Based on more than 20 years of experience, this all-inclusive guide shows how to successfully implement Customer Relationship Management (CRM), the largest global software application today in terms of revenue. Combining helpful tips and techniques with a unique blueprint, this study illuminates the myriad issues that are critical to using people, process, and technology to achieve a superior level of customer satisfaction and loyalty. From structuring a team and adjusting operations to addressing data integrity and security concerns, CRM users and their respective firms will learn to adapt to emerging marketplace demands, key technology innovations, and the wireless world. Tackling real-time issues from different angles, this handy reference also includes a collection of appendices offering examples of the sales process, software solutions, service providers, and a glossary of terms.
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CRM in Real Time
Empowering Customer Relationships
By Barton J. Goldenberg
Information Today, Inc.Copyright © 2008 Barton J. Goldenberg
All rights reserved.
A CRM Primer
Customer Relationship Management (CRM) is a phrase that was coined in the mid-1990s and heavily promoted at the end of that decade. Providing a concise definition of CRM is challenging due to its continuing rapid evolution, but here is a place to start:
Customer Relationship Management (CRM) is a business approach that integrates people, process, and technology to maximize relationships with customers. CRM increasingly leverages the Internet to provide seamless coordination among all customer-facing functions.
As the Internet and mobile and wireless technologies take CRM into real time, organizations can function like a 24-hour nerve center, instantly alerting individuals to changes in customer demand, competitive analysis, inventory, availability of supplies, and profitability. Add to this the new digital customer or client who uses social networking and blogs to "talk" about your company and products, and you have the environment for a new wave of CRM: the Real-Time Enterprise (RTE).
RTE is the process of interconnecting a company's entire operations via internal and Internet applications, along with mobile and wireless devices, to enable all information — and communications — to be shared in real time.
First, let's take a closer look at CRM. There are three primary reasons why organizations choose to automate their sales, marketing, and customer service functions in a CRM system:
High cost of direct sales – Today, the average cost of an onsite sales call is about $379 (according to a 2006 Hoover's study), and the costs of direct selling (from a sales organization to a customer) continue to rise. CRM can help increase sales force productivity while containing or decreasing rising sales costs.
Increased global competition – Business dealings today reach a global marketplace. To compete on a local or foreign level, effective market intelligence is often critical. CRM can help companies monitor and track market developments more effectively.
Need for information – Sales, marketing, and customer service/support are information-intensive activities. Success depends on two key components: implementing an effective marketing mix strategy (product, place, price, and promotion) and understanding/addressing the marketing mix strategy of your competitors. CRM can help collect, compile, and disseminate needed information about the market, especially for your customers.
Key CRM Benefits
The systematic use of CRM applications has been well-established to provide many benefits to organizations that want to automate their sales, marketing, and customer service functions. The most compelling benefits of a successful CRM implementation include the following examples:
Better sales/marketing information – Customer names, customer background, customer needs, and competitive positioning are some of the data types collected as a result of implementing a CRM system.
Improved productivity – Effectively targeting market identification, reducing the number of cold leads, providing accurate on-the-spot quotations, accessing inventory availability quickly, and entering orders directly from the field help to shorten the sales cycle.
Enhanced customer care – More time is available to spend with customers due to a sales department's reduced administrative workload, an ability to monitor customer service levels, and the ability to highlight existing or potential customer service problems and react more quickly to customer needs.
Improved customer retention/loyalty has become an increasingly important objective for most organizations, and an area that is directly related to the benefits of CRM previously discussed. According to Antony Young and Lucy Aitken, authors of Profitable Marketing Communications: A Guide to Marketing Return on Investments, corporations in the U.S. lose about one-half of their customers during a five-year period. It has been shown that the longer a customer is retained, the greater the profitability for the retained customer. An effective CRM system will help a company retain more customers over time.
For those who like hard numbers, ISM, Inc. and the Insight Technology Group have conducted studies of CRM implementations, confirming that the following levels of benefit can be achieved:
A minimum 10 percent per annum increase in gross sales revenue per sales representative during the first three years of the system – This gain occurs because field personnel improve their efficiency (more "batting time" to call on customers and implement strategy) and their effectiveness (improved quality of their sales calls in that field because personnel are more knowledgeable about their customers).
A minimum 5 percent decrease in general and administrative cost of sales during the first three years – This takes place because field personnel (and the company) have no need to send costly literature and information in a shotgun approach to existing and potential customers. Instead, field personnel (and the company) can be selective about sending specific promotional materials to customers.
A minimum 5 percent increase in win rates for forecasted sales during the first three years – This gain results when sales organizations select their opportunities more carefully, drop out of potentially bad opportunities earlier, and concentrate on those opportunities with a high likelihood of closure.
