“Buyer beware” is beginning to have a new meaning. A new CRM-Add-In was offered to me today. The tool, when integrated into a CRM-Application, measures the extent to which the person is networked in Facebook, XING, Twitter etc. and gives a score according to the size of the network. The idea is of course, that people with a large network need to be more carefully handled than others.
From the point of view of the customer, this would mean that it is necessary to invest time in maintaining a network in order to get good service. That does not sound too good.
Maybe the saying “we are what we eat” should be changed to “we are what we buy”. Something to think about the next time you buy something on the internet.
Tags: Social Networks
In theory all sales, marketing and support functions can be found in one gigantic application. This does have the advantage that customer relevant data can be gathered in one place, but think of what happened to programms like Open Access or Lotus 1-2-3: they were replaced by single programms such as those making up Microsoft Office.
There is much to be said for using separate applications for these three functions, just as Front and Back Office are separated. True, many ERP-Vendors offer a CRM component, but in most cases this only demonstrates that no-one can do everything. SAP may appear to combine these functions, but looking carefully one sees two products with a single marketing blanket.
The market seems to be moving away from fully integrated solutions. Companies today are looking for tools to improve sales efficiency without involving support and help desk groups – the more complex the support operation, the more is this apparent.
Tags: crm, ERP, Microsoft, SAP
At a recent BI-congress I listened to a presentation of a solution for the measurement of customer value. In this case, the visually attractive graphical representation showed the “value” of each customer in four quadrants and the suggestion was, that customers shown to be unprofitable should be phased out. That sounded reasonable, but on more careful examination a number of questions were raised.
A more careful look at the basic data showed many weaknesses which could lead to damaging decisions. The calculation was made on the basis of invoiced goods and services minus costs. OK, but how are costs measured and applied? It appeared that in this case many of the costs were estimated, cost of sales for example, or support costs on the basis of a calculated cost per hour.
This raises two questions:
- How should calculated sales, marketing and support costs be applied to individual customers?
- Can customer value be defined purely on the basis of profitability?
The first point is a question for controlling and relates to processes and practices in the company. The second point is more interesting from the CRM point of view.
What is customer value? Is lifetime value the criterium or the value over a specific period? Which factors should make up value?
From the CRM point of view, the pure financial situation over a given period is only one aspect. The following aspects should be considered in any analysis:
- Does the customer have more potential?
- Is the customer important as a reference?
- Does the customer provide leads or other marketing value?
- Is the customer networked with other customers or potential customers?
- Is market share important for the acquisition of new leads?
These aspects may not be easy to handle with the BI Tools currently available, but are of critical importance to sales and marketing. An analysis without reference to these factors will produce misleading results and a frustrated sales force.
Tags: BI, Customer Value
In a discussion today with a major PC systems integrator, I was told that the company worked quite happily with Microsoft Excel and Word for CRM purposes and had no plans to make any changes. This was bad news for someone offering CRM consultancy, so I followed up with some questions.
The sales and marketing organizations are producing good results. Sales activities are largely not documented, but a well organized ERP application provides reliable information on goods and services purchased. A simple ticketing system provides a record of service activities. The company has a stable customer base. Sales processes are simple and are supported by the ERP-System.
In this particular situation, there really would be little gained by introducing a CRM system. There is no need for sales persons to produce offers or take orders while on the road. News letters and customer correspondence can be produced and sent with Microsoft Office products. A Sharepoint depository holds all customer records.
The situation would change however, if the owner/manager were not coordinating and guiding operation himself, thus ensuring a high quality of customer service. If further management levels were introduces this would also change the scenario as would a period of rapid growth. In this case the strategy of the company is to maintain and protects its customer base and to grow only through the sale of more services to a slowly growing number of customers.
So what am I trying to say? Basically that CRM sales persons should be aware that CRM systems are not per se essential for a successful operation. This will depend on the size and processes of the organization. Particularly in the case of an owner managed company, the owner will (normally) be the first to notice when the operation is not running efficiently.
Tags: crm, Excel, Sharepoint, Word
The last two posts have been pointing to the limitations of CRM software. It is true that software functionality has not changed much since the first CRM solutions were offered, but usability and flexibility has shown a massive improvement.
Why do the applications not develop? Basically the tools customer oriented users require are not that complex and are limited in number and type. The tools are available and have been for some time. A tool alone will not help you however, just as little as owning a hammer will drive a nail into a wall. There is nothing wrong with the hammer, but you need to know what to do with it. The same applies to CRM Products. As stated in a previous post, there are solutions available for almost any CRM requirements, but first you must know your requirements.
These are the steps you need:
- Define your business aims with regard to your growth plans and planned customer base. Then define your strategy for reaching these aims from the point of view of the customer.
- Define your business processes in relation to your business aims. Business processes in sales and support are not in any way complex, but they do need attention to detail and need to interface to back office functions. Sales processes must remain flexible. Back Office processes tend to be more strict.
- Translate your processes to software requirements that support your information flow and work processes. Do not let your IT-Department talk you into making a check-list of functions and certainly not into a technology oriented selection process. Your processes are important.
- After all this, go ahead with the software selection process. Let suppliers show you how their software can support your process. In the short list stage it may be worthwhile investing in the development of a module from all short listed companies.
