Good news from Nürnberg – the CRM Expo attracted more qualified visitors than in the previous year. Not all suppliers were represented but SAP, Microsoft, Salesforce and CDC (Pivotal) were there for the enterprise sector, with cobra, pisa, julitech and addito for the mid-market/SOHO sector. The stands could have been busier, but exhibitors were content with the number and quality of contacts.

As to be expected interest in SaaS solutions, Social Media and BI was predominant

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:

1. How should calculated sales, marketing and support costs be applied to individual customers?
2. 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.

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.

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!

Even the best viral marketing ideas will not create the desired effect if they are not seeded successfully. For those with a limited budget, try the following:

• Digg, Reddit, Delicious & Co: People using these sites are numerous and are often “communicators” and active in several networks.
• Twitter: Twitter is a must, but is not enough on its own unless you manage to get mentioned by a well read participant. Not all twitterers with a large number of followers have real visibility.
• Blogs: Influential bloggers can spread your message, but will only do this if your campaign is relevant to the blog topic.
• Social Networks (LinkedIn etc.): if you have connections with social media power users, leverage them to help seed campaigns.

These are just a few of the possibilities. Ensure that any responses are captured by your CRM system and followed up!

Social networks as a platform for B2C sales and communication are well established, the drift from print to online marketing demonstrates this clearly. A recent study by Outsell shows that online marketing now accounts for over 30% of the total marketing budget. In facebook and youtube, companies selling to consumers (Coca Cola, BMW or apple for example) are well represented while suppliers of ingredients or parts are hard to find.

B2B customer relations differ from B2C in a number of ways.

• Relations are built to individuals, but these individuals act as members of an organization, not as consumers.
• Decisions to purchase involve a number of individuals, each with their own aims and motivation.
• Requirements may be influenced by personal egos and emotions, but will largely depend on business demands.

This makes the use of social platforms for B2B CRM more of a challenge but is certainly a challenge which cannot be ignored. In the business as in the consumer world, people use the internet as a primary source of information and communication. For CRM applications, new installations tend to build social functionality into the company CRM application.  However, existing public platforms do have a place for some activities at least on the basis that individuals involved in a B2B purchase may base their opinion on consumer information. The following table may help.

This week’s theme is the use of Web 2.0 features for CRM  for B2B sales and marketing. The following topics will be covered.

1. The relevance of twitter, facebook, youtube and other platforms for communication between individuals
2. The relevance of networking platforms such as linkedin and xing
3. The advantages of a forums and discussion groups
4. Guerilla Marketing

Watch this space!

In the planning stage of most CRM Projects activity management does not play a central role. After roll out it suddenly becomes a major issue. Why? There are a number of reasons. From the personal point of view, not all activities originate from the CRM system, so how can conflicts be avoided? What happens when the CRM priorities clash with personal priorities?

These are the issues:

• Groupware vs. CRM
• Tasks with no specific completion dates
• Workflow management
• Daily work planning
• Cold calls and campaigns

These will be the topics of the following posts. Watch this site!

At last most CIOs have recognized that CRM is not just names, addresses and opportunities but a set of business processes involving customer interaction. At first glance, it should be possible to integrate social networks in existing processes, but a second look shows the need for a re-think. While business processes are designed to proceed step by step to an aim, the users of social networks are used to short exchanges which may or may not lead anywhere. Reading Tweets or entries in XING or LinkedIn for example, users comment on almost anything and may or may not come back to look at replies. Certainly the users do not wish to receive any form of advertsing as a result of an entry but are looking for communication. Any ideas?