A minimum 1 percent margin improvement in the value of a deal over the system's lifetime – This gain is realized since sales personnel are working closely with a carefully selected group of customers who place as much emphasis on value selling as on discounts, and sales organizations tend to discount less frequently.
A minimum 5 percent improvement in the quality rating provided by customers – This gain is a result of having happier customers who are getting the information they need more quickly, who are receiving better service, and who are building on the relationship marketing approach that sales personnel are now able to offer.
Before deciding whether CRM is right for your organization, you should review all the potential benefits of CRM in detail. From my experience helping companies to automate customer-facing functions in a CRM system, I have learned that senior management needs detailed evidence of measurable benefits to justify what may grow into a large capital investment, plus the investment in time, resources, and staff.
But there is good news: A growing number of tangible and intangible benefits associated with CRM are available, and there are specific ways to measure them. For each of the following measurements of CRM benefits, we have assumed that your company has similar and valid measurement information available today in some format or will be available prior to the start of your CRM project.
I define tangible benefits as those that can be measured in hard numbers. These include increases in the following benefits:
Time spent by sales personnel with existing customers – Consider measuring the number of service calls made per day by sales personnel or the number of hours spent by sales personnel in their interactions with existing customers.
The number of new customer prospects pursued by sales representatives – While most sales representatives like to call on existing customers with whom they have an ongoing relationship, new customers are the key to future growth. Consider measuring the number of new prospects versus existing customers contacted by the sales representative per day, per week, per month, or per quarter.
Time spent by sales managers in contacting customers and working with sales representatives on customer issues – Coaching sales personnel is critical, but managers never seem to have enough time to do it. Consider measuring the number of hours per day that sales managers spend in contact with customers and prospects, and with sales representatives discussing customer issues.
Customer service efficiency – Customer service may be the key differentiator between those companies that lead and those companies that wonder what happened. Consider measuring the turnaround time for customer service issues as well as the number of customer service errors made as a result of misinformation.
Timeliness of follow-up correspondence to customers/prospects – Consider measuring the number of days between the date the customer/prospect was contacted and the date that the customer/prospect follow-up information is sent.
Higher close ratios – CRM helps move prospects efficiently through the sales pipeline. Consider measuring the lift in close ratios that result from CRM tools and techniques.
Revenue per month for each sales representative – This important CRM benefit depends on careful management to ensure that time is saved as a result of automation of the organization's sales, marketing, and customer service functions used productively to deliver more sales. Consider measuring the increase in base revenue generated per month per sales representative.
Overall business results – The sales manager of one company I worked with set up a competition between sales personnel based on their use of the CRM system. The results were overwhelming: Healthy rivalry between personnel led to a significant increase in overall business results (as well as a seven-day cruise for the winning salesperson and his or her spouse). Consider measuring the percent of dollar increase over the budget for the entire sales team each month.
Frequency that your company's name is in front of your customers and prospects – The out-of-sight, out-of-mind syndrome can be quite harmful to your sales efforts. Consider measuring the number of correspondence items sent to customers and prospects by sales and marketing personnel.
Customer satisfaction – Consider using a customer satisfaction survey rating and displaying these ratings in a location for all personnel to review.
Better communications within your company – As more staff spend time in the field with customers and prospects, the need to secure effective communications among personnel continues to grow. Consider measuring the time spent giving and getting information between the field and regional or headquarters offices.
Improved "close" rates – For the percentage of business orders closed, consider measuring the "close" rates of sales reps before and after the implementation of a CRM system.
Reduction in "close" time – For the speed of bringing new business orders to a close, consider measuring the "close" time of sales reps for new business orders before and after the implementation of a CRM system.
I define intangible benefits as those measured using "soft" criteria. Management may prefer the hard numbers, but top-level executives can also appreciate such soft criteria benefits when they are effectively presented. Intangible benefits include the following:
Overall smoother functioning within your company – It can be shocking to learn how much time sales personnel spend on unnecessary administrative matters, or the amount of time a new salesperson spends getting up to speed in a new territory. Consider measuring the time that is spent looking for needed information versus the time that is spent using information and actually doing the job.
Increased employee motivation and satisfaction – This may be difficult to measure, but consider measuring feedback from those employees who use CRM. An alternative is measuring employee-turnover rate for those personnel who use the CRM system.
Better trained and more skillful sales, marketing, and customer service personnel – CRM can provide an excellent training ground for personnel to spend time learning facts and figures about products and services. Consider measuring the ability of sales personnel to access needed facts and figures quickly, including the implementation of required sales and marketing business procedures.
