on what Amazon did brilliantly from their very inception and what they did.

If you go back to the days when Amazon was only selling books it really wasn’t that long ago, and most people actually forget that that is the case. It’s a remarkable story. So, they were selling books, physical books. There was no Kindle writing

So they’re selling physical books. And what did they do that was so smart. What they did was they took a look at their customer universe and they get a couple of things. One they created this amazing database of books that were available for sale. And in fact, they became the go to place if you were going to research you know what information was available on you know global warming which was a factor that if you do research what was available you’d go to Amazon.Com and you’d plunk in.

Customer Segmentation

The other thing that they did which was breakthrough at that point in time was they were so focused on customer service. So, it was relatively new at this time when they started to buy products over the web. So, what they did was they created this level of customer service that provided a huge amount of trust with consumers. So today we take it for granted but then they would acknowledge your purchase immediately.

They would tell you when the package was going to be delivered and it arrived on time and arrived quickly they may have actually set that standard that we hold everybody else to today. I believe they have. So they did that they created all of this trust but then the other thing that they did which was brilliant was using their database. They had a collaborative filtering algorithm. And what that algorithm did was it looked at the books that you purchased and then it made recommendations to you on other books that you might like to read. And that was breakthrough at that point in time.

It almost sounds like something we take for granted today. Today we see that all the time. Particularly on Amazon so that you know if if I buy a pair of sneakers they’re going to offer me sweat socks to go with my sneakers. All right. I mean they’re just very smart about the market basket that they will put in front of you based on what you’ve purchased.

Predictive Analytics

Those are frequently purchased together, Amazon has figured that out. So collaborative filtering around Amazon to create relevant communications to their customers. In a way, that added value to them in a way that added value in a way that created trust and relevance in their communications and just the relationship almost a relationship. So from that end if you follow this through so when they started introducing other goods and services people trusted Amazon.com.

It’s remarkable that they started to offer retail goods. And then after they started to do that they went into the entertainment business. Now they’re producing original content and of course the most recent acquisition by Amazon is the purchase of Whole Foods. Big big acquisition huge acquisition.

So now Amazon will support your literary interests it will support just about anything you wish to purchase in the retail goods world. They will also create oil. They’ll they’ll offer you video content and in fact they are creating programming by the way based on what they know about their customer universe. And now they will be helping you with your day to day nutrition.

So they have in many ways that 360 degree view for Amazon is perhaps more comprehensive than really any other organization that I can think of off the top of my head today. But all of it all of it stemmed from outstanding customer service through their initial collaborative filtering algorithms understanding what customers wanted and by understanding how to market to customers as they made more and more new offerings over time. So from a from a best practice perspective knowing that the customer closing the loop with customer I have to take my hat off to Amazon they have done it quite well.

I think we could all learn a little bit from that growth that they had by embracing that type of strategy.  They clearly continue to change the landscape and it will be exciting to see where they go in the future.

Can Smaller Organizations See Success With a CRM Strategy?

There’s some things that Amazon does exceptionally well but because of their size there are some things that they can do that let’s say smaller retailers can do and differentiate them.

So, for example if I want to purchase a pair of eye glasses Well glasses are at least for me a personal purchase and I really don’t do it very often. I don’t really know what the fashion of today is. Maybe shame on me. But I don’t. So the question becomes one of our look how well I feel good with my purchase.

Well the way that I like to purchase my eyeglasses is I like to go into my local optical store and I like to talk to the salesperson behind the desk that one on one communication to me is important in that purchase. So you know that notion of customer service local access is one that I think local retailers have you know a huge leg up on and those local retailers also know more about the surrounding area than Amazon ever can.

You know in speaking to some powerhouses in retail I think the consensuses you know in combating let’s say Amazon where everybody kind of fits. Amazon has cornered the market on buying. But there’s still a at least for certain purposes there’s a segment that is looking to shop and Amazon doesn’t quite cater to that. You know when you do you’re not sure what you want and you’re not ready for a you know a transaction in that moment.

That’s the opportunity to exploit. And I do think that customer relationship management capabilities can help identify those opportunities to retailers.