The Challenge with CRM Initiatives

John Moore, on his recent blog post, Why aren’t you using your CRM system more? has facilitated a meaningful conversation which has triggered some very productive dialogue related to CRM, what it is, and why companies haven’t had more success.

This thread confirms what I have suspected for quite a while; While the evolution of Social Media and CRM continues to push forward in present day, many are still confused about what CRM is. There is an ever widening gap between those caught in an early 90’s mindset (as Esteban Kolsky references in an earlier comment) regarding CRM and those looking forward to leverage the latest technologies for their customer facing initiatives (ie Social Media, Mobile, Mashups, Cloud Computing, etc).

If you polled 100 executives, and asked them to define CRM, you’d likely get more than 50 different answers.

I’d define CRM as something like this:

CRM is a business strategy for increasing profitability through the alignment of people, processes, and technology towards enhancing the company’s value proposition and overall customer experience.

That said, if you can’t clearly define something, how can you possibly measure success?

The challenge with a CRM initiative is that there are so many expectations at so many levels, both internal and external. Success is certainly attainable, but requires the complex organizational alignment across management levels and functional disciplines.

An organization rolling out a successful CRM initiative will have:

1. An understanding of who their customer is, what their customer needs, and how they can present a compelling value proposition and unmatched customer experience

2. A clear understanding of the organizational and procedural changes required to deliver the compelling value proposition and customer experience

3. A clear understanding of the expectations/needs from:
a. Executives
b. Managers
c. Front Line Workers (across the disciplines of all customer facing departments – Sales, Marketing, Service, Support)

4. An ability to deliver a “system” (process plus technology) that maximizes value to ALL OF THE STAKEHOLDERS presented above.

Doing something like this requires tremendous alignment between executive vision, leadership talent, a “customer centric” culture, systems design, user empowerment, and the proper technology tools to support it.

For every company that is able to execute this, there are boatloads of those who can’t, and most don’t have any idea why.

I’d enjoy hearing your input below.

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CRM and Social CRM Articles, Blogs, and Resources (week of June 22)

CRM

Driving CRM Effectiveness in a Recession (by Oracle)

Has the CRM Industry Become Redundant? – Dick Lee, High-Yield Methods, CustomerThink.com

How the Recession Increases Customer CentricityGraham Hill, Customers & More CustomerThink.com

Co-creating Experiences Fit for CustomersGraham Hill, Customers & More CustomerThink.com

Social Media / Social CRM

From Social Media to Social DesignDavid Armano, Dachis Corp, Logix + Emotion

Social Media ROI? – Jeremy Nedelka, Think Customers: The 1to1 Blog

Outcome Based Social Networks: Yet another CRM at the Speed of Light ExcerptPaul Greenberg, The 56 Group CRM 2.0 The conversation – ZDNet Blog

Enterprise 2.0 Conference: Aggregate and OrganizePaul Greenberg, The 56 Group CRM 2.0 The conversation – ZDNet Blog

The Growth of the Social Inbox – Jessica Tsai, destinationCRM.com

Social CRM has been around Longer than you ThinkDavid Van Toor, Sage Software, destinationCRM.com

Traditional CRM vs Social CRM: Expanded

Brent Leary, widely recognized expert on Social CRM, does a great job of summarizing the difference between Traditional CRM and Social CRM in the Inc. magazine Article below. I’ve added some of my additional thoughts.

Traditional CRM vs. Social CRM

By Brent Leary

Traditional customer relationship management’s strong suit has been improved operational effectiveness, easier access to data, and improved collaboration. Social media adds the dimension of connecting with potential customers.

Connecting with potential customers is one of the biggest challenges facing small businesses today. A recent study by Network Solutions and the University of Maryland shows that marketing/innovation is the single biggest competitive disadvantage confronting small business, after access to capital. In fact, converting marketing leads into buyers and finding efficient ways to promote and advertise, are two areas small businesses say they struggle the most with. This finding is supported by a recent Microsoft small business study, which found customer acquisition and retention to be the biggest challenges facing their small business partners.

