These are the Times of CRM Vindication and Validation - Part 3

Part 1 of this series analyzed two white papers entitled “Customer Relationship Management: The Winning Strategy in a Challenging Economy” and “Maximizing CRM Effectiveness During Lean Times” and authored by Microsoft Dynamics CRM and Oracle CRM, respectively. The blog 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, the post also analyzed the recent technological enablers that are making CRM offerings more affordable, flexible, and easy to use. In addition to concluding the technical discussion and trends, Part 2 then introduced five main CRM strategies that companies can employ to survive and thrive during uncertain economic conditions, starting with the focus on existing customers. Part 3 concludes this series by analyzing the remaining four CRM strategies.

CRM Strategy #2: Prioritize Sales Investments

In the current business climate, hardly any company can afford to aggressively increase the size of its sales force. While they are the key to driving revenue, salespeople are arguably the most expensive resource in any organization’s front-line operations. Therefore, increasing the effectiveness and efficiency of the existing sales team and channels is critical.

Yet according to the Alexander Group, field sales representatives only spend 22 percent of their time actually selling. Therefore, the time spent on prospecting, building proposals based on knowledge of the prospect’s requirements, and closing deals must be put to good use.

The first step to successfully reprioritizing sales investments is to know the organization’s current state of affairs. To that end, companies must identify the strengths and weaknesses of their current sales strategy by scrutinizing key metrics including lead evolution, sales pipeline, quota attainment, and revenue forecasts. Managers can use dashboards and key performance indicators (KPIs) to provide near real-time data visualizations of sales performance.

Alternatively, organizations can tighten their focus and take a closer look at the deal mix and competitors by analyzing account distribution, lead source effectiveness, invoices/orders received, and win-loss data in an effort to better identify their ideal deal size and type. Sales organizations can use that information to hone in on their sweet spot (deal mix and profitability) and jointly work with marketing teams to create more effective lead scoring criteria.

That data can then be leveraged by sales force automation (SFA) capabilities to help ensure that sales resources are optimized. For example, workflow tools could be leveraged to intelligently score leads and assign them to the most qualified resource.

Another way to increase sales effectiveness and consistency is to reduce the gap between an organization’s best and worst performers by instilling the practices of the top performers across the organization. Applications that contain specialized sales workflow features can be configured to guide sales professionals down the most effective path to closing deals at every point in the sales process.

At any sales stage, the SFA application should present the most relevant information, enforce collection of critical opportunity information, and even automatically create tasks for any of the members of the opportunity team. Embedding a company’s best practices into the application should drive higher close rates as well as shorten sales cycles and the learning curve for new sales professionals.

A consistent and more systematic approach to prospecting in turn allows organizations to avoid getting mired in the inefficient hunting of a few mega-deals and instead improve the quality of leads pursued. A balanced mainstream deal mix (instead of so-called “elephant hunting”) helps to allocate resources for sustained growth, not just quick wins.

Companies should embrace technology to streamline business processes and connect people and processes. CRM providers like Oracle and Microsoft are leveraging Web 2.0 technology to create a new generation of sales tools specifically designed to increase sales user productivity.

One of Oracle's CRM applications analyzes purchase patterns of existing customers by mining data across the enterprise and public domain, and then identifying which products and services to sell for certain opportunities. This capability brings us back yet again to the intrinsic link between CRM and business intelligence (BI) that was mentioned in Part 1.

CRM Strategy #3: Simplify Customers’ Service Experience

While every company wants to provide superior customer service, this goal must be balanced with the need to keep costs down. Customer experience can be simplified by improved speed and consistency, and via a reduced learning curve for both service agents and customers.

One way to effectively reduce costs is by consolidating systems and achieving a more streamlined IT environment. Data consolidation has the potential to not only reduce the costs associated with storing and maintaining data, but also to make data more relevant. Needless to say, too many organizations are saddled with an assortment of disparate systems for storing customer data, whereby each niche system is offering only a partial view of the customer.

