Here’s a quick test:
1. Review the tools and processes your company uses for selling to and supporting customers.
2. Consider the various interactions customers have with your employees and partners. And now answer these questions:
Is the picture clear?
Can you see your customers in sharp enough focus to confidently make investments for growth?
Achieving clarity about customer needs and expectations is part of Customer Relationship Management. By this term I mean an integrated framework, not merely the powerful software tools usually referred to as ‘CRM.’ Current CRM applications offer more functionality than most companies need; they create unprecedented opportunities to collect, share and analyze data about customers and prospects and channel partners and sales performance.
However, it’s the human and the process-related elements of managing customer relationships – the need for integrated execution by multiple players – that need more attention as the economy recovers and revenue growth climbs the corporate agenda. Nor is cost reduction forgotten: a benefit of integrated execution is the capture of increased revenue at a lower cost.
In this column I will suggest five principles by which B2B companies can put a common frame around these elements: effective management of customer relationships, the achievement of revenue growth, and an improvement in relative costs.
1. The customer relationship is the primary driver of growth
In its earlier phases, CRM had an operational focus and a strong affiliation with IT. Increasingly, however, that affiliation is shifting. Business executives recognize that selling more to their customers means knowing more about why those customers buy, stay loyal, or leave – being customer-centric, not focused on products and organizational silos. A customer focus also means understanding how your processes work from the customer perspective.
2. Inside Sales and Service, as primary touch points with customers, should be leading sources of customer insight, retention and loyalty
Despite large databases of transactional data, knowledge of the end customer is often patchy. Reliance on resellers may not help: it means an arm’s length relationship with the ultimate buyer. Inside sales and service groups can collect valuable insight if they are trained to do so. But the most frequent contact with buyers is often through customer support, and it is here that opportunities to learn and to cross-sell are routinely lost. Data structures are often at fault, but so is training and the inculcation in service reps of a proactive mindset.
3. Sales must adopt a disciplined commitment to new behavior
This may be the hardest challenge in erasing the product-centric mindset. After a corporate CRM initiative failed to gain traction, and cost-reduction had run its course, an electrical and electronic components manufacturer found its real priority – reversing a multi-year slide in sales. Since the company had grown through acquisitions, the foundational challenges included:
§ Integrating sales forces selling different product sets to some of the same distributors.
§ Training and motivating the restructured sales force to sell across product lines
Attention to efficiency generated recommendations for making it easier for partners to do business with the company, and clarified future requirements related to ERP, business intelligence, and CRM.
4. Channel partners have a crucial role in product/service differentiation
Take the cable manufacturer who launched a new offering with design advantages into a niche market. Although 2004 growth is well into double digits, this market-leading company judged the results to be below expectations. It relies on the enthusiasm of distribution partners for stocking new products and speeding up market penetration. The key to increasing revenues in this case lies in finding the motivation for distributors and end users to switch to the product more quickly.
5. Marketing must balance what customers want against the requirement of making a profit
Customer responsiveness does have limits, which someone must police. A company that builds differentiation on the ability to engineer specials puts profitability at risk unless there is pull-through from the order. As owner of product positioning, product management and market intelligence, Marketing is a natural candidate to set up collaboration on revenue opportunities with Sales, Service and Engineering. Marketing should also consider whether, in addition to its existing roles, it should share P&L responsibility for revenue performance.
For today’s B2B companies, the new context for CRM is the operational plan for achieving profitable revenue growth. While it can be narrowly defined as a set of operational tools, CRM is also evolving into the integrated business framework for all of the ways in which companies, partners and customers interact.