To help overcome customer acquisition challenges, many small businesses are looking into customer relationship management (CRM) tools and strategies. In the past, many viewed CRM as being too complex and expensive to implement for the expected return on investment. But over the last couple of years, software-as-a-service (SaaS) offerings from the likes of Salesforce.com, NetSuite, and a host of others have allowed companies of all sizes to implement CRM products and services at a fraction of the cost, time and effort needed in the past.

Brian here. I would add the following to Brent’s statements:

The first being that many companies are now looking towards “Traditional CRM” solutions not only because they are interested in improving their customer acquisition efforts, but because they have realized that customer retention efforts are their best bet in an environment where there are fewer new and existing customers in the marketplace. This desire to improve customer retention is currently next to impossible because they don’t really even know who their customers are, and which ones would be the most beneficial to keep. CRM can help with that.

SaaS (Software as a Service) offerings have been steadily gaining traction over the past several years, but the argument that it saves cost, time, and effort has been a hotly debated topic. For some small businesses a SaaS solution certainly makes the most sense, but a good percentage of companies still choose an on-premise solution because of 1. Security/Privacy Concerns, 2. Ease of Integration with other applications 3. Lower long term TCO (Total Cost of Ownership).

Traditionally, CRM’s strong suit has been improved operational effectiveness, easier access to information, and improved interdepartmental collaboration. While these are critically important to the success of any business, the focal point of these areas are internal to the company. And while a more efficient company should have a positive impact on customer interaction and responsiveness, does it really help us to meaningfully connect with those potential customers empowered in a Web 2.0 world?

Social media adds this missing dimension to the traditional, operational areas of CRM. And according to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site — what they refer to as “member communities.” The integration of social media into CR strategy — called Social CRM — differs in focus from traditional customer relationship management in a few key ways.

Data-driven vs. content-driven

Businesses began investing in CRM applications in the ‘90s mainly to store contact data. Before contact management software was available, businesses had to store their valuable customer information in Rolodexes, spreadsheets, and even filing cabinets. It was important to have a central location to store the data that was also easily accessible to communicate effectively with contacts. And with multiple people “touching” the customer for various reasons, it quickly became important to be able to track activities, appointments, potential deals, notes, and other information. Consequently, traditional CRM grew out of this need to store, track, and report on critical information about customers and prospects.

Social CRM is growing out of a completely different need — the need to attract the attention of those using the Internet to find answers to business challenges they are trying to overcome. And nothing captivates the attention of searchers like relevant, compelling content. Having the right content, and enough of it, will help connect you with those needing your product or service. Creating content in formats that make it easy for your target audience to consume it increases the probability that you will move them to action — starting a conversation with you. Whether it be by developing a blog post, podcast, YouTube video, or Webinar, creating attractive content is a key pillar of social CRM strategy.

In addition to supporting and enabling marketing, lead generation, and customer acquisition efforts, Social Media and therefore Social CRM are also being leveraged by companies for customer service, brand monitoring, and customer retention efforts. The content production that Brent mentions is a great way of attracting eyeballs and filling the lead funnel, but companies are also integrating “listening” into their Social CRM strategy. Companies like Comcast have used Twitter to monitor negative comments about their brand and take a proactive approach at solving problems for disgruntled customers. Social Media and its integration with traditional CRM efforts have opened up new ways to turn an unhappy customer into a raving fan. Other companies like HelpStream and Lithium are pioneering new ground, using Social Technologies to build communities where customers and prospects interact with each other to solve problems and discuss ways to best leverage companies products and services.

Process-centric vs. conversation-centric

Traditional customer relationship management is heavily focused on implementing and automating processes. Companies looking to implement processes like lead and activity management would turn to CRM. Management would turn to CRM to standardize on sales processes to increase the accuracy of sales forecasts. And customer service requests could be tracked, routed, escalated, and resolved in a uniform fashion to ensure proper handling. Traditional CRM helped make it possible to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences.

