CRM Means Understanding Customers

Monitoring and Responding to Customers Can Increase Sales

Nov 4, 2008

CRM is a corporate approach to customer behavior, influencing it, and developing long-term relationships to enhance loyalty, acquisition, retention, and profitability.

For many corporate senior executives, CRM (customer relationship management) has come into their management perspective and boardroom meetings with mixed reviews – initially appearing to be a great opportunity to increase efficiency, revenues and profitability, as well as providing a process for ‘getting to know the customer better.’

While CRM is a powerful tool in both the business-to-business and business-to-consumer environments, it has been both oversold and underutilized. Often, more has been promised for CRM than it could ever possibly deliver, and too frequently companies have not properly implemented the CRM systems in which they have invested significant time, effort, and money.

The 2005 Bain & Co survey (Management Tools & Trends) of 960 executives revealed that CRM was used by 75 per cent of those executives who took part in the survey, a very significant increase from the 35 per cent usage reported in 2000 -- the first time Bain included CRM in its survey. Since that time, CRM has continued to grow, as more software technology comes to market.

Make CRM a Gradual Process

There has been a tendency for some vendors and consultants to focus on CRM as a ‘trans-organizational strategy,’ requiring immediate commitment throughout the organization and rapid re-engineering of processes and philosophies to make the customer the focus of all activities. In reality, CRM will be more readily accepted by organizations if the process is a more gradual one. By 2007, according to Bain & Co. CRM had become the second most widely used management tool.

Avoid the Big Bang

When CRM is only seen as a solution that needs to permeate all aspects of an organization’s activities to be effective, there is a natural tendency to want to roll it out all at once in what might be called the ‘big bang’ approach. Too often, the big bang turns out to be a big mess!

Organizations confronted with more change than they can handle at one time may find that the challenges faced by employees are exceeded by the challenges faced by the software. Because of the complex nature of even a modest CRM solution, successful CRM implementation requires above average consulting skills, and while consultants can assist in analyzing a business and its processes, vendors tend to want to solve all the problems at once. Once chosen, the CRM solution needs to be implemented, so organizations need to devise a plan, implement it, and stick to it.

Preparing for CRM

Companies should not be expending precious financial and human resources on particular communications channels and customer segments out of all proportion to their profitability and practicality. The following steps are recommended for a successful CRM implementation:

An organization needs to identify the most important application of CRM and ensure that a stable, viable process is put in place. As a part of a planned, carefully executed process, specific customer segments and communications channels are identified for the initial execution.

Make sure the business processes are mapped into the underlying technology. Customers are supported by the way companies operate; the technology selected helps provide that support. The technology itself shouldn’t be in the driver’s seat. Companies often buy CRM technology in the name of customer service, and forget about the customer when implementing the application becomes an internal issue. The focus must be on the customer at all times.

The copyright of the article CRM Means Understanding Customers in Customer Relations is owned by Duane Sharp. Permission to republish CRM Means Understanding Customers in print or online must be granted by the author in writing.