Many CRM projects start with having an IT-oriented employee research information on existing solutions and the development of a list of requirements based on the functions offered by products favored by that person (or team). This is the wrong track. Start a step 1, not at step 4!
Tags: CRM Applications
Contrary to popular practice, CRM consulting is about putting the customer at the center of your business, not about internal efficiency. In most of the cases I have been recently involved in, customers have been primarily concerned with the improvement of existing internal processes. This makes life easy for the consultant or software sales person, but will probably neither lead to reduced costs nor to increased sales.
Finding and retaining customers is becoming increasingly difficult as loyalty is no longer to be expected and competition increases at all levels. To be successful, it is essential to look at your company from the customers point of view. Is your company behaving the way in which your customers expect? Are you supplying sales and support services which your customers expect? Or is your company more concerned with internal efficiency than with customer needs? You do not need a CRM product to increase sales efficiency – most sales people require little more than a good contact management tool, CRM becomes effective when you prospects and customers notice an improvement.
CRM is not software and in fact most available solutions can support your operation. CRM is about knowing your customer’s requirements and putting a strategy in place to find, develop an keep them. Are you looking at your CRM Software with regard to this aim?
Generally, software suppliers will suggest a workshop to define your requirements. That is generally correct, but whether before or after the sale, these workshops will always be conducted with regard to the limitations of the software offered. Sales people know that your budget is limited and will avoid suggesting improvements which, due to software limitations, will be too costly
You must define your aims and requirements without reference to a product. If you are unable to do this with internal resources, find a consultant who is not tied to a product. However, you are still the only person who can define your business aims.
There is no need to fear that you will then not find a suitable CRM product to meet your needs. There are enough excellent solutions on the market.
Tags: CRM Software
Looking back to the beginnings of software for sales and marketing, we have seen “Computer Aided Selling”, “Sales Force Automation”, “1to1Marketing” and now “Customer Relationship Management”. Although suppliers and experts speak about the need to communicate with customers and offer 360 degree customer views, the majority of the RFPs I see tend to center arount the improvement of sales efficiency.
This can probably be explained by the increasing cost of sales and decreasing sales margins but does ignore the advantages which could be gained by looking at sales processes from the cutomers point of view. Aiming at decreasing costs usually involves simplifying current processes and not on reviewing the processes in total. It also has the side effect that products promising simple and quick implementation tend to be preferred.
Increasing efficiency and reducing costs are certainly valid aims when introducint a new CRM system, but the real advantages of a new system should include processes which would not be possible without the use of software. Sales, Marketing and Service functions can be integrated to improve the total service level to the customer not only be reducing administrative loads, but also by offering new services.
In most cases, in Germany at least, customers are categorized as A, B or C customers based on the volume of business. At first, this appears logical but at a closer look more factors should be regarded:
- business volume in relation to the customers total budget
- the customers growth plan
- marketing prestige
Just looking at achieved business volume is a very one sided view of a customer. More important is the size of the customers budget, assuming that there is no reason why you should not expand your share. Some customers will clearly grow rapidly and these need to be handled with particular care since this is a chance to establish contacts and loyalties which will keep competitors out when the company grows and more people are involved in purchase and development decisions. Some companies have a lighthouse function in their industry which makes them a generator for new business if they can be referenced.
Basically, there is nothing wrong with an ABC analysis, but the process for the classification needs to be well and clearly defined and classifications should be reviewed at least annually.
The main argument against the ABC classification, is that C customers tend to be ignored. This would lead to problems, since the rule that 20% of customers create 80% of revenue will always apply. Cutting away the C customers will only reduce revenue – it will not change the 20:80 relation!
Tags: B2B, Customer Value
The importance of information gathered during a customer call cannot be exaggerated. This means that calls to customers should be carefully planned and the results recorded in way which allows later analysis of the information gained.
Good sales persons will know how often they should visit their customers and have a good knowledge of customers attitudes and requirements. However even the best sales person will sometimes forget a call and information not stored online is not available for analysis. A well designed CRM system will provide means for suggesting calls to be made on the basis of the date of the last visit and the potential of the customer. Going into more detail, a CRM-System can support sales people by offering a customer-specific check-list of important points and will make the job of entering call data simple.
This is basically a very simple process and is often, exactly for this reason, overlooked during application design. Some of the most succesful companies guide the frequency and content of customer visits very closely – CRM in practice!
Tags: call scheduling, crm
The World Cup is here again, cars and houses are once more flagged and the streets are empty during games. The key word here is loyalty. Why are people loyal to the team they support? At a time when companies are looking for ways to promote loyalty, people are turning to sports and social media. There is a lesson to be learned from this. People can only be loyal where emotions are involved, and emotions are built around people. There is a strong need to identify with a group of people with similar attitudes and opinions.
Companies which attempt to reach customers by offering the lowest prices or the newest technology may have success so long as they are the cheapest or the best, but they will not keep their customers when conditions changed. This may be one recipe for success, but companies able to generate an identity to which people can relate will do better. Evidently, creating and maintaining the identity is a case for the entire staff of a company, but a good CRM concept should provide the organizational basis by supplying the right information at the right time.
Loyalty is more important than the promotion of special offers and technical gimmicks.
Tags: crm, Loyalität, World Cup
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