While there are processes involved in building a successful social CRM strategy, conversations are at the heart of it. Having meaningful conversations with those searching for the help you can provide is the turning point in transforming clicks into customers. The processes involved are aimed at making it easy for people to find us (through our content) and invite us into a conversation — on their terms. This may take the form of a comment left on a blog post, following your company on Twitter, or possibly embedding your PowerPoint presentation on their webpage. There are numerous ways to participate in meaningful conversations with people looking for help in solving challenges. Formalizing a strategy to increase the likelihood of engaging in these conversations is a tenant of social CRM.

Operationally-focused vs. people/community-focused

As mentioned above, managing customer information is a major concern to businesses of all sizes. It plays a key role in the ability of businesses to respond to customer requests, manage resources needed to close deals efficiently, and provide management with reports to keep track of sales performance. This helps executives achieve operational effectiveness, and is particularly important for businesses expanding their sales and marketing operations, needing to implement new processes to manage growth. Businesses have typically turned to CRM to improve communication between sales and marketing operations, as well as to improve data-access to positively impact decision making.

Whereas traditional CRM activity focused heavily on operational effectiveness and its impact — both internally and on the customer — social CRM is all about people and community. It’s about how your company intends to participate in the ongoing conversations taking place in the industry. How you embrace non-traditional influential people like popular industry bloggers, and social sites on the Web frequented by your audience. And fully understanding the importance of contributing to discussions, in a transparent manner, will help you build the kind of reputation needed to become a valued member of the online communities important to your business.

So if you’re turning to CRM to help bring on new customers, you’ll have to go beyond traditional CRM focuses by integrating social media infused tactics and strategies. But it’s important to remember social CRM is not a substitute, but a much needed complement to traditional areas of customer relationship management. It gets us close to what we’ve needed all along.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary

via Traditional CRM vs. Social CRM

Have additional thoughts or ideas related to the differences? Please share them below!

Social CRM – CRM 2.0 – CRM using Social – The Integration of Social Media with Customer Relationship Management Systems?

Honestly guys, can we please get back to important issues beyond semantics?

In case you missed it, a heated debate sprung up this week in the Twitter and Blogospheres, respectively. Read the following to get caught up to speed.

Esteban Kolsky’s Post
Prem Kumar Aparanji’s Post
Rob Schneider’s Post

In my humble opinion, those of us who regularly interact on the #scrm channel seem to have a pretty good understanding about the framework of what we are talking about. The healthy and spirited debate is great, and hopefully not only enriches our individual and collective understanding, but also that of the customers we serve.

What it is, and how we use it today and in the future, at the most basic level is still up for debate. Regardless of anybody’s claims, the reality is that we are very early on in integrating the world of social media with traditional CRM solutions. Those that have pioneered the space are just beginning to be able to quantify returns and metrics, and are discovering “unintended consequences”, both good and bad.

There is plenty of hype. I agree. But I believe there is also tremendous opportunity to harness the Groundswell (thanks Forrester, Charlene Li, and Josh Bernoff) that is taking place in the world around us for the tremendous benefit of CUSTOMERS through new and innovative Sales, Marketing, and Support interactions.

The question we are all attempting to answer is “How do companies leverage the emergence of Social Media to increase customer experience, customer acquisition, and customer retention?”

From my perspective, call it what you want – Social CRM, CRM 2.0, CRM using Social, or any other term. Truthfully, it doesn’t really matter. CRM is about a lot more than CUSTOMER RELATIONSHIP MANAGEMENT, but it provides a common term for discussion and innovation. SOCIAL CRM should be the same.

Let’s get back to meaningful conversation, and regardless of your view(s), I’ll be hanging out on the #scrm channel for more interesting interaction.

Orange County Customer Experience Awards: Part 1

Over the course of the past couple weeks, I have been impressed by some local firms providing an exceptional customer experience. I’d like to highlight some of them over the next few weeks, and have thus begun the Orange County Customer Experience Awards. By the way, if you’ve recently had a great experience with a company, let me know. I’d love to hear about your experiences, and possibly highlight them here. PLEASE NO SELF PROMOTION.

