Louise Anderson on Internal Marketing

Would you like to waste a couple of million dollars? Then launch a CRM program without first educating and incentivizing your staff.

That’s the view of CRM expert Louise Anderson. She firmly believes in internal marketing, and in rewarding employees. But too few firms are doing it correctly she says.

How does she define internal marketing? In part, as the sharing of success stories so that employees can copy what was done.

Anderson is CEO of Anderson Performance Improvement Co. and the author of “Cream of the Corp.,” a book of practical suggestions on how to get people doing things that accelerate profits. She recently shared her views with The CRM Loop.

The CRM Loop: How important is internal marketing to the success of a CRM program?

Anderson: Hugely important. The reason is that some people in life adapt quickly to a change, but they don’t all do it the same way. Internal marketing can stimulate that change.

The CRM Loop: Do many companies institute a CRM program before marketing it to employees?

Anderson: Yes, and they are making it hard on themselves and not being as productive as they could be. Most firms already have pockets of employees who are doing it right. Our client data shows that if the company would replicate that behavior, it could have a 200% to 600% improvement.

The CRM Loop: And if they don’t?

Anderson: Customers get something totally different than what they expected.

The CRM Loop:Why are so few firms doing a good job of it?

Anderson: Because most companies today are so busy focusing on the external customer that their resources are overloaded. What they forget is that if they create external value with marketing that the employees are not aware of, they have wasted millions of dollars and potentially increased the dissatisfaction of their customers. It’s not that they aren’t aware of the need to improve their internal marketing; they’re spending the money, but in the wrong place. For example, they’ll conduct more training when a program isn’t working But was the training really at fault, or did they not call their employees to action soon enough after it? That is where internal marketing comes into play.

The CRM Loop: Do you believe in employee incentives?

Anderson: Yes. Managers can reward employees on the spot for demonstrating activities that build a customer relationship. One way is with scratchoff cards, which are inexpensive and fun. And by doing this, the company learns which managers are observing the behavior that they are asking for, and why the individual earned the reward. When an employees go online to redeem their points, they can see who is also being recognized for taking the ‘call to action’ to engage with their customer.

The CRM Loop: Do incentives diminish ROI?

Anderson: No, they actually increase it. ROI increases if you gain a customer earlier, or sell more products and services to that customer because you know the behaviors that will make that happen.

The CRM Loop:: How would you compare companies that use internal marketing with those that don’t?

Anderson: Look at the results. If you have invested in your people with marketing and recognition, the cost of the program will be less because of the incremental dollars gained. Here’s an example I like to use. I have a million dollars to invest in a CRM program, and I’m also going to spend $250,000 on internal marketing and rewards. My return on that program is $15 million in the first year. Another company invests the same million for their CRM program, but launches it without an internal marketing and recognition program. Their returns are significantly less. They forgot to include the most listened-to radio station, WIIFM: What’s In It For Me.

The CRM Loop:How do you determine if your CRM program is successful generally?

Anderson: Usually, there’s a baseline metric identified. It could be cost and/or growth. On one side, you base it on sales to new and existing customers, and also customer retention. On the other side, you have the cost of customer contact. You look at it over time, but traditionally it will get worse before it gets better. It takes about six months to properly gauge the success of a change and see if it beats the baseline trend.

The CRM Loop: Why would it get worse first?

Anderson: All change is like that. If you’re asking people to improve significantly, it’s going to slow them down. But if they are supported and coached, they will soon go past their old performance, especially if you’re rewarding them along the way.