Penny Hutton looks at at the preparation that an organisation must undertake, and the questions that should be answered, before investing in a CRM system.
CRM has quite rightly been a ‘hot topic’ during the current economic slowdown. This is because driving value from existing customers is often a much more reliable and cost effective way to drive sales and profitability compared with implementing a new customer acquisition campaign.
Many organisations are persuaded by the figures often banded around in this industry that it costs six to seven times more to acquire a new customer than retain an existing one and organisations can boost profits by between five per cent and 95% by increasing retention rates by as little as 5%.
The value of CRM is supported by recent research from Forrester of over 500 organisations in North America and Europe which reveals that half of them are using CRM for customer service, marketing, sales, or some combination of these. Another quarter of these companies plan to use CRM in one to two years, meaning only a quarter of businesses won’t be running such programmes by the end of 2014.
For those considering implementing a CRM programme - where do you start?
- First of all, you can’t rush into CRM activity. If you want it to work effectively you need to think very carefully about your vision – what you envisage CRM delivering - and make sure this is aligned to the business’s requirements. When it comes to delivering a vision, organisations need to take a journey of discovery. This means they need to ask what do they want to achieve / deliver from CRM activity. At a very basic level is it retention, or sales? Generally, it’s both.
- The next key question for companies to ask themselves is what is their current capability for carrying out CRM activity to deliver on the vision? Do they already have the technology, systems and data integration capability, knowledge and expertise in-house to deliver CRM effectively? To this end it’s important to carry out a CRM capability audit and benchmarking. This needs to include a review of customer touchpoints to explore the user experience – is it joined up and seamless from their perspective? Also, are there any gaps in customer expectations? Equally important is to implement a gap analysis to evaluate the current landscape versus the vision for the CRM activity.
- You can’t put together a vision when considering a CRM programme without looking closely at your business requirements. So as a starter for ten, define the scope of your requirements and benefits to your business from the CRM activity. Make sure business benefits are clearly articulated – do they tick all the boxes? An option is to put together and validate a business benefit statement – one that creates a strong business case for the campaign.
- Always fully consider the alignment of the CRM activity with business strategy and expectations, which brings us nicely onto the CRM strategy and the importance of putting one together. A key part of this is to define an approach, delivery principles, the project scope, assumptions, dependencies; undertake financial analysis, identify stakeholders and consider project governance. Also, what are the enablers and what will be the deployment mechanisms?
- Most important of all is to put together clear KPIs to ensure your objectives are realised. For example, are the KPIs related to retention, increase in sales, or both; what does ‘success’ look like? It’s important to be realistic with the targets – don’t set them too high initially. It’s likely they’ll need tweaking early on because you’re embarking on a journey of discovery. To this end, put in a process to review the activity regularly, particularly at the beginning.
- Always remember best practice when communicating with existing customers. If you don’t already have one, create one. It will mean you will deliver a relevant and meaningful communication time and time again that encourages them to interact and hopefully make repeat purchases.
- Finally, don’t just focus on the quantitative benefits of good CRM, such as an increase in sales, but also the qualitative benefits. Creative, targeted and timely communications are not just going to help drive sales, but make customers more amenable to your brand and help drive long term profitable relationships with them.
Once you have a vision for your CRM programme that meets your business requirements what do you do next? Most won’t be able to handle all their CRM activity in-house. Therefore, engage with experts who have a thorough understanding of CRM, access to the latest technology, systems and experience of running multichannel programmes. This is something we will look at shortly in our next article on how to choose a CRM solution.
Penny Hutton is strategy & planning director at Eclipse Marketing.