These are the Times of CRM Vindication and Validation - Part 2

Part 1 of this blog series analyzed two white papers entitled “Customer Relationship Management: The Winning Strategy in a Challenging Economy” and “Maximizing CRM Effectiveness During Lean Times,” authored by Microsoft Dynamics CRM and Oracle CRM, respectively. My post made the case for forward-looking enterprises to leverage customer relationship management (CRM) solutions to help them both weather the ongoing storm and prepare for the inevitable turnaround.

In addition to several macroeconomic trends that seem to be helping CRM solutions prove their worth, I also analyzed the recent technological enablers that are making CRM offerings more affordable, flexible, and easy to use. One enabler is the software as a service (SaaS) or on-demand subscription-based deployment mode and the other is the fact that CRM has lately expanded from its traditional “operational” realm into also being “analytic, collaborative, and social.”

Keep IT Simple & Smart (KISS) Rules

By leveraging the service-oriented architecture (SOA) and Web-oriented architecture (WOA) concepts, CRM vendors have been enabling their application suites to be consumed in appetizing chunks. Namely, customers can today purchase only the functional scope they need, and deploy it much more quickly than they could an entire indigestible broad suite of applications.

Thereafter, companies can deploy additional capabilities incrementally and as required, without committing to massive rip-and-replace projects. Moreover, CRM modules are increasingly designed around Web services-based interoperable standards that simplify integration with existing applications. Integration is often achieved through simple point-and-click, or wizard- or workflow-based configuration, without the need for custom coding, which makes it easier for customers to mix and match components from multiple vendors.

Another technology trend that Gartner has recently outlined as those that have been positively changing CRM products is the use of unified communications (UC). Right now the main areas where enterprise applications are using UC are the following:

To that end, and as described in my previous blog series on the underlying Microsoft pltaform tools, embedded presence capabilities from Microsoft Office Communications Server (OCS) to allow Microsoft Dynamics CRM users to instantly see the status/availability of their colleagues and easily initiate communication. In addition, seamless connectivity with Microsoft Unified Communications Manager allows organizations to intelligently route calls and provide relevant pop-up screens (context menus) with the associated customer details.

Looks (and Feel) Do Matter

One of the first low-hanging fruit areas to improve has been the presentation of information, or the user interface (UI) look and feel. World-class CRM solutions should not only provide a “one-stop-shop” for customer interactions but also need to provide straightforward configuration tools that allow organizations to further tailor and optimize the presentation of information for their business users.

By standardizing customer management functions into a single UI, companies can reduce training and system maintenance costs. Thus, virtually all major CRM vendors have steadily improved their user experience (UX) design by making their UIs simpler and more intuitive, sometimes by exposing only role (job)-specific functionality and hiding features not relevant to a particular group of users.

Users are less productive when they are forced to repetitively switch back and forth between multiple applications in order to conduct their daily work. Whether employees are executing marketing campaigns, working a sales deal, updating customer information, fielding a customer service inquiry, or taking an order, they should be able to do all of that in one unified system and with a minimum number of mouse clicks.

The E-commerce Link

Moreover, in today’s world of two-income households with scarce free time, consumers increasingly prefer online shopping and self-service facilities from the comfort of their homes. E-commerce represents the most cost-effective channel for companies to sell their goods and services, but only if they can draw upon a scalable and high-performance front- and back-office platform that manages e-commerce transactions within the context of their overall customer interactions.

Such a system must manage multichannel interactions consistently and efficiently (see TEC’s previous article Consumers Shop Everywhere: Understanding Multichannel Sales"). In addition to providing the rich informational and ease-of-use capabilities that customers have come to expect when shopping online, these systems should deliver real-time decision-making capabilities.

Real-time decisions can suggest useful complementary personalized products or services to offer customers at the point of their interactions, while providing organizations with the benefit of an automated cross-selling solution. For example, a customer who just purchased a new smartphone online is a good candidate for an unlimited data plan, a leather carrying case, and a car charger.

Nothing Without Industry Focus

CRM vendors are also offering more industry-specific solutions by incorporating industry best practices and providing rapid implementation tools that reduce cost and speed time to benefit. Such an application for establishing processes for customer retention and growth (an driving programmatic engagement) should include a wide range of functionality optimized for specific industry and customer requirements.

For example, Siebel, even well before being acquired by Oracle, featured one of the most reliable forecasting processes for various industries (e.g., consumer goods). This so-called “triangulated forecasting” approach incorporates three different perspectives (i.e., field assessments, real-time pipeline assessment, and historical trend analysis) to compare snapshots of opportunities and forecasts over time.