While my experiences are with small, local firms, I believe enterprises should take note and evaluate how they might provide the same type of exceptional customer experience even if they are a $10 million, $100 million, or billion dollar company.

My wife and I recently had our second child, and after much research and online shopping for “dual strollers”, we decided to check out a local shop to actually see these modern engineering marvels that have ever bloated sticker prices, functions and features to see what all the hype was about.

We had been informally introduced to a local boutique firm called OC Travel Tykes that takes an expert consultative approach to strollers. I know, I know, it’s strollers for pete’s sake. But the captivating part was, once we arrived to meet Kelly (the owner and proprietor), she took the time to do a relatively exhaustive needs analysis on our lifestyle, asking a number of questions like “how often do we travel?”, “How often do we exercise?”, “How old is your oldest, and how often do they like to ride in a stroller?”, etc.

Once this initial conversation was completed, Kelly introduced us to each of the strollers that were candidates for our needs, and explained why certain strollers probably weren’t the best fit for our needs, ultimately allowing us to drive the conversation, while taking time to give background on each company, philosophy, parts and materials, frequency of returns, and pros and cons of each stroller.

The experience (regardless of the product) was one of the best I’ve been part of for quite some time. I kept thinking, “This is such a phenomenal experience. All things the same, I want to buy our stroller here.” A bit of perspective; This type of reaction happens in me about once every 4 years. Since I live and breathe CRM, I find myself being generally overly critical in evaluating vendors across the board.

Time passed, life is busy. Kelly politely placed a couple of follow up calls about a week apart.

Ultimately my wife and I stepped back into the “Stroller mindset”, discussed our options, cringed a bit at the price, and had made our choice. We planned on heading back to OC Travel Tykesthe following weekend to to pickup the stroller, but discovered that another major vendor was having a 20% off sale.

While I was impressed with the customer experience, I wasn’t about to pay a 20% tip for the experience. After all, customers are fickle, and though I hate to admit it, I fall into that category. I called Kelly and explained to her the situation. I wanted to buy from her. I would gladly pay a small premium, but I couldn’t justify paying 20% more. After some consideration, Kelly offered to meet the price, and candidly shared that it didn’t leave much margin for her since she operated on a relatively small volume, but that she was happy to do it.

THINGS THAT OC TRAVEL TYKES DID RIGHT THAT VERY FEW COMPANIES ARE ABLE TO DELIVER

1. Offered a unique value proposition
Strollers are typically offered through big box department stores with low wage employees with very little expertise is strollers. In addition, no one else that I am aware of offers the “life needs analysis” that we received.

2. Low Barrier to Entry
OC Travel Tykes offers “Try before you buy” options. I haven’t seen that anywhere else

3. Personalized Service and Flexibility
Kelly schedules one on one appointments the best that she can. This avoids the typical retail experience of talk for 2 minutes, and then off to help another customer. She also allowed price flexibility for a business case/proposition that made sense.

BENEFITS OF OC TRAVEL TYKES APPROACH

1. She earned our business
Now granted, she didn’t make a mint off of our purchase, but she did get compensated for her time and efforts. She moved one more unit for her vendor. Multiply that by dozens of customers and you begin to see meaningful profits.

2. She created a “Fan”
I am now blogging about my experience. Anyone who has been in sales and marketing will tell you that the best lead is a personal referral.

3. Free Marketing
Not only will I tell my friends and family, but also thought that this experience was noteworthy enough to write about it. I have no idea how many new strollers or associated products she might sell because of this word of mouth, but it is probably more than the one that I bought. Multiply this be a few others who comment personally or through social media, and one positive experience multiplies into dozens of sales

4. The potential for repeat business
The next time I need a stroller (God forbid we have triplets), guess where I am going to go first? OC Travel Tykes. They’ve earned by business. Depending on the longevity of the company, my kids could potentially buy strollers from there when they have kids. This is how great organizations are built.

Do you know of any other companies in Orange County (or elsewhere) providing exceptional customer experiences? Let me know. Share a comment.

