CRM strategy in a downtime

MyCustomer.com
Share this content

by Paul Greenberg,
executive vice president of Live Wire

Recently a study was conducted of roughly 1000 executives on their reasons for the economic malaise that is hitting the globe. Their most prevalent answer? The corporations have been remiss in treating their customers properly! Kind of a telling argument for CRM isn’t it?

Ever since the economy shifted from product-centric to customer-centric, it has become apparent that the way to the kind of golden success in a boom time was through CRM. With the more recent downturn, it now seems that it is also the way to perhaps silver success or, in the case of some companies, survival.

At least that was what Live Wire, Inc., of Ayer, Massachusetts thought in 2000. Because it was at the turn of the 21st century that Live Wire, a small ecommerce consulting services company, realized that maybe CRM was the way to carve out its niche in the world.

“We did lots of thinking about what a small company could do with some foresight,” says Nachi Junankar, president, CEO and founder of Live Wire. “Then we had to figure out what particular brand of foresight that Live Wire could bring to market.” CRM became its resting place.

Live Wire has been around for about four years and for the first three of them did nothing of major distinction but produce revenue. However, in year four – the first half of 2001 – they did something that few CRM-directed or, in fact, few companies anywhere have done – it posted record quarters.

“The change in strategy paid off,” explained Nachi. “There were several facets to it, but the two most important were the change in the focus of our client base and our move to CRM.”

The breakdown of the strategic elements that Live Wire assessed is important metric for small- and medium-sized companies as the economy in 2001 continues to wane a bit. While no one is expecting recession or depression, either in the U.S. or globally, it is clear that sales opportunities are currently in hiatus in many places as the Fortune 1000 and their smaller counterparts hesitate about making the leap to spending the monies they have. This makes it far more difficult for the smaller companies working off tight cash margins to expend what they have to for successful sales.

“We decided on several things,” states Junankar. “First, in March 2000, we began a shift from our original heavily dot.com client base to a more stable Fortune 1000 and government contracting client focus. Why? Because the one place there was money to spend was the government. Additionally, the governments, both federal and state, paid in a timely fashion and the contractors gave us the repeatable revenue we were looking for and many partnership opportunities.”

What about the move to CRM?
How could a company which started out as a staff augmentation company not only retain the core staff augmentation business, but build an ongoing CRM practice?

There were several elements in place for this. First, the company’s Executive Vice President (also author of this article) was the author of a prominent book on CRM and had done strategic CRM consulting. Live Wire had a long history of ERP staff augmentation, particularly as part of the PeopleSoft Consulting Services Program. This meant a history of support on large implementations, which CRM implementations for the most part are.

Additionally, their client base was moving toward CRM as a core strategic element in their corporate planning and budgeting. Research done by Live Wire indicated that the CRM market would continue to evolve into a mega-market. (Incidentally, this was recently borne out by studies from Jupiter Media Metrix that pointed out that even with the economic downturn, CRM budgets were likely to grow, sometimes as much as 75% over the year 2001).

There was a clear mission and vision also. Customers were not only the classic customers of sales history – those who paid for goods and/or services, but the 21st century neo-customer – the paying client, the employee, the supplier, the partner – one who you exchanged value with. By not only defining a CRM strategy, but by making it an internal cultural strategy, the payoffs were notable.

Life was good.

As time went on in early 2001, there were refinements – identification of economic reality meant that grasp was at those things you could touch, even if they were out of immediate reach. If the opportunity could metaphorically be seen, smelled, touched, heard by the senses, then it was qualified. If it were something else, it was discarded and made part of a pipe dream rather than a pipeline. A conservative approach to a CRM practice that protected the revenue stream while the economy was slow.

The results of this thinking? Record first and second quarters both in revenue and profitability, when layoffs were occurring throughout the corporate world. The hiring of an experienced CRM practice manager as the CRM side of Live Wire began to really expand. Strategic consulting opportunities in CRM for the company. Speaking engagements and writing on CRM everyone.

If a small or medium sized company develops an early strategy and aims very carefully at the CRM market, it has a good chance of success. Otherwise, the chances are reduced and the likelihood of failure increases.

Will Live Wire stay the course or continue to grow? That remains to be seen, but the optimism has a foundation. Good CRM strategy and its use internally and externally means good time.

Downturn, schmownturn.

www.live-wire.net

Replies

Please login or register to join the discussion.

avatar
28th Aug 2001 15:44

The economic down turn is not due to poor customer treatment. Shrinkage in key age groups is the main cause. In 1974 the U.S. birthrate fell below replacement rates for the first time; 26 years later the impact of this has hit the economy like a Mack truck.

The same is happening in Europe, only worse. Japan is being hit the hardest. Between 1990 and 2015, Japan's population is shrinking by 28 million

Dramatic changes in age ratios have also contributed to the downturn. Lower birthrates drive up the median age. Japan’s median adult age is about 50, the U.S.’s about 45, and in most of Western Europe, it is over 40. Most adults in developed nations are at an age when they don't buy cars as often, and housing spending declines.

New household formations, a key driver of economic growth is half what it was. The housing industry, a barometer of new household formations, and which accounts for half the GDP when its multiplier effects are accounted for, is less than half what it was.

The main drivers of the 1990’s economic boom were the Internet, IT in general and huge productivity gains. Without those, we would have entered the worse recession since the Great Depression around 1997. A recent Business Week article, "The Boom That was a Bust" bore this out, reporting no economic growth in the 1990s. It was an illusion created by extraordinary productivity gains.

It is simple arithmetic: when births fall below replacement rates, economic growth is compromised.

The only foundation for economic growth is in developing nations. Many companies not in international markets must depend on competitors' customer portfolios for growth. This is where customer centricity comes into play. Customer centric companies have a better chance of stealing competitors' customers.

The economic downturn will likely long continue, reversible only through economic expansion in developing nations.

Thanks (0)
avatar
28th Aug 2001 15:44

The economic down turn is not due to poor customer treatment. Shrinkage in key age groups is the main cause. In 1974 the U.S. birthrate fell below replacement rates for the first time; 26 years later the impact of this has hit the economy like a Mack truck.

The same is happening in Europe, only worse. Japan is being hit the hardest. Between 1990 and 2015, Japan's population is shrinking by 28 million

Dramatic changes in age ratios have also contributed to the downturn. Lower birthrates drive up the median age. Japan’s median adult age is about 50, the U.S.’s about 45, and in most of Western Europe, it is over 40. Most adults in developed nations are at an age when they don't buy cars as often, and housing spending declines.

New household formations, a key driver of economic growth is half what it was. The housing industry, a barometer of new household formations, and which accounts for half the GDP when its multiplier effects are accounted for, is less than half what it was.

The main drivers of the 1990’s economic boom were the Internet, IT in general and huge productivity gains. Without those, we would have entered the worse recession since the Great Depression around 1997. A recent Business Week article, "The Boom That was a Bust" bore this out, reporting no economic growth in the 1990s. It was an illusion created by extraordinary productivity gains.

It is simple arithmetic: when births fall below replacement rates, economic growth is compromised.

The only foundation for economic growth is in developing nations. Many companies not in international markets must depend on competitors' customer portfolios for growth. This is where customer centricity comes into play. Customer centric companies have a better chance of stealing competitors' customers.

The economic downturn will likely long continue, reversible only through economic expansion in developing nations.

Thanks (0)