Introduction to CRM

What is CRM?
CRM is a concept that has developed from marketing theory. During the latter half of the last century a major shift in thinking occurred based on evidence that it is more profitable to retain a customer than to acquire anew one. Consequently, relationship marketing theory suggests that companies change their focus from pursuing the aim of selling to the maximum number of people to concentrating on developing relationships withtheir existing customers. The main focus of CRM is the formation of relationships with customers with the intention of improving customer satisfaction and maximising profits.

With the development of technology many IT systems have been developed to assist this aim. They range from contact databases to campaign management software. All of these various systems, which can assistwith improving the efficiency of CRM, have been grouped together and are now generically know as CRM software.

Why do I need CRM?
Every organisation needs at least one customer. A customer is not just someone who makes payment for a product or service, in the case of not-for-profit organisations they can be the recipient of charity or theprovider of a donation. It is imperative that every organisation needs to look at how it manages relationships with its customers for the best long term interests of the organisation. CRM software is designed to help your organisation manage these relationships to achieve the best possible outcomes. Talk to any individual management consultant or IT vendor and they will tend to have a narrow focus on their particular area of expertise. Some of these specific parts of CRM may be relevant to you, others may not, but the overall concept of improving the manner in which you deal with your source of income, your customers, has to be of interest to everyone.

More than Technology?
Often when people talk about ‘doing a CRM project’ they are simply talking about the software they are installing and how they are going to use it. This approach is not going to bring great improvement to the company – possibly some, but not a radical change. The main focus of any CRM project should be on the benefit it will produce for the customer and for the business. The first thing that should be looked at is what is being done now and then working out what should be done in the future to improve the way you work with your customers. Then, and only then, start looking at how it can be done and how that can be helped with an IT solution.This may seem obvious but it is often forgotten and the rush to use technology can result in a lot of money being spent on CRM systems that disappoint. There are many examples of companies using revolutionary methods to deal with their customers which have led to great success. Think of the budget airlines, telephone banking and online insurance – all revolutionary when introduced and all made significant changes to their industry, not by changing the core concept of what they do but in the way they dealt with their customers. Admittedly, all of these examples rely heavily on the use of their IT systems but the concept came first and the technology was put in place to support the concept.

Some of the departments or functions that might benefit from a CRM overhaul are discussed below but it is important that you have an overall strategy for your entire business and don’t implement overlapping or even conflicting systems in different parts of the organisation. It is also a significant advantage if you have a complete view of each of your customers and capture all your dealings with them and collect all your knowledge about them into a single, cohesive data source.

Sales
This is the most obvious contact point a business has with its (potential) customers and is usually the first place considered for a CRM project. There are a number of ways that sales teams can be organised and the sales process managed and monitored – a topic covered by many books in the last few decades. There is no single ‘right’ way to manage a sales team just as there is no ‘right’ way to make a sale but the consensus is that a good, well understood and well managed sales process is the most effective route to success. So if you set up a process for your sales team it is only natural that the best way to control and monitor that process is through the use of an appropriate IT system. These systems are at the core of the majority of main-stream CRM solutions.

Marketing
Sales and Marketing work together closely in any organisation and for smaller companies both roles are often fulfilled by the same people. This close link is reflected in most sales management systems which generally provide functionality to cover marketing processes in addition to sales processes. However, the degree to which they do this can vary considerably and specialists have emerged providing dedicated, sophisticated systems designed purely for marketing departments.

Administration & Management
One key contact point that customers have with a company is its management and general administration staff, such as those in accounting. Amazingly, though these groups of people are often overlooked when considering a CRM strategy. If a manager is dealing with a client or if a member of the accounts team is handling an enquiry it can reflect badly on your organisation if they don’t have the relevant facts to hand. Many of these facts are captured and available in a CRM system, so why not make it available to them? For example, a customer may have a question about an invoice which differs to what was agreed with your sales representative.