How is your organization doing at personalizing experiences, providing compelling value propositions, and enabling raving fans to share their experiences through personal interactions and social media?

Sound off everyone!

Thanks again to Kelly and OC Travel Tykes for a great experience!

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Leverage the Value Equation and CRM to thrive in any economy

Graham Hill presents some great points, and sage wisdom in his post “Six Proven Rules to Beat the Recession”.

I would contend that his advice is at the core of success in business, and just becomes more clearly defined when businesses are forced to be aggressively and desperately focused  in a more challenging economic landscape.

To sum it up, “It’s all about value”. Focus on the value equation and then build/organize around it.

Point #3 below is where CRM takes center stage, though can be leveraged to execute on each of the strategic points outlined below.

Here’s to your profitability! Sound off and Happy Innovating…

May 30, 2009
Six Proven Rules to Beat the Recession
By Graham Hill, Customers & More

Type in the word “recession” into Google and at the last count, it returned over 62 million hits. Everyone is talking about the recession and many companies have already started to do something about it too. Often this means cutting swathes of staff without much thought to their long-term success: British Telecom announced it is cutting 10,000 jobs, Citibank that it is cutting 52,000 jobs and the City of London is forecast to lose over 370,000 jobs during the recession!

No Company Ever Shrunk to Greatness

Whilst job cuts are to be expected, they are by no means inevitable. Research by McKinsey showed that companies that beat the last recession in 2001/2 actually increased spending in key areas. The research tracked almost 1,000 US companies over 18 years, including during those all important recession years. The companies that emerged in the top quartile after the recession actually increased spending on sales, innovation and marketing. Although this reduced their cash reserves, the companies traded short-term profitability for long-term gain. And it worked; their book-to-market ratio was more than 25% greater than their less successful peers.

Understanding the Value Equation

The companies that beat the last recession understood the “value equation”. When times are hard, cash is in short supply and customers are in even shorter supply, you need to carry out a ‘strategic due diligence’ to understand how your company creates value. That means understanding what drives sales and margin growth, how core shareholders view the company’s prospects and how the company can return value back to them. That is the company-side of the value equation. But by itself it isn’t enough. You also need to understand the customer-side of the value equation too That means understanding who your company’s core customers are, what they buy, which channels they use, how much they are willing to pay, and what jobs and outcomes they are looking to achieve at different points in the customer experience.

Only by understanding both sides of the value equation can you beat the recession. And the value equation changes a lot during a recession; just think how people are now buying own labels rather than branded products at your local supermarket. It is critical that you spend enough time during the due diligence studying how your company delivers value to customers and how that creates value for shareholders. The recession is probably going to be with us until 2010, so it makes sense to do a proper due diligence before setting out to beat the recession. And it is no use just relying upon analyses from just before the start of the recession either. The world has changed in the last few months and it might never be the same again.

Six Proven Rules for Recessionaries

Although different companies should respond to the recession in different ways, there are a few general rules that they should follow. I call these the “Rules for Recessionaries”.

Rule 1: Protect Your Best Customers, Products & Channels

As George Orwell, might have said, “All customers are created equal, but some customer are created more equal than others”. You need to understand who your best customers are and to protect the revenues they provide. As pressure mounts to make cuts, it is essential that the cuts fall on the customers who don’t provide much revenue or who lose you money. You also need to protect the products the best customers buy, and the channels they buy them through from cuts too. Paradoxically, this may be the time to consider making strategic investments in your best customers. You can achieve much more ‘bang for your buck’ when your competitors are reducing their spending.

Rule 2: Refocus the Customer Experience Around the Value Equation

Knowing who your best customers are, what and how they buy, and what jobs and outcomes they are looking for, allows you to refocus the business and provide a superior customer experience that also delivers superior results for your company. This may require refocusing resources away from your worst customers towards your best ones. The deep understanding you developed during the due diligence will identify the core touchpoints in the customer experience and the activities which support them. And the focus on customer jobs and outcomes will ensure that you don’t forget about the product in use. This is usually the part of the customer experience where most value is delivered to customers.

