THREE BASIC PRINCIPLES TO CRM SUCCESS IN THE 21ST CENTURYKey words
Customer Relationship Management (CRM), touch points, fragmentation, change management, business and or enterprise resource building
CRM emerged in the 1990’s as an information technology solution for managing a customer database and today sits at a senior management strategy or executive level to deliver shareholder value to organisations.
Wendy van Schalkwyk, international business consultant says, “CRM is vital to organisations as it creates lifelong relationships with clients, extracting customer value from data integration to create business intelligence. It is multi-channelled and re-organises the business to focus on particular market segments and manage its customer relationships effectively with efficiency.” Perry Norgarb from SmallBizCRM has been working with CRM software for over two decades. Norgarb states, “the right CRM system can help a small business monetize their site, but only if the right solution for a specific business is implemented.”
But how did a simple customer tracking tool, become so important and how do companies avoid spending millions on CRM without it leading to failure?
- Get the CRM definition right
Over the past 20 years the definition of CRM has changed significantly. Academic research confirms that hundreds of definitions exist and even marketing guru Kotler’s definition of CRM is different today to what is was ten years ago. Today Kotler (2014) defines CRM as a process of carefully managing detailed information of individual customers and all customer touch points to maximise customer loyalty.
The lack of a clear definition of CRM will result in CRM being fragmented within the organisation and value being difficult to monitor or track.
- Get the organisation involved
Successful CRM projects are implemented against the CRM objectives derived from the corporate objectives and support the overall business strategy.
Payne and Frow (2005) argue that successful implementation of CRM Programme depends upon four critical factors which include (1) CRM readiness assessment, (2) CRM change management, (3) CRM project management, and (4) employee engagement
A CRM readiness assessment provides and overview audit which helps management assess the overall position in terms of environmental readiness to progress with CRM implementation and to identify how well developed their organisation is relative to other companies.The CRM change management process involves strategic decisions to be taken which will impact the company resources, time and costs but if the right investment made can have significant return on investment.
Senior level understanding, support and leadership is critical in a complex CRM implementation project as it affects the company cross functionally and re-organises the work flow operation and activities of the business. This requires key skills, but for smaller organisations the CRM systems can grow as the organisation grows as long as the right tool is invested in that allow for scalability.
Various arguments have been put forward for the failure of CRM systems. It is suggested that the main reason for CRM project failure is the lack of strategic planning prior to the implementation of CRM. And according to Norgabr, the failure rate proves how important it is for a business to take the time to investigate CRM systems and to opt for the best fit for the individual business.
- Get the CRM model right
Grabner-Kraeuter and Moedritscher (2002) advocates that without a strategic framework or model for CRM, it is difficult for CRM to define its success and is one of the reasons CRM initiatives fail.While various models exists and continue to emerge, CRM must be tailored to its respective business needs for real value to be created.Winer (2001, p. 91) identified a 7 step model for customer relationship management. This included:
1. A database of customer activity
2. Analyses of the database
3. Given the analyses decisions about which customers to target
4. Tools for targeting the customers
5. How to build relationships with the targeted customers
6. Privacy issues
7. Metrics for measuring the success of the CRM program.
Then the Journal of Marketing Management (2005) defines CRM into three perspectives.
1. narrowly and tactically as a particular technology solution – Perspective 1
2. wide-ranging technology – Perspective 2
3. and customer centric - Perspective 3
The Journal of Management, 2005
Payne and Frow’s CRM model (2005, Vol.69. p.169-176) shows CRM’s detailed complexity and holistic nature of creating shareholder value but this model also illustrates the reality of just how much work, energy and resources CRM can consume when done at an organisational level.
The Payne and Frow’s CRM Model, 2005
The Payne perspective of CRM highlights the interactive set of strategic processes that commences with a review of an organization’s strategy and concludes with an improvement in business results and increased shareholder value.
