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How many customer relationships has your company reviewed before going the CRM route?

Preparing to implement CRM, a system to help manage customer relationships, mostly consists of people inside the business talking to each other.

Yet customer relationship management happens daily through the myriad conversations between your staff and your customers.

Taking a customer view before implementing an internal support system is essential to provide an accurate business solution.

You know that software marketing claims cannot possibly be real, yet many executives continue to travel in hope and buy £multi-million programmes.

At best these manage complex customer statistics to help understand trends, buying habits and a range of customer-related issues.

> systems

But ‘systems-only’ CRM is not a panacea. CRM systems, no matter how smart, cannot manage your customer relationships for you – that is your job!

CRM sounds as if it covers ‘relationships’, ‘management’ and ‘customers’ yet so often none of these are fully considered in system design.

Businesses have one of three types of customer relationship, each relying on a different level of customer intimacy.

Systems can support at any level but the deepest, close customer intimacy needs a strong culture of customer orientation if the aspiration of customer-supplier partnership is to be met.

Level 1 relationships
The customer-supplier relationship is a ‘buyer-supplier’ transaction. This is epitomised by sales via tender, heavy price competition and margin erosion.

This is where the majority of relationships stay, typically held here through the supplier’s sales staff.

Level 2 relationships
The supplier becomes a long-term partner, working with the customer to develop an integrated supply chain that meets quality, price and time requirements.

This relationship is usually held at multiple levels in both organisations and managed by an account manager. Communication in this type of relationship is more complex, involving different people in the sales and delivery processes.

Level 3 relationships
Businesses operating at level three understand their customer’s customer and develop products and services in anticipation of their customer’s future needs.

Reaching this level is likely to demand joint strategy development with joint systems.

> systems and data

Imagine the scenario once senior management has decided to go the CRM route.

IT picks up the project and begins by running workshops with potential system users, where users create wish lists of functions, tools and data. IT then evaluates packages against the list and chooses the best fit with system requirements and budget.

The big problem with this approach is its systems and data focus, which always require compromise since no system will be all things to all businesses.

This compromise problem is exacerbated by monolithic CRM implementations.

Nucleus Research, the global research and advisory firm recommend rapidly deployable CRM solutions with a small footprint, extending them over time as business objectives dictate.

The scenario of IT-led development misses the customer entirely, being user-focused and seeking to manage information about customers rather than relationships with them.

This type of internally focused development is not built from an understanding of how customers relate to the business.

Effective customer relationship management relies on strong customer orientation right across the business. Taking time to visit the customer at all levels, extensive training and putting in place account management are first steps.

Travelling the customer relationship management route is first and foremost a strategic decision. This is not an easy path and requires massive systems investment, rocess changes and above all customer-orientated behaviours.

The return on investment calculations will be long-term and guesses at best, although long-term rewards can be significant.

Research before action

Spending time with customers before committing to CRM pays dividends. Well-researched customer feedback identifies the effectiveness of current customer relationships. Research also gives insights into where to put the effort, and helps direct later CRM system design.

The relationship chain across the business (from the customer to sales, from production to delivery, from delivery to customer service) is often broken and no system alone will mend it. Improvement comes from customer-focused attitudes and behaviours across the business.

• Understand the current state of your customer relationships (ask them!)
• Be clear about what relationships you want to develop
• Spend time educating internal users so they give thoughtful feedback about their requirements
• Keep the systems scope tight – don’t be too ambitious
• Work to develop person-to-person customer relationships – CRM is not an alternative

If your business already understands the relationship part of customer relationship management then using the right CRM system can improve the management element.

Combining a people-orientated customer approach with CRM tools provides the foundations for market success.

On the other hand, if you take a systems-centric approach to managing customer relations, then the software is likely to deliver a degree of sophistication in information generation that the organisation cannot possibly use.

This systems-centric approach is also likely to lead you down the track of buying a system much bigger than you need. Lack of clarity at the outset means your implementation team find it hard to control the scope – and the system costs more than you bargained for.

June 2006

CRM systems, no matter how smart, cannot manage your customer relationships for you – that is your job!

The scenario of IT-led development misses the customer entirely, being user-focused and seeking to manage information about customers rather than relationships with them.