That “stovepiped” information in turn leads to wasted cycles, duplicated efforts, and escalating costs as costly IT resources are spent trying to resolve data discrepancies. At the end of the day, organizations need to have “one version of the truth” when it comes to customer data and the cost benefits that come with it. For example, with access to order and invoice information within the CRM system itself, customer service advisors (CSAs) can quickly answer billing questions without tedious transfers to other departments.

One of the fastest ways to minimize costs is through automation, and organizations need to reassess their escalation and approval paths. By automatically generating customer service cases from incoming e-mail messages, with the relevant details already populated, organizations can save significant data entry time. Customer support cases can be automatically assigned to the most qualified resource based on pre-defined criteria or triggers.

Escalations should be made seamless with automatic transfer of customer details so that the supervisor can smoothly engage with the customer where the agent left off. To minimize service handoffs and improve satisfaction, organizations should extend the footprint of their CRM deployment to the Web with a single transparent multi-channel solution for delivering superior customer service, as explained in Part 2.

Last but not least, with enhanced Web site management, registration and user management, account management, and knowledge management (KM) features, companies can gain the ability to rapidly deploy and maintain an application for delivering higher levels of customer service. Such a system should also be integrated with other service channels and enable customers to seamlessly transition among channels (e.g., from the Web site to an online chat session to a phone conversation with a CSA) in the context of their product or service issues.

CRM Strategy #4: Right-size the Service Costs

Empowering CSAs to resolve issues is also an effective way to control service costs. When agents have easy access to embedded customer profiles, service cases, purchase and service history, and are backed by KM tools, they are able to resolve problems faster. CSAs with simplified desktops should resolve issues more quickly if they are equipped with a complete customer history and a full view of service incidents so that they can zero in on relevant facts and provide the appropriate service or product.

The aforementioned self-learning KM capabilities are particularly more powerful when they are part of the core CRM solution because customer data adds context and improves the relevancy of the knowledge base (KB) repository of articles. That embedded knowledge in turn allows organizations to increase the speed of service and improve first call resolution rates.

But in today’s market, while the ability to talk to a human remains an important option, more and more customers also expect to be able to self-service their own needs. They want to go to a company’s Website and manage their account details, download product information, resolve issues, and schedule field service visits at their own convenience. In an increasingly networked world, many customers prefer self-service channels because of the speed-to-resolution they provide.

In both sluggish and expanding economies, companies must seek ways to reduce the cost of providing service to their customers. Online customer-facing applications provide compelling benefits in this regard. According to Forrester Research in its 2008 article entitled “Need To Cut Costs? Improve The Web Site Experience,” while average call center costs are $5.50 per call, the average cost per Web self-service transaction is just $0.10.

Thus, enterprises should take advantage of this customer self-sufficiency trend by providing intuitive self-service portals that help empower customers while at the same time reducing agent workload. Accordingly, organizations are mandating that technology purchases for customer-facing applications focus on improving the online customer experience.

In fact, another Forrester report in 2007 entitled “Marketing Technology Adoption 2007” found that 86 percent of consumer businesses cite customer self-service as their top technology theme. To that end, companies should move simple and low-risk transactions to self-service, such as, e.g., online knowledge lookup and viewing basic transaction status.

Companies must be able to analyze patterns in service history to know satisfaction levels and drivers by customer type. Based on that insight, they can provide opt-outs for more expensive assisted (“hand-holding”) support as well as tiered opt-out options by customer type.

CRM Strategy #5: Rethink the Marketing Strategy

As emphasized many times before, in today’s economy it is imperative that organizations not only maximize the value of existing customers but also win new business in order to establish a foundation for sustainable growth. One of the most effective ways to maximize revenue opportunities is by optimizing the marketing mix.

