Strengthen customer relationships fast through a "people and process driven" approach.

It’s already more than ten years ago since CRM (Customer Relationship Management) started to be a new buzz word among the global top management community with the promise to significantly boost revenues. Among other studies, research suggested that focusing on existing customers rather than continuously chasing new customers is by multiples more cost effective (Bain and Company) and that CRM activities contribute more than 50% to total return on Sales (Accenture).

 At this time, the CRM buzz has been mainly driven by IT Consulting companies. As a result, many large companies around the globe invested heavily into the newly upcoming CRM systems in order to be on top of the trend. 

Indeed, customer have probably experienced increased service levels in many respects. For instance, call center interactions in general have become much less time consuming while more effective, we enjoy advertising SMS’ on a daily basis that really match our urgent needs and we can be sure that on our birthday our emails fill up with greetings from our vendors. In addition to enhanced customer interaction, I have no doubt that companies improved their marketing, sales and customer service effectiveness due to gaining higher transparency on any kind of customer related transaction.

However, success statistics of CRM system implementation projects suggest a failure rate of 30 to 70%. For instance, many companies struggle to get people to diligently enter information about their latest customer interactions into the customer database or fail to make use of the newly provided customer insight. It often takes years, until a CRM system delivers real business benefits.

Therefore, I am wondering if a system-driven a pproach to strengthen customer relationships is the right thing to do, especially in times of the economic crisis when top managers have to be so careful choosing the right investments to achieve quick cash returns.

So, looking at the risks on costs and benefits coming with CRM systems, is there another approach to Customer Relationship Management? A non-system driven approach? I believe YES.

To explore the idea, let’s get back to what we actually want to achieve when we talk about CRM. The goal of actively managing the customer relationship is to ensure that existing customers stay with us, buy more products or services over time, and may even become advocates for our brand, products or services.

 This means that the customer should:

• get offered what he needs and knows about these offerings
• has easy access to buy products and services
• perceive warm and friendly service while interacting throughout touch points
• gets proactively offered additional value adding products or services

 Looking at the list of objectives above, it’s getting transparent that CRM is much more than deploying a computer system. Many of the points can be also addressed by looking at other dimensions such as policies, processes, organization structure, incentive schemes and people skills and culture.

 Here some selected ideas how the customer relationship can be improved without investing in a large scale CRM system:

I. Establish Feedback loops to listen better to your customers

Listen listen and again listen! This is the start of every good relationship. One pragmatic way to improve the information flow from customers to R&D, marketing, sales and after sales is to establish a customer insight team whose role is to capture, evaluate and distribute relevant insight from available sources. A potential source for customer insight could be focus groups with people in the organization that have direct contact to customers, e.g. sales and after sales, call center agents, etc.

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II. Redesign your customer experience processes

 From the customer perception, there are three potential experiences:

• Perceived value lower than expectation (frustration or disappointment)
• Perceived value lower equal expectation (neutral)
• Perceived value higher than expectation (wow!)

 Assess systematically your customer experience processes to identify potential to overachieve expectations or risk to disappoint the customer. You will be surprised how some little changes sometimes can have a high impact on customer experience. Examples could be a follow up email by the sales person after a customer meeting summarizing the key points agreed in the meeting or ensuring that the customer is proactively being informed about the status of a delay in delivering a product.

III. Utilize existing customer data sources

You don’t need to have a beautiful customer data warehouse to gain key insights to improve your customer relationships. A data dump of the transaction data from your ERP system, some Excel Vlookup’s combined with Pivot analysis can often give a good idea about drivers for customer engagement.

In addition to this, there are “very cheap and cheerful’ dashboard solutions available in the market that can easily combine data from different Excel reports that are available in marketing, sales and after-sales departments to a meaningful and easy to understand Executive Dashboard. Those interactive dashboards can be exported in PDF, Flash or Powerpoint and shared easily via email or Intranet. The Dashboards not only help to gain insight, they also help align all stakeholders in the organization to one single goal: Customer Focus.

IV. Change culture of your people towards customer focus and service excellence

The best processes and tools won’t work if they are not lived by people. Therefore, it’s crucial to have all people in your organization understand how they can contribute to focus better on customers and develop a customer oriented mindset. The required culture alignment can be achieved through effectively and continuously communicating the CRM goal, resolving employee engagement bottlenecks, strong leadership, and a set of continuous improvement processes with recognition for role model behavior and effectively implemented improvement measures. The key is to find a good balance of guidance given by the company leadership and inspiration of front-line people to innovate customer experience from the bottom.

Apart the examples above there are certainly other ideas how the customer relationship can be improved without deploying a CRM system. The good thing is that with a “people and processes first” approach any following CRM implementation is more likely to succeed as processes are already optimized and people have the right mindset to utilize the new system for the stake of the customer.