Service/Product Delivery
An increasingly high proportion of UK companies are either service companies or they create complex, customised products which are unique to each of their customers. If you work in an organisation like this thenyou know that it is essential that the delivered product or service is exactly what the customer was expecting. To achieve this your product/service delivery team must know exactly what the customer has ordered and yet, time and time again, you find occasions where some small, but crucial, part of the customer’s requirements isn’t passed on by the sales team to the delivery team or is forgotten about somewhere along the line. If all the customer’s details, requirements and circumstances have been accurately captured in a CRM system, to which the delivery team has access, these problems can be reduced. Equally importantly the delivery team can feed back any changes or new information relating to the customer that they come across during their work. This information could indicate to a sales person that an additional sale could be made of a different product or service and means the investment in a CRM system can rapidly pay for itself.

After Sales Service
The importance of after sales service varies massively from one company to another. Of course, we all also know that even where after sales service is important, some companies treat it more seriously than others.There are a range of helpdesk and service management solutions on the market place which suit a wide variety of situations from dealing with product guarantees & repairs to providing scheduled maintenance visits.Although these are commonly grouped together as service management solutions they should be considered part of an integrated CRM strategy and work in conjunction with other CRM systems within your company. It is possible that the majority of your customer interactions are actually through after sales service and capturing this information will help guide your sales force on how to serve the customer better and look for additional sales opportunities.

The Big Six Sigma Myths

By: Marvin M. Wurtzel, President, Marvin M. Wurtzel & Associates

Thursday August 23, 2007

Six Sigma has an attractive value proposition. Increase profits and improve customer satisfaction through more effective and efficient business processes. What company could say no to this idea? But, the Six Sigma methodology often is associated with daunting myths that prevent companies from taking advantage of its potential. For example, it’s assumed that Six Sigma is strictly for manufacturing processes, doesn’t work with Business Process Management (BPM). Or, it’s believed that Six Sigma initiatives require massive training efforts, create unappealing bureaucracy and are just not cost-effective.

These myths simply aren’t true. In fact, any company can take advantage of the principles of Six Sigma to achieve continuous improvement of their processes resulting in improved customer satisfaction, leading to millions of dollars in cost savings and profitability. One of the most effective and efficient ways to enhance the value of a Six Sigma initiative is to use a common sense approach to extend the principles of Six Sigma throughout the organization — across people, processes and technology.

The Top Ten Six Sigma Myths
1. Six Sigma is a new concept

Six Sigma is Total Quality Management (TQM) with a focus on process, results, and return on investment as a result reduction in variation. It's not the tools or process of Six Sigma, it's how you implement it that counts. The tools have been around for a many years, they are statistical in nature and now aided by computer to make them more user friendly. Start by leveraging Business Process Management and your understanding of the core processes in your business. Then apply it with a clear focus to drive significant results in your company.

2. Culture change is difficult

Culture change is easy when you give employees what they need to do a better job and don't waste their time. Employees don’t come to work to do a bad job, we don’t always give them the processes, tools and training to do the job correctly. By working on the core business processes that are problematic, then the next, and the next, your ongoing success will convert the rest of the organization to Six Sigma.

3. Setting big goals may prevent the success of Six Sigma

While Six Sigma equates to 3.4 defects per million operations is a very lofty goal, moving up a sigma level or two can give some impressive results. Since many enterprises operate their core business processes at the 3 to 4 sigma level, an improvement of even one sigma level represents a huge step forward in reducing defects or errors, and in turn improving customer satisfaction and reducing costs. Through a better understanding of their core processes, businesses can make significant improvements rapidly. For example, if a businesses which has an order fulfillment process (a core process) operating at 3.0 sigma or 66,000 defects per million opportunities (DPMO) could improve performance to the 4.0 sigma level (6,210 DPMO), it would realize a gain of approximately 10X performance. Imagine if each error cost as little as $10.00 to fix, then the cost savings would be in the range of $600,000.00.

4. You have to train everyone

Many Six Sigma consulting organizations make their money by training the organization in volume. You don't want to measure the number of employees trained, you want what you expect training will do to provide significant improvements. Also, restricting participation helps build interest and desire among the rest of the work force.

To read about the rest of the 6 myths, please click here.