Customer Relationship Management (CRM)
The new panacea, or recognising reality?
Customer Relationships are a key aspect of retaining existing customers and winning new ones. The management of the sales process has and always will be a key success factor. Customer relationships and the need to develop them existed before computer systems. CRM is also a new TLA (three-letter acronym) for the record.
Links to other best practices and training at bottom of page.
So what are the important aspects of managing customer relationships. It is of course all the key steps in the sales process as follows:
| 1 | Lead generation | ) | Plus Marketing |
| 2 | Identifying need | ) | |
| 3 | Qualification | ) | |
| 4 | Specification (may include customisation of standard products) | ) | |
| 5 | Enquiry handling | ) | |
| 6 | Cost estimating | ) | |
| 7 | Quotation (may require project management for complex bids) | ) | |
| 8 | Order close | ) | |
| 9 | Sales Order Processing | ) | |
| 10 | Delivery (may require project management for complex products / services) | ) | |
| 11 | Installation / commissioning (may also require project management) | ) | |
| 12 | Servicing / spares / repairs | ) |
It is also the management of that process.
To make any sense of this process and to provide prioritisation rules, customers or potential customers (prospects) have to be categorised based on their strategic importance. You need to decide for yourself how, but suffice to say not all customers are equal. You may use turnover, future potential, social-economic groups, etc. Once categorised a method has to exist to maintain categories in the light of changes.
Factors, which may be determined by category, include:
Culture
Order winning criteria or repeat business criteria might include the following, but will almost certainly be mostly influenced by the fact that you show that you care:
More information can be found in "Culture Development Methods"
This should lead to:
Leading to more sales
However I am very uncomfortable about influencing customer "wants" rather than "needs", or exploiting inexperienced buyers, but it is done superbly by a number of organisations. (Nobody needs jewellery, or half of the stuff they sell in supermarkets, or Pokemon!)
Managing the Process
There should be a regular scheduled meeting of the sales office and mobile sales force, with a standard agenda as follows:
This forms a major input into the improvement of the process.
The Sales Process
There are a number of business processes involved in selling:
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Marketing / new product development Catalogue maintenance Product file maintenance Customer file maintenance Terms of Business maintenance Service parts list maintenance Sales material maintenance Long term contract maintenance Price list maintenance Sales forecasting Lead generation Sales calling Enquiry / specification / customisation Qualification / credit checking |
ITT / bid handling Estimating Project management of bids or product development Quotation management Contract/service level agreement Negotiating contracts Credit control Delivery / installation Service, spares and repairs management Order processing Order acknowledgement Configuring / application engineering / design Process planning Production planning |
Progressing work Cost collection Allocation of finished goods / parts Picking Assembly of components Packaging Inventory recording Despatch Export documentation Invoicing Distribution Transport and shipping Commissioning / installation Warranty Help desk / complaint handling |
The relative importance of these processes and appropriate techniques for managing them will vary for different situations. The main criteria being the manufacturing / operations strategy. These vary as shown below:
For each of these processes which are relevant to your business there should exist:
Key aspects of these processes are covered in the "Customer Relationship Management" workshop, and there is further detailed information on common aspects of the sales and marketing processes in the article "E-commerce: E-nabling your business".
Modern trends in customer / supplier relationships
The following aspects of these relationships are changing:
There is now a broad recognition that co-operative rather than adversarial relationships are much more productive. For more information on these and other important aspects you should read the following articles:
Customer Perception Analysis
My first exposure to this was when I worked for a computer bureau in the 1980's. They actually rang their main customers every week to ask them for their views of the service. And they acted every week on what the customer said. Up-time for that computer system was 99.99% over a six-month period.
Customer Intelligence
This is not trying to instil intelligence in your customers. It is actively engaging them in conversation at every available opportunity to find out what they are doing, and in particular what problems they are having and what opportunities may exist for you in the future. This is sometimes called continuous marketing as opposed to campaign marketing, which is a one off exercise. It is not selling, it is asking. All your employees who come into contact with customers can do it. There is a significant amount of information gathered about customers during the course of an ongoing relationship, and that includes the despatch clerk, talking to the goods inwards clerk at the other end.