By correlating historical facts with predictions from the field, sales managers can perform reality checks of their assumptions and set more achievable sales quotas. Furthermore, by comparing what has changed in the forecast week over week, organizations can focus on trouble spots, get to the point quickly, and filter out the unrealistic “pie-in-the-sky” projections.

For example, an “issue” could turn out to be a sales rep in a given territory, who “sits” on deals for too long at a particular stage of the sales cycle. Or it could be a suboptimal product mix in a region given local preferences. The best way to achieve triangulated forecasting is by integrating historical information from a data warehouse into the analysis, which brings us back to the intrinsic link between CRM and business intelligence (BI) that was mentioned in Part 1.

In case of insurers and financial service organizations, CRM features could include:  managing member enrollment and communications, guiding personalized loyalty promotions, and incorporating partner awards, as well as managing partner transactions. Again, loyalty systems should provide rich analytic capabilities that deliver extensive information on each member including tier status and value, transaction history, loyalty assets, and eligible and enrolled promotions.

This information should be presented alongside sales and service transactions as well as marketing preferences, which are located in the CRM system. Loyalty program members themselves should be able to gain seamless access to their loyalty information (e.g., points and rewards) through the channel they desire, be it online, over the phone, in person, or through a kiosk. In an ideal scenario, loyalty systems underlie a strategic business initiative that both drives revenue by maximizing brand value and enables organizations to gain critical customer insight.

Five Strategies to Driving Upside in a Challenging Economy

Based on the discussion so far, modern CRM systems are flexible and adaptable, so that business processes can be changed as required. But what exactly does a CRM suite enable and what are the potential benefits? While there are surely many approaches being espoused in the market today, the two white papers mentioned above assert five main strategies that companies can employ to survive and thrive during uncertain economic conditions, starting with the focus on existing customers.

CRM Strategy #1: Focus on Existing Customers

As said in Part 1, it is common knowledge in business circles that it is significantly cheaper to retain existing customers than it is to acquire new ones. By providing their employees with quick access to actionable customer data, organizations can better identify the right customers to increase their loyalty and maximize their profitability.

Effective customer retention begins with customer knowledge and insight. Companies should assemble a complete and single (unified) customer profile that allows customer-facing employees to see all demographic data, interactions, communications, and purchases made. This consolidated view across all touch points and transactions, combined with market segmentation and analysis tools, enables organizations to better gauge the profitability of each customer.

After understanding what each customer needs next, organizations can then create programs and policies commensurate with the customer’s profitability. For example, organizations can configure call routing systems to automatically identify high-value customers and route them to premium customer service advisors (CSAs). With access to pertinent key metrics, CSAs are empowered to provide on-the-spot discounts or any other promotional offers proportionate with each customer’s value.

But routing the call is only the beginning. In today’s market customers want quality rather than quantity. They need information to be able to analyze downside risk and upside potential in each relationship. As important and efficient as inbound communication is, it is proactive, relevant communication that often endears an organization to its customers.

For example, organizations can set up an automated process to alert affected customers of potential issues, such as product defects, and then automatically send out proactive communications to keep their customer base informed. Alternatively, they can set up a simple process to automatically send out timely messages, like birthday cards or product vouchers based on a specific date to show appreciation to important longstanding customers. It is often these “little niceties” that strengthen the connection between a company and its customers.

Maximize Customer Profitability

Establishing customer loyalty is only half of the equation. As hinted earlier, organizations also need to maximize the profitability of their existing customers and better capitalize on revenue opportunities. Companies can use market segmentation and data mining capabilities to identify trends and patterns that indicate key selling scenarios based on buying behavior, demographics, or other criteria.

Taken to another level, organizations might leverage leading indicators such as customer lifetime value (CLV) to predict future profitability and use that information as the basis for more accurate lead scoring and effective sales engagement. Marketing teams should be able to easily create nurturing programs via guided campaign wizards and send out a steady trickle of relevant information about new products or offers to keep the sales pipeline primed. Sales and marketing organizations can then jointly track revenue generated and tailor marketing programs based on the real-time results of those marketing programs.

Certainly, maximizing customer profitability is not just about sales and marketing. When service agents have access to up-to-date information, they are also better able to take advantage of revenue opportunities. Real-time visibility into contract details and renewals allows agents to proactively address issues before the contract expires and thereby improve renewal rates. Service agents can use embedded analytics based on customer purchase history and profile to provide more compelling up-sell and cross-sell offers.

Part 3 will conclude this series with analysis of the remaining four CRM strategies. In the meantime, what are your views, comments, opinions, etc., about CRM? I would appreciate you sharing your experiences with the CRM offering and the provider as well as your current appetite for this software category.
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