Chapter 14 - The Future of CRM

Future CRM Strategy

1.       CRM Strategy

a)      “Implementing customer relationship marketing strategy ranks as one of the top 5 corporate objectives in 60% of enterprises worldwide.”

Scott Nelson – CRM Is Dead, Long Live CRM

b)      The promise of CRM is to provide companies an information-rich environment for developing winning customer strategies.

2.       What is the Problem with CRM?

a)      If CRM is so promising, why are the majority of U.S. companies still foundering with CRM?

i)             Companies report mixed results!

ii)           Confounding when everyone agrees that CRM is necessary strategically.

3.       The Solution: Ease of Use?

a)      We believe the promise of CRM systems will only be realized if systems become more user friendly.

i)             CRM value will be recognized only when the value of inputting data into systems becomes personally rewarding for employees.

4.       The Fatcs

a)      In a recently completed DePaul University survey on best sales practices:

i)             Only 50 percent of companies with sales volume over $1 billion reported using CRM

ii)           Of the companies using CRM, only 55 percent reported their programs as being helpful in building customer relationships

iii)         Conversely, for companies with sales volumes less than $100 million that have embraced easier to use on-demand CRM solutions,

(1)    81 percent reported the CRM software was beneficial

(2)    75 percent reported CRM helpful in building customer relationships

5.       The Point

a)      The point is clear

i)             The simpler the system is to use, the more powerful it becomes

ii)           Future CRM applications will have to be far simpler to use than previous generation’s systems

(1)   There is a long way to go to change sales department and management attitudes toward use of the software

a)      “Despite the abundance of data, most companies do a poor job of predicting customer behavior.”

i)        Businesses are only successful in predicting customer purchase behavior 60 percent of the time

ii)      That hardly justifies the cost of having a CRM system

iii)    Inaccuracies in prediction and the use of older, cumbersome CRM systems have created the impression that CRM is in some difficulty

V. Kumar, Rajkumar Venkatesan, and Werner Reinartz

b)      We believe that the problems are not in the CRM system but rather how we apply what we learn from the system.

i)        The future of CRM is dependent upon:

(1)   Our ability to simplify systems

(2)   Providing users the time necessary to learn

(3)   Becoming proficient using CRM

(4)   Helping users understand the payoff

c)      The future of CRM technology promises significant improvement in CRM functionality

i)        Expediting managerial and diagnostic system application processes

ii)      CRM systems in the future will provide more insight into customer behavior and relationship development

6.       The Future of Sales Strategy

a)      Sales strategy is beginning to change as CRM data enables

i)             New account management structures

ii)           Different territory coverage plans

iii)         More customer responsive cultures

b)      Superior account management structures result from improved customer data detailing improvement in customer performance

7.       New Sales Implications

a)      The need to consider alternative territory management models is also under significant scrutiny as sales management struggles with a more competitive sales recruiting environment and the evolution of its sales force.

i)             80 million baby boomers are approaching retirement

ii)           Only 40 million Generation X'ers are in position to take their place

8.       New Sales Applications of CRM

a)      Many senior salespeople are baby boomers and are currently entrusted with key account responsibility.

i)             What if they exit the business without passing on their customer knowledge?

ii)           How will that insight be retained if not through CRM?

iii)         This group has been among the most resistant to accept the technology-based CRM.

b)      Alternative territory management formats are being explored as a result of relatively high salesperson turnover

i)             In a recent study by DePaul University’s Sales Leadership Program, turnover is as high as 14 percent annually among manufacturers

ii)           Plans for covering these vacant territories include

(1)   Improved inside telephone sales support from customer service

(2)   New inside sales organizations that will take advantage of easier to use and more functional CRM systems

iii)         The payback for these initiatives is clear when you consider that the cost of a vacant sales territory has significant negative impact on bottom line

9.       CRM and Sales Organizations

a)      Companies with CRM systems are keenly aware of the new account management needs within sales organizations

b)      New tools have recently been released to help resource-constrained organizations leverage sales management

c)      A new generation of software has been developed to help management

i)             Better direct their sales teams

ii)           Improve customer ROI

iii)         Improve the sales talents of their organization

10.  Force Logix

a)      New software has been developed to better link management to the sales process.

i)             Sales Force Optimizer provides management with a sales force management tool that assists with sales coaching and sales process management

ii)           This tool eliminates the bulk of sales managers’ administrative responsibilities and utilizes performance metrics from CRM systems in addition to data input from a variety of other corporate databases

  

11.  CRM and Promotion

a)      Improvements in CRM systems will improve campaign management of electronic and direct marketing programs.

i)             Higher system utilization rates means more current data will improve quality of customer communication

ii)           The expeditious return of participation data will mean improved program performance results

iii)         Improving technology will mean shorter promotion intervals and better response

12.  New Tools

a)      It is not difficult to consider the impact that Radio Frequency Identification (RFID) tagging and improved household coding will have

i)             Expedient analysis will provide additional programs that can  motivate responsive customers

ii)           A new era of customer management will be possible. In the area of B2C marketing, the motivation of customer segments will be possible as promotion results allow for shorter promotion cycles and perhaps continuous stimulation of important segments

13.  CRM and Forecasting

a)      Future CRM systems will provide users

i)             Improved data management functionality

ii)           Better forecasting models

iii)         Improved customer data and sales performance metrics

b)      New editions to existing software products are already adding improved features to enhance system capability

c)      Improved methodology will eliminate past forecasting problems

14.  CRM and ERP

a)      Technical improvements in CRM will be matched by improvements in ERP systems.

b)      In the future, CRM will be seamlessly integrated with customer demand with production, delivery, and billing.

c)      The direction of manufacturing, logistics, and accounting operations will be far more efficient.

15.  CRM Strategy and Organizational Change

a)      For CRM to be more effective in the future, we need to rethink how we sell

i)             Organizational structure change

(1)   Alternative territory coverage plans

(2)   Increased use of sales force automation

ii)           The organization, functions, and titles will need to be evaluated regarding how they add value to customers

(1)   Key customer contacts will require more visibility internally and more responsibility in developing accounts

16.  CRM Strategy and Organizational Change

a)      Examples of two groups that warrant reevaluation

i)             Customer service and technical support do not enjoy the organizational status commensurate with their customer value

(1)   These organizations can evolve to provide inside sales support capability

(2)   These groups are technically proficient working with customers over the phone and are expert in CRM and data entry

(3)   They are gold mines of talent for their organizations

(4)   As a centralized resource, these organizations can serve as a feeder system to external sales

17.  CRM Strategy and Future Cultural Change

a)      Corporate culture must grow to embrace CRM

i)             Leadership must use CRM to drive participation

b)      CRM will be used to make optimal strategic decisions

c)      Customer-centric thinking requires an increase in status for customer facing groups

i)             Sales

ii)           Customer service

iii)         Marketing departments

d)     Management must prepare the organization to accept change.

i)             This will become easier as CRM systems improve  and people recognize the personal value of using  technology

e)      Organizations that accept change and use CRM will  develop competitive advantage.

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