Payment methods
Alternatives to the traditional methods of payment are now commonly employed. These include:
Communications methods are changing. These now include:
Measurement and Reporting
Whilst measurement and reporting is now commonplace, it often leads to "data overload", where there is too much data and no analysis and action arising from it. This topic is covered in "Focused Improvement Systems"
Logistics methods now include:
Office organisations are now being aligned to customer needs with:
For example the goals of marketing, sales and service / spares are actually the same when viewed in the long term. However in the short-term conflicts often arise. This balance needs to be flexed as necessary.
My phone call above should not have been frustrating if all of the staff who lived in a department could answer all questions.
Self-certification of quality means that inspection is no longer necessary.
OK it is now 1250 words into this topic and we feel the need to mention tools for aiding this process. Collecting, collating, measuring, analysing, acting and controlling these activities is a time consuming process.
But first the process itself.
Business Process Re-engineering
Before automating any process the process itself needs to be designed with the objective of making it firstly effective and secondly efficient. The technique to do this is Business Process Re-engineering or BPR, described in the article "Organisational Redesign". Ideally the output of this exercise should be a process which is simple, effective and uses the appropriate tools to do the job. This may include computer systems. Indeed there are now a number of computer software packages, utilities, service providers, "call-centres", and web authors aimed at this process. Dealing with each of these in turn:
Software
1. Sales Lead Management
I evaluated my first sales lead tracking system in 1990, so this is not new. But there is a now a wide range of software aimed at the tracking ("workflow") of a potential client through to order closure and beyond. This software typically includes functions to support the following:
Reporting will include:
Typically ERP type systems take over at the point of sales order entry. However, it is desirable to monitor customers throughout their sales life for example to measure cumulative sales value. The equation, cost of sales verses income, cannot be calculated without this. If you also include soft information about potential clients such as motivations and behaviours, you need to be aware of the legal implications. The aim is to make all information available for decision making. In particular information from sales, marketing and service / repair production and stocks is necessary.
So the interface at this point needs to be thought through.
2. Marketing Management
Software functions include:
3. Telesales
Software functions include:
4. E-tailing
Software functions include:
You will also need web design tools at this point.
5. Service / help desk / call centre
Software functions include:
Reporting includes statistics on:
Other factors in software selection
Function is not the overriding criteria for software selection, (although you are unlikely to buy software that does not match your needs). You also need to consider:
(See "IS/IT Strategy Software Selection and Implementation")
Utilities
The ability to hold different data from different sources and to be able to analyse it and produce reports, is still a significant challenge to IT. However "Data Warehouses" (large capacity databases), and "Data mining" (searching and sorting capabilities) have now reached reasonable maturity which enables characteristics analysis and correlations to be performed. Algorithms that are useful for mining include:
Expert systems (based on collective expert knowledge and learned experience) are still not common but would answer the question: From my experience in a population who is most likely to.....?), This is similar to 3 above except that new knowledge and experience adapt the behaviour of the system, whereas in 3 the knowledge or rules are static.
These tools enable targeting of sales effort.
Service Providers
We now seem to be going full circle back to computer bureau to provide Internet access. There are lots of them. The difficulty here is picking the stayers.
Call Centres
There is now a growing number of call centres to provide centralised telephony such as help desk type services, first line problem solving, selling and Internet responses. These can operate internal or sub-contract services on behalf of clients.
Web authoring
This is now a modern cottage industry.
Finally
It is now well understood that over-reacting to complaints creates a better impression than getting it right in the first place. I am not suggesting you should aim to fail but my experience suggests that the occasional crisis to which you over-react, actually creates a great deal of good will. Customers occasionally exploit this, but it is also well understood that it takes far less effort to retain an existing customer than to win a new one.
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The following further best practice articles were also mentioned in this paper:
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Summary: Best Practice Business Processes |
Ó SM Thacker & Associates (Consultancy and Training Specialists) April 2000 Version 3 Sept 2005