Improved use of mobile access devices – This benefit is important since each of us has a different technological assimilation learning curve that impacts our future use of equipment and technology. Consider measuring the comfort level of field personnel who use mobile devices over time.
More up-to-date information and easier access to it – Up-to-date information and easy access are subjective measurements made by end users. Consider measuring the timeliness of needed information and the ease of accessing this information based on end-user standards.
Improved responsiveness to customer and prospect requests – A sales and marketing manager at a domestic pipe manufacturer used the firm's CRM automation system to "staple" himself to each customer request until it was resolved. Consider measuring the time it takes to respond completely to a customer or prospect request, which may be tied in with customer service.
Improved image of your company – Effectively managing relationships with your customers can play a leading role in building your company's image in the eyes of your customers. Consider measuring the reaction of existing and future buyers to your sales and marketing professionalism.
The ability to differentiate your company from the competition – Many studies have tried to measure the competitive advantage resulting from implementing a CRM system. Consider measuring increased customer loyalty as well as customer perception of your company versus the competition.
Support for organizational change(s) within your firm – I once worked with an airline that had significantly downsized its organization and needed increased support for the remaining sales and marketing personnel. To determine this potential benefit of CRM, consider measuring time spent training new sales and marketing personnel.
Improved understanding and better control over expenses – CRM can assist in this effort, assuming sales, marketing, and customer care expenses are tagged to individual sales personnel and/or accounts. Consider measuring expenses per sales and marketing person and/or per account.
Based on the number of tangible and intangible benefits, the rewards of implementing a CRM system are great. I recall a case where my firm conducted an audit of sales and marketing for a copy machine manufacturer that was designed to measure the impact and potential of a CRM system on sales force productivity.
The audit determined that automating CRM-related activities such as lead tracking, time scheduling, and account profiling resulted in saving an average of one hour per day per salesperson. This equated to an additional 26 days of work time per year for each sales representative. Similar measurements for customer service representatives and top management reflected savings of 30 minutes and 20 minutes per day, respectively.
Excerpted from CRM in Real Time by Barton J. Goldenberg. Copyright © 2008 Barton J. Goldenberg. Excerpted by permission of Information Today, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Part 1: An Introduction to CRM,
Chapter 1: A CRM Primer,
Chapter 2: CRM: The Right Mix of People, Process, and Technology,
Part 2: People Issues,
Chapter 3: Understanding the People Component,
Chapter 4: Executive Support: The Single-Most Important CRM Success Factor,
Chapter 5: Securing Executive Alignment for Your CRM Initiative,
Chapter 6: Executives Take Charge,
Chapter 7: Tips for Improving User Adoption,
Chapter 8: CRM Project Communications,
Chapter 9: CRM Strategy Foundation,
Chapter 10: Putting the "Customer" Back into CRM,
Chapter 11: The Necessity of Training,
Chapter 12: Ensuring Consistent Customer Service,
Part 3: Process Issues,
Chapter 13: Realizing Effective Process Change,
Chapter 14: Understanding Business Process Review,
Chapter 15: Why Business Processes Must Precede Technology,
Chapter 16: The Importance of Data Integrity,
Chapter 17: CRM and the E-volution of Ebusiness,
Part 4: Business Application and Technology Issues,
Chapter 18: CRM Business Application Trends,
Chapter 19: The Technology Component,
Chapter 20: Key CRM Technology Trends,
Chapter 21: A Wireless World,
Chapter 22: CRM Software Selection Tips,
Part 5: Critical Issues,
Chapter 23: Using People, Process, and Technology to Differentiate,
Chapter 24: Ten Steps to Effective CRM Implementation,
Chapter 25: Creating a CRM Business Case,
Chapter 26: Getting Your CRM Business Prioritization Right,
Chapter 27: Outsourcing CRM,
Chapter 28: Addressing CRM Security Risks,
Chapter 29: Eight Key Implementation Issues,
Chapter 30: CRM on a Global Basis,
Chapter 31: CRM in Government,
Part 6: The Future,
Chapter 32: The Evolving Real-Time Enterprise,
Chapter 33: Ten Steps for Creating a Real-Time Enterprise,
Chapter 34: The Future of CRM: Real Time,
Chapter 35: Web 2.0 and the Digital Client,
Appendix A: CRM Sales Process Example,
Appendix B: Level 1 Process Flow Example,
Appendix C: CRM System RFP Example,
Appendix D: Top CRM Software Solutions,
Appendix E: Sources to Assist in CRM Software Selection,
Appendix F: Application Service Providers,
Appendix G: Glossary of Terms,
About the Author,