Rule 3: Sweat Your Customer Management Assets

Now that you know who your best customers are and have refocused around value creation, you should look to gain the maximum from the customer management assets you have. This means squeezing a bit more value from each of the core touchpoints in the customer experience. Doing this requires that all the supporting people, process, technologies and other assets that deliver the customer experience are better aligned. And that they are used a bit more intensively to create value, whether this involves better sales calls, more targeted marketing, or products that are better at helping customers get the jobs and outcomes they want. As has been said elsewhere, a recession means doing BETTER, not just doing less!

Rule 4: Cut Non-value-adding Costs while Protecting Value

In parallel with using your customer management assets to the full, you should also look to remove all non-value-adding costs using the lean thinking approach pioneered by Toyota. By following a customer order through the entire delivery process, most companies are able to identify 20-40% of the activities that don’t add any value, i.e. that neither the customer, nor the business is willing to pay for. These are all candidates for cuts. This not only saves significant costs, it also speeds-up the business, reduces errors and increases the satisfaction of your best customers.

And don’t listen to the ignorant naysayers who clain that lean thinking only works in manufacturing. Just look at companies as varied as Vodafone, Ducati and Tesco, and of course, Toyota, who have all applied lean thinking with great success to improve their service operations.

Rule 5: Support & Incentivise Staff to Deliver Value

Tough times call for strong leadership. And not only from senior management. You should carefully assess your staff and select the ones who can help lead you through the recession. And then agree tough performance targets for delivery. That may mean upsetting the old order and hierarchy as young managers are promoted above longer-serving ones. It may also mean trouble with unions more interested in maintaining the job status quo than in your company beating the recession. You should be prepared to support, coach and mentor managers responsible for running key parts of the customer experience. It will be worth it. Not only will they feel empowered to deliver against their targets during the recession, they will also be much better managers once the recession is over.

Rule 6: Focus on the Long-term while Supporting the Short-term

Many companies make the mistake of just focussing on the short-term, particularly at the start of a recession. And you will certainly face pressure to be seen to be ‘doing something’ about the recession. The whole point of the due diligence and the previous steps is to enable you to understand what creates value for customers and shareholders over the long-term, and then to develop a plan to beat the recession. This will no doubt require some tough trade-offs. And sometimes you will be forced to make the wrong ones to placate senior management. That doesn’t mean that you should ignore the short-term, particularly revenue generation. But it will allow you to strike the right balance so that you can plan to beat the recession.

Are You Planning to Beat the Recession?

Try and answer the five questions below. If you can answer “Yes” to most of the questions, you are on the right track. But you still have a little work to do? But if you can only answer “No” to most of the questions, you had better look again at your approach to beating the recession. Your best competitors already have!

Question 1: Do you understand the total value equation?
Do you know how value is created for your company? Do you understand how value is created for customers? Can you keep abreast of changes in both as things change?

Question 2: Can you protect the value created by your best customers?
Do you know who your best customers are? Do you know what they buy, at what price, through what channels? Do you know what your competitors are doing to attract them?

Question 3: Are you using all your resources to create value?
Are you sweating your customer management resources? Are you cutting out non-value-adding costs? Are the resources aligned and integrated to let value flow seamlessly to customers?

Question 4: Are you supporting your staff and partners?
Are the right people in charge of customer management? Do they get senior management support when they need it? Are they incentivised to deliver value? Are you supporting & incentivising your partners?

Question 5: Are you focussed on the long-term?
Are you preparing plans to beat the recession over the next 1-2 years? Are you pro-actively managing customers for short-term value creation? Are you measuring the health of your business on a regular basis?

If you follow the six simple Rules for Recessionaries, you will be in a good position to put together a coherent plan to beat the recession. But if you are just intending to rely on aggressive cost cuts, or untargeted investments in the status quo to save you, then “Good Luck”. You will need it.

via Six Proven Rules to Beat the Recession | CustomerThink – CRM, CEM & Social Media – Think, Feel & Connect.