Seems impossible doesn't it? Yet it's easy to double
your profits by making your CRM more effective and efficient.
Pity, then, that many companies are driving away customers
and increasing costs because they have chosen the wrong CRM systems
or are using CRM badly. At the moment very few companies have implemented
CRM strategies successfully, or can show a measured return on investment.
So what's the problem, and what's the solution that
delivers a staggering doubling of profits?
Brilliant CRM is 5% conceptual and 95% day-to-day execution.
The problem is that the discipline is overrun with armchair theorists
thinking about the 5%. The solution will be a renaissance of new thinking
about the brilliant basics of execution.
Helping companies enter the CRM renaissance can help
them double their profits. I recently helped a telephone company who
had tons of good ideas, yet somehow the ideas alone didn't bring success.
There was a big, fat strategy document; there was a profusion of artful
campaigns developed by an army of creative individuals; and a proliferation
of data marts and CRM software packages chosen from a variety of IT
firms.
Yet when I traced a few campaigns and processes from
concept to execution Ð often spanning months Ð what I found
was plenty of activity keeping staff occupied, but little that created
value for customers or for that matter for the telco. Worse still,
many activities in one department cancelled the efforts of another
department, because there was little alignment between their departmental
goals.
Take the loyalty campaign. First the mailshot went
to millions of people who didn't qualify for benefits. Second, the
call centre staff were not briefed, and so could not answer simple
customer questions. Third, the sources of the few successful sales
were not tracked. Finally, the joining packs were not sent out until
three weeks after payment and some joiners received nothing.
We held a Board awayday at which we debated how much
of the strategic vision would be lost though poor strategic execution.
As we worked our way across the business, what emerged was the conclusion
that 50% of strategic profit forecasts would be killed by poor strategy
execution. But the good news was that the Board started thinking about
the brilliant basics of execution, and in particular the broken processes
that needed fixing.
It dawned on the Board that these failures were self-fulfilling
prophecies. At the root of the problem lay an unwillingness by the
Board to make policy decisions concerning customers. The Board had
been much more comfortable letting middle managers take all decisions
about customer policy.
This "customer empowerment" of middle managers
had resulted numerous middle managers creating their own campaigns,
or developing their own systems. Failures became commonplace, and
so the Board had developed the habit of underfunding each initiative
and referring to almost everything new as a "pilot". Inevitably,
most of the pilots went down in flames.
After the dawning came the renaissance. Out went the
big fat strategy report, in came slimline essential requirements.
Campaigns were simplified and overhauled. Departmental goals and targets
were aligned, and roles were clarified. The effect on customers was
dramatic and the profits soared.
Middle management were delighted, because the workshop
had shown their bosses the importance of doing a few critical things
brilliantly. While they had enjoyed the "empowerment years",
they had become disillusioned and frustrated with the differences
of approach with other departments. They welcomed the Board taking
a more proactive role on customer issues and particularly pleased
to have some clarity on customer policies and a strong, unified vision.
They were only too happy to put behind themsleves the culture of proliferating
mediocrity Ð they were aware that the costs had been excessive,
execution had been frustrating, and the impact on customers had been
dismal.
Doubling profits can be simple, but it requires attention
to three brilliant basics: First cut out inessential and wasteful
processes and systems. Small is beautiful in CRM. Overcome the temptation
to add more and more systems requirements, that are nice-to-have,
focus on the few absolutely vital requirements. Don't empower absolutely
everyone to contribute his or her own small campaign, everyone does
not have the god given right to communicate with customers. Keep communication
tightly disciplined and highly focused on the key strategic messages.
Make sure the Board sets the top level agenda.
Second, raise the selling price by communicating value
simply and consistently to customers. Don't fall into the trap of
buying loyalty by eroding your price. Giveaways, offers and incentives
can be a sign of weakness, and can send signals of cheap-quality and
low-value to customers. Conversely, don't give away control of pricing
to the accountants, who are rarely sensitive to customer needs. Pricing
should be viewed as a key and highly manageable element in the profit
equation, worthy of attention equal to that accorded to sales volume
and costs.
Lastly, increase sales volume by communicating a relevant,
credible and distinctive promise of value to customers. Choose your
messages carefully to motivate future purchases, not merely to use
up the communications budget. If the message isn't welcomed by customers,
or isn't likely to motivate future purchases, then maybe you shouldn't
be communicating that message at all.
A few brilliant communications will increase sales
volume far more than a profusion of mediocre campaigns.
Everything in this action plan is just plain common
sense. That's pretty obvious. What's also obvious is that quite a
few people in the organisation are going to have to change their ways
of doing the job, their attitudes towards colleagues, quite a bit.
They are going to have to co-operate with other managers and other
departments, and temper their personal ambitions with those of the
company and its customers.
That's life. Change is what brings progress. The ability
to accept and work happily and efficiently with change is what separates
the winners from the losers.
Remember the old motto "If you're not part of
the solution, you've got to be part of the problem", take serious
note therefore Ð anyone who puts obstacles in the way of progress
is going to get flattened.
Let's all get to work, doubling our profits.
Source: Dr. Robert Shaw,
founder of the consulting and education firm, CRM Best Practice and
author of Measuring and Valuing Customer Relationships (Business Intelligence).