This model affirms that competitive advantage stems from the creation of value for the customer and for the business and associated co creation activities.
Kale (2004) further supported this view and argued that a critical aspect of CRM involved identifying all the strategic processes that take place between an enterprise and its customers.
Fundamental to this concept of customer value are two key elements of research which include determining how existing and potential customer profitability varies across different customers and customer segments and then determining the economics of customer acquisition and customer retention and opportunities for cross-selling, up-selling, and the building of customer advocacy.
How these elements contribute to increasing customer lifetime value is integral to value creation and the customer retention process represents a significant part of the research for value creation to emerge.
Van Schalkwyk adds that is important to keep in mind that organisational CRM is continuous as it is being impacted real time by global market forces as data and information flows across the world, given globalisation, new knowledge is being created and creativity for innovators emerges informing new trends and spurring innovation. These factors have a direct impact on a company’s existing products and service lines, as this directly influences customer buying patterns and habits. Therefore taking the time to invest in the right CRM system in order to understand and develop customer relationships more effectively is essential for business sustainability into the future. The lack of an effective and up to date CRM system makes businesses ineffective and inefficient as companies become out of touch and irrelevant to their customers ever changing needs and desires.
Concludes van Schalkwyk: “There is no single solution to CRM. Quite often organisations think they know what it is and when they bring in the experts to the table to do the gap analysis assessment it becomes clear they don’t understand the function, definition and value of CRM in the 21st century of business. We then have to work together the company to select the most appropriate model. Interestingly, what is driving CRM is the need for customer centricity and creating on-going value and relevance in the market. What is fundamental is that is that CRM all about the customer not the organisation. CRM is all about what the customer wants and how he/she wants their needs to be met. The customer wants to be better understood and needs the CRM system to provide insights to their needs so that the organisation can be responsive and present them with the right offering at the right time.”
Perry Norgarb agrees with this statement and therefore his company, SmallBizCRM, has created a CRM finder tool that will aid the process of choosing the most appropriate CRM system. This is achieved through two sets of questionnaires that guide a small business through the necessary thought process and questions; and ultimately narrows it down to five CRM solutions. Norgarb adds that choosing the right CRM can make a trmendous difference to a business, “There’s nothing more rewarding than a client thanking you for revolutionising their business.”
Issued by: MI-Ashanti International (Pty) Ltd.
Chief Executive Officer (CEO)
Wendy van Schalkwyk
Cell: 081 333 2802
About Wendy van Schalkwyk
Wendy van Schalkwyk, is an International Masters of Business Administration student with Business School in the Netherlands (BSN) and currently completing her IMBA dissertation thesis on the topic: How to reduce the failure rate of start-up entrepreneurship in the 21st Century. She is the Chief Executive Officer (CEO) of MI-Ashanti International (Pty) Ltd, a 21st Century high performance business and training consulting firm, a director of Armorong (Pty) Ltd – a new renewable energy tech start-up, a Rotary International Paul Harris Fellow and sits of the Board of Trustees of Living Hope NGO in the Western Cape, South Africa. She has a passion for people, the environment and business and is intentional about making a valuable contribution to aid the success of start-up entrepreneurship and building good leadership in the 21st Century.
About SmallBizCRM (Pty) Ltd.
SmallBizCRM offers free tailored CRM solutions for small businesses.
With 28 years of experience within the CRM industry, Perry Norgarb created SmallBizCRM to help small businesses negotiate their way through choosing and implementing a CRM solution effectively. To achieve this SmallBIzCRM has developed a CRM finder tool and a CRM Needs Analysis tool, along with in-depth reviews of CRM systems. Our tools provide the optimal five CRM systems available, based on answers provided in a questionnaire, as well as a longer report to motivate the decision of choosing a CRM system. Our reviews are objective and offer an honest overview on relevant CRM systems. We act as trusted partner to small businesses. Try the CRM Finder tool here.
September 8th, 2014