Behind a successful organisation is a strong, sustainable customer base. Managing that asset is a key task, from the boardroom down.
To help in that task, I have developed a Strategic Customer Relationship Management (CRM) Framework which can be used to identify gaps in customer-facing processes and systems.
Once those gaps have been identified, they can be addressed to build stronger and longer customer relationships.
There are six key steps that are crucial in making CRM work effectively:
Successful implementation of the six key steps produces:
- Increased profitability
- Better internal collaboration
- Satisfied and loyal customer
- Continuous business improvement
Step 1: Customer Strategy
An agreed and achievable customer strategy is key to an organisation’s ability to deliver relationship value to its customers.
Where CRM systems have been introduced without a strong strategic focus they fail. CRM systems that are regarded as essentially an IT project are often introduced without a clear and achievable strategic aim.
When they fail, many companies assume that the CRM concept is a failure, or not a good fit for their business model. In fact, though, it is a strategy failure, not a CRM failure.
To implement CRM effectively the strategy needs to be firmly at the forefront of implementation. The task is to build stronger, longer customer relationships that maximise profitability. This can only be achieved if it is clear how customers perceive value, and how the organisation can deliver it.
Senior management support for CRM
- Senior management must be at the forefront of introducing and supporting CRM initiatives
- There must be a committed, designated CRM sponsor at board level
- Senior management must work together to resolve cross-functional conflicts
Business strategy is crucial to the process
- The CRM strategy defines a commitment to quality and customer-centricity which must be clearly understood by staff
- A clear set of values that support the strategy must be shared and understood by staff
- The strategy and supporting business plans must be reviewed at least annually taking account of evolving market trends and customer characteristics, industry evolution, the competitive landscape and technology impacts
- Management systems impacting on CRM should be reviewed at least annually to ensure that they support fully the evolving CRM strategy
Strategically identifying the most important clients is important
- Clearly identify which customers the organisation wishes to serve and which ones it does not wish to serve
- Customise the organisation’s service offer to match different segments expectations, concentrating on those which are strategically most important to the business
Step 2: Customer Value
Systematically review the value an organisation delivers to its customers to allow sustainable competitive advantage to be achieved.
Understand which factors customers value from the organisation’s service delivery and how those affect the perception of ‘superior service’
The concept of Customer Lifetime Value is important for a business in determining how much resource to allocate to each customer segment
As customers receive a service that they value, the organisation in turn benefits from loyal customers that are prepared to pay a premium for the service.
- Understand the value that each customer segment brings to the company in terms of lifetime value. This drives business success
- Conduct periodic reviews of what supplementary services could be added to the organisation’s offer, and how these will increase the value received, and perceived, by customers
- Regularly review competitor activity to determine how this impacts customer value metrics. Any significant changes must be communicated to senior management
- Tailor value propositions to different customer segments This demonstrates the organisation’s strategic focus to building stronger customer relationships both internally and externally
Step 3: Customer Information
Gathering business and market intelligence about customers is a prerequisite to understanding the strategic direction of the organisation.
The organisation can then ascertain which types of customers it should build stronger relationships with, because they are crucial to business success.
- Customer information systems allow information about individual customers to be collected and analysed. This produces micro and macro information about the customer and customer sub-sets, for use in customer applications and campaign management
- Data collection must be managed to ensure relevancy, accuracy, currency and objectivity
- Customer information should be used proactively for cross-selling and up-selling purposes
- Predicting customer buying patterns and then applying historic data to these provides a measure of the potential return on investment of a promotional campaign
Step 4: Customer Technology
CRM is not just an IT system, it is a management approach. Technology is just a tool to facilitate an understanding of the needs of customers and to allow the management of customer relationships.
It is important that the system gathers the right information about the customer so that strategic decision making is fully informed.
Acting on correct information will increase sales and add customer value. Capturing the wrong data causes defection and dissatisfied customers.
- The location, accuracy and completeness of customer data, particularly if kept in different databases, is crucial
- Appraising and addressing any significant systems integration, people, processes and training issues is vital when introducing any new CRM system, e.g. sales force automation
- A full investigation and budget for change management, project management and employee engagement issues is intrinsic in any new CRM systems proposal
- Customer information links should be integrated with existing systems like fulfilment, service and finance
Step 5: Customer Monitoring
Ensuring that the strategic CRM objectives are delivered to the customer base is at the heart of the monitoring process.
Timeliness and accessibility of information from the system is crucial.
Understanding and acting on monitoring information will increase performance standards in customer and employee satisfaction, service quality and supplier performance.
- CRM metrics must be identified and acknowledged by staff
- Senior management should agree on the business monitoring model for the organisation
- The most important key performance indicators (KPIs) must been identified
- Staff should understand the KPIs and actively work towards scoring highly on them
- Customers should have been involved in identifying and structuring the KPIs
- There must be a formal process in place for monitoring performance, and this should be reviewed at least on an annual basis
Information at: empowerbusinessclub.com/consultancy/buy/keyclient
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