Customer-friendly business strategy = successful CRM
Bob Thompson, the founder of CRMGuru.com and President
of Front Line Solutions identifies what makes a successful CRM implementation
and highlights the factors contributing to its failures, in a conversation with
There is no standardisation in defining a Customer Relationship
Management (CRM) system? How do you think this issue can be sorted out?
CRM is a customer-centric business strategy, period. It is
designed to improve customer relationships.
The minute a companys primary objective is other than
improving customer-relationships, it is no longer CRM even if CRM software is
installed. Hence customer-centric strategies distinguish CRM from CRM software.
There have been many cases of CRM failures worldwide? Why?
Negative perceptions about CRM have discouraged many companies
from going ahead with CRM. But many such decisions are based on the bad experiences
of other companies. What is needed is to understand why some implementations
fail but others succeed.
There are critical success factors or best practices, which
contribute to the success of CRM. Difficulties in implementing CRM and getting
positive RoI stem from implementers repeating the same errors. CRM failures
are rooted in common errors and the outcomes will be much better if implementers
identify and follow best practices.
Companies who do not want to take action on the negative
feedback or more requirements of customers should not attempt CRM. The same
applies to companies not willing to empower and equip their line staff to deal
with customers. Companies lacking the discipline and priorities required to
implement effective measurement should also not go in for CRM.
The most predictable cause of CRM failure is trying to achieve
RoI through cost-cutting. Also, many CRM product and service providers are doing
CRM implementers a disservice by spreading misinformation about various aspects
It has to be always remembered that customer-centric planning
and people management are the primary drivers for success of CRM. Process and
technology are only implementation tools.
What kind of best practices do you feel lead to positive
Adopting customer-centric strategies is the leading factor
of CRMs success. Many companies attempting to implement CRM do not actually
want to become customer-centric. This leads to failure.
Secondly, investing in people at points of customer contact
i.e. line level training and support are important for CRMs success. Thirdly,
there is a necessity for organisational changechange in departmental roles
and responsibilities to ensure CRMs success.
The last requirement is that CRM implementers need baseline
data to measure against. Hence setting measurable goals is also needed for CRM
to succeed. Any single factor is not enough but multiple factors ensure successful
What kind of customer-friendly strategies ensure the success
Companies must work out a customer-centric plan by using
customer defection rate data and customer satisfaction research. They must adopt
a customers perspective and work on developing a comprehensive planning
write-up and specific business objectives.
The strategies should be such that they provide benefits
to both the company and customers. They should lead to shorter cycle times,
greater customer involvement in custom-made product or service development and
reduce operation costs by redesigning workflow that eliminates work which does
not add value to customers.
The strategies must be based on what the customers have asked
for and devised as per their needs. They have to be a result of interaction
and information-based communication with customers instead of being a promotional
How can companies develop and adopt customer-centric strategies?
This requires active involvement of senior or top management
leaders themselves. They must take customer calls and lead by example. They
have to take action themselves.
For an organisation to be successful, it is necessary that
the boss is a visionary. He should take care of resources so that things get
done. It must be his priority to invest in resources, solve problems and be
involved. This will make him seen as an active and visible leader who brings
forth transformation in the organisation. Employee training, counselling and
helping in dealing with new jobs and responsibilities are necessary to make
people understand their roles.
Too little investment is done in this area. Hence, the top
management should make this a priority.
So what should companies do when it comes to putting the
CRM software in place?
Every company is different. Some companies implement an overall
single centralised system. Others isolate and tackle specific problems one at
It is necessary to have a long-term vision by the senior
management. The best approach is to break the problems into steps, improve processes,
technology, and measure periodicallyfor instance, every six months or
one year to see its impact.
A company cannot just claim that it is customer-oriented.
It must assess its tactical environment, infrastructure, and technology. Fact-finding
must be carried out to take a closer look at the culture of the company and
The organisation must find out how much change is required,
how long will it take to effect it and take a look at the real problems. By
being focussed it can find out the factors that have bearing on the business.
CRM has moved from being an operational tool to a tool
with analytical functionalities. What are your observations?
Marketing analysis is important
to provide proper customer intelligence. It helps the organisation in
deciding on the strategy required to retail a customer
Analytical tools have been around for a long time. Availability
of data has become a business priority. Proper analysis ensures that the organisation
makes right decisions.
Marketing analysis is important to provide proper customer
intelligence. It helps the organisation in deciding on the strategy required
to retail a customer. It is necessary to have the minimal customer data to find
out who is profitable, who is not, and who is likely to defect.
Technology can help pinpoint this information and solve the
problems due to the emergence of analytical applications. Analytical CRM must
be added to the campaign management system.
So what triggers customer defection, and how is it possible
to retain customers using CRM?
It is more cost-effective to retain customers than to acquire
them. Most customers say that poor s
ervice caused them to take their business elsewhere, but most business managers
believe that price is the main factor for customer defection.
Emotions play a greater role than quality or price in the
decision to defect. People leave a company because they are ignored or not treated
well. Also, a small percentage of customers complain. The others just go away
never to come back.
To improve loyalty and retain customers it is necessary to
understand drivers of loyalty and defection from the customers viewpoint.
An organisation must develop a loyalty strategy and focus it on the right customer.
They should systematically deliver what the customer values and fix it quickly
if they are unable to deliver. The organisation should have proper measurement
and reward systems to encourage customer-centric behaviour.
These ensure that the organisation is customer-centric, which
is what CRM is all about. It enables the business to grow faster and earn bigger
revenues. That is the business benefit CRM should deliver.
And what are the current trends on the CRM front?
The key trend today is customer experience management. This
means analysing the interaction that a company has with the customer throughout
the service engagement. There is a conscious follow-up effort on measuring,
understanding and improving value to the customer.
For instance, in the hotel industry if the ambience and service
are good; there is a better interaction between the customers and staff, and
the customers will come back and be loyal. This new trend has been observed
in the last few years. It is important for the service industry. Hosted or on-demand
CRM is also a growing trend and a necessity for hosted or managed services.