Family Values: Internal Marketing and CRM
Thinking of buying a new CRM system? Save your money until you know that your staff is behind you.
That’s the advice of one of the top thought leaders on CRM: Don Schultz, Professor Emeritus-in-Service of Integrated Marketing Communications at Northwestern University’s Medill School of Journalism. It all comes down to what he and other call internal marketing.
What’s that?
According to a white paper by Schultz, it is the science of getting your employees—even the ones that don’t have any direct contact with customers—to buy into “programs and processes needed to achieve organizational goals and objectives.”
It’s not a new idea, and it has evolved since the 1970’s when theorists believed that was all about making employees happy on the job.
It’s still about that, but it has evolved into a hybrid of different models, one that addresses both customer needs and staff behavior.
Let’s say your customers are defecting. It may have to do with poor service, or with some behavior exhibited by your staff. If you can identify the problems through research and/or analysis, you can then figure out what to do about it.
“One starts with customer behaviors since these drive the financial returns for the organization,” Schultz writes. “Then one tries to explain or understand why those behaviors occurred, often by overlaying attitudinal data gathered from the relevant parties.”
Case in point: An institution of higher learning was having trouble retaining students. The first step was an exercise in old-fashioned data analysis.
The school found that the students generating the most revenue were not always the most profitable. “There was an inverse relationship between length of enrollment and the amount of revenue the students returned to the education center in tuition and fees,” Schultz writes.
And knowing that, it was easy to determine “recoverable value,” or the impact on the changes on both revenue and profitability by segment.
With that done, the school was able to figure out why profitable students were defecting. Most were turned off by poor record keeping, the services provided by the staff, and by the failure of school officials to communicate.
And what did it do to change those behaviors? In this case, the hardest part was easy. The school changed its office hours and started doing a better job of spelling out its goals to faculty and staff. It didn’t even have to offer incentives.
But many companies get flummoxed at this stage because of poor internal communication. And that is largely due to the fact that they are broken into silos.
In his white paper, Schultz cites five basic corporate functions: Marketing, finance, human resources, information technology and operations. All these report to the CEO, but they do not interact much with each other. And when they think of it at all, each group views internal marketing differently.
For example, HR sees it mostly as an employee satisfaction issue. Marketing views it as a selling opportunity. Corporate communications looks at it as reputation management.
That gap between HR and marketing is a hard one to bridge, according to a survey of 175 executives by the Forum for People Performance Management & Measurement.
Both HR and marketing pros agreed that they do not communicate as effectively as they should. But that was the one of the few things they agreed on.
HR executives claimed that they understand customer issues. The marketing execs disagreed.
And while the marketing folks cited sales reps as the most important customer contact people, followed closely by customer service reps, HR professionals listed them in reverse order.
No wonder Schultz says that there is often “no cohesion or agreement inside the various functional units and even less between them.”
And the fault for that lies at the top. At most companies, “it is difficult, if not impossible, for senior managers to view (internal marketing) as anything more than another corporate program that demands corporate resources but provides few corporate returns,” Schultz writes.
Indeed, the process usually gets pushed to the middle-manager level with “all the inherent problems of turf, position, promotion and political situations that inhabit that region,” he continues.
How do you break down those barriers, short of blowing up the whole company? You do it by encouraging cross-functional networking, or the building of horizontal systems that allow people from the silos to work as a team.
“The approach has the value of keeping the current organizational structure in place, with the inherent cost savings…while at the same time enabling the various functional groups and managers to come together to solve mutual problems and issues.
Then there’s the question of compensation. Although incentives don’t work in every case, they are important. “Ideally, at some point it should be possible to develop some type of employee benefit-sharing program to reward the employees for their changed behaviors,” Schultz writes. “Thus the internal marketing program provides reciprocal value for all.”
Does internal marketing work? Yes, when it’s done properly.
“The problem is, while the concept of internal marketing is sound, the actual practice is an entirely different matter,” Schultz states.
But there’s some good news hidden in the data from the Forum for People Performance Management & Measurement: The survey found that higher performing firms do a better job of sharing corporate goals with customer contact employees.
How does one sum up this holistic approach? As Schultz writes, internal marketing is based on “the creation of horizontal integrating processes that bring the organization together.” It also entails “initial research among the firm’s customers or consumers to determine which or what customer-employee situations need to be improved.” Finally, “Those improvements are then quantified and a financial value place on them.”
Want to read Professor Schultz’s white paper? Click below to download.
