One thing to remember when selling your upper management on a CRM system: Make sure you know what you’re talking about.
Some companies proceed without knowing much about themselves, let alone their customers, according to Naras Eechambadi, Ph.D., who is CEO of Quaero LLC.
As a result, they opt for the Big Bang, instead of "incremental projects that take two or three months and have an impact," he said, speaking at the speaking at the National Center for Database Marketing conference in Rosemont, IL.
This is critical, given Forrester research showing that the biggest recent cutbacks in operational investments are in the area of CRM.
The key is to "look at your current level of development," Eechambadi advised. He identified four stages:
*Ad hoc--These companies are broken into silos, which never talk to each other. Customer acquisition is divorced from customer maintenance, and undue emphasis is placed on the former. For example, one credit card issuer measured success by how many mailing pieces went out.
It would be a waste of money for these players to invest in expensive systems, Eechambadi said. They first have to refine their internal processes and structure.
Recent Forrester research showed that only 25% of all companies have a high level of cooperation between divisions. Another 23% have only some.
In addition, less than half had a senior-level person responsible for the overall customer experience. The result is that the customer "sees a fragmented view of the company," Eechambadi said.
*Basic--These firms are better, but not by much. Some silos may be sophisticated, but their skills are not being leveraged throughout the firm. These companies also have to work on their processes.
*Advanced--These organizations have sophisticated CRM tools that make money.
*Streamlined--Such companies are "walking on water," Eechambadi joked. The only thing they need to do is continue improving and compete against themselves.
Unfortunately, most companies are not at the latter stage, Eechambadi continued.
For example, recent research showed that only 48% of all firms usually know about a customer problem before it hits. An even lesser number--23% know if a customer has visited the Web site.
The same survey showed that only 43% alter service based on a customer’s profitability. And less than a fourth of all phone agents can see a customer’s Web activity.
And many firms seem to know little about CRM itself. For example, one company made "CRM a bad word." And why?
"They had installed a sales force-automation system, but the sales force didn’t want to use it," Eechambadi said. "This was a multi-million-dollar project, so they said, 'No more CRM.'"
He added that many firms "confuse elements of CRM with all CRM."
Why bother at all?
Research showed that two-thirds embrace CRM to improve customer satisfaction. However, Eechambadi pointed out that this is the least measurable reason. Many firms become CRM devotees to reduce the cost of sales, and half to increase sales and revenue. A minority do it to reduce head count.
And how do you sell an investment to upper management? Eechambadi offered these pointers:
*Summarize your business needs--unit by unit.
*Reduction in costs is a convincing argument, "but you have to have a lot of confidence that you can do it," Eechambadi said.
*Increased profitability of households is another convincer, but it is important not to take this too far. "Don’t fire customers," Eechambadi said. Instead, try to move unprofitable customers to the next level of profitability.
*Executive longevity being what it is, don’t suggest projects that take more than a year.
*Use research, like a survey done by IDC. It showed that firms that make a major investment--in the $3.1 million range--see an 8.4% increase in revenue in a year, and a 16% increase in two years.