But in order to optimize this mix, marketing departments need total visibility into marketing data through a unified CRM application. This visibility enables organizations to determine lead-to-revenue metrics and to understand their true "ROMI (return on marketing investment)." These metrics should in turn allow them to more tightly link demand generation activities to sale execution, with the ability to adjust tactics as conditions change.

Targeting the right prospects from the start is one of the fastest ways to reduce waste and improve marketing campaign effectiveness. A good sales process builds a 360-degree view of the customer, beginning with the first touch. Enterprise marketing management (EMM) and marketing automation tools embedded in leading CRM systems can help businesses match campaigns (with even individualized messages and dialogues) to the characteristics of the prospect.

A recent’s article indicated that differences in data quality can amount to a 66 percent shift in revenue from customers. More accurate customer segmentation, lead qualification, and lead scoring based on insightful customer data helps companies to focus on the prospects most likely to buy. For this to happen, companies must know their ROC (return on customer) and their market share goals and strategy.

As a recap, organizations should be able to quickly create campaigns, distribute communications, seamlessly track responses, and qualify leads. When marketing capabilities are part of a holistic CRM solution, organizations can more easily track their effectiveness and quickly adjust the channel or messaging to improve results.

Marketing messages and promotional offers can be customized to address specific issues within an industry, a company, or even an individual prospect. Then, results can be tracked to yield immediate insight on which tactics work best.

Blending Art and Science

Marketing has long been thought of as being an art rather than a science, but that does not have to be the case. Effective marketing is no longer a matter of “throwing mud against the wall” to see what sticks.

Sophisticated analytics now make it possible to track the response to marketing campaigns down to the individual customer. This BI capability can potentially revolutionize a company’s approach to marketing. TEC’s previous article entitled "CRM Analytics Brings More Profitability" explains how marketing lends itself well to gaining insight via analytics.

All this insight must be integrated into the sales lifecycle, so that lead qualification scripts are tuned to the messages and offers that pique the prospect’s interest. Warm leads must be funneled to the sales reps, who are best equipped to handle them. Responses can even be incorporated into the priorities assigned to those leads, so that a more engaged prospect is assigned a higher place in the queue than a casual one.

Real-time tracking is an essential element of this process, since time is of the essence when responding to a prospect’s interest. Marketers and sales managers should both have current statistics on active programs as well as the analytical tools to delve into past campaigns.

When integrated with lead tracking, marketing analytics can provide compelling return on investment (ROI) analysis for use in budgeting and campaign planning. Companies must link demand generation to sales execution in order to cancel any marketing activities that are not aligned with the actual sales capacity.

Better targeting is not enough, since organizations need to be able to track campaign details throughout the campaign lifecycle across all channels. For example, organizations that rely heavily on events should be able to track all event venue details, attendees, registrations, cancellations, and customer details within their CRM solution, enabling them to accurately measure the success of events and optimize future ones.

On the other hand, online marketing campaigns with the Web-to-lead capture purpose should not be a disparate process. Organizations should be able to create online campaigns with the requisite landing pages within their core CRM solution and then easily track the associated impressions, clicks, leads, and revenue generated.

Self-evident Conclusions

I concur with both of the white papers’ assertions that if history has taught us one thing, it is that organizations cannot afford to neglect strategic investments in challenging economic times. The biggest risk of all is to do nothing, since, when the economy rebounds, the competitors who decided to invest during a downturn will leap ahead of those hunkered down.

Any organization that doesn’t have a well-considered strategy and the enabling tools to execute it is missing opportunities to better position itself for sustainable growth and take the lead when the times improve. By focusing on their existing customers first and then expanding onto other remaining CRM strategies, companies can continue to nurture the business, strengthen critical relationships, and better capitalize on revenue opportunities. Focusing on these practices and behaviors now will not only help an organization steer through this recession, but will also prepare it to seize opportunities in the next expansion.

Dear readers, what are your views, comments, opinions, etc. about CRM and how are you weathering this storm while preparing for the turnaround? 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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