Choosing the Right Strategy Can Get Your CRM Program Kick-Started; However, Moving Ahead without One Can Leave You Dead in the Water
(Originally published in the November/December 2002 issue of AFSMI's Sbusiness.)
By William K. Pollock
Choosing the right strategy is always important in kicking off any business endeavor - but never more important than it will be in launching your organization's CRM program. While every business endeavor - whether large or small - is important, CRM-related initiatives are typically among the most important as they involve all aspects of the business, with a particular focus on the customer. Therefore, anything that can assist in successfully launching the program will be most helpful. On the other hand, anything that can hinder its success will be eminently visible - right down to the customer level. This is why getting off to a good start with CRM is imperative - and adopting the most effective strategy is a major prerequisite for success.
Gartner, Inc. suggests that, "If you implement customer relationship management without a plan, you're likely to fail." In fact, the analyst firm cites four alternative strategies from which a business must choose to ensure that it is ready to launch a successful CRM program implementation. They are:
- Strategy No. 1: Extend Depth and Breadth of Relationships
- Strategy No. 2: Reduce Delivery Channel Costs and Create Barriers to Entry
- Strategy No. 3: Reinforce Brand
- Strategy No. 4: Create Customer Satisfaction and Loyalty
While Gartner outlines its thoughts on the merits of these alternative strategies, we have our own take on each alternative, as well as our own points to consider when making your choice.
Strategy No. 1: Extend Depth and Breadth of Relationships
As the most commonly adopted strategy of them all, to extend the depth and breadth of relationships is, - of course - a valiant goal. It certainly adheres to the basic concept and premise of CRM - that is, to base the way in which the organization deals with its vendors, channel partners and customers on a foundation of interactive relationships, and to manage those relationships all to the common goal of serving the customer better. Isn't that what CRM is all about?
The adoption of this strategy can be used to:
- Establish a framework that facilitates the ability of the services provider, its vendors and its customers to all work together more closely - as "partners" - in managing their respective service operations and activities;
- Provide a foundation that empowers each "partner" to make its decisions quicker, more effectively, and in concert with the goals and objectives of each of the other channel partners; and
- Serve as a basis for interweaving the total benefits of the program outcomes, both in terms of each individual partner's needs, as well as for the total customer relationship management process that will ultimately impact every facet of the vendor-customer support chain.
However, before the organization selects this particular strategy as its primary driving force, it must first determine whether these are truly the goals and objectives that it desires to attain in order to reap the maximum benefits of implementing CRM. For example, if its channel costs are already pretty much under control, its services brand is already fairly well-recognized and perceived in the target marketplace, and its existing levels of customer satisfaction and loyalty are already high, then this may or may not be the penultimate strategy for the organization to embrace.
Strategy No. 2: Reduce Delivery Channel Costs and Create Barriers to Entry
It can also be argued that you do not need CRM to reduce channel costs or create barriers to entry - and this argument may be true for many organizations. However, such initiatives as Web-enabled CRM can effectively "kill two birds with one stone" by providing a framework within which an organization can deliver a new mode of customer support, while reducing channel costs and creating barriers to entry essentially as by-products - albeit, very attractive ones.
The selection of this strategy can be used to:
- Shift some of the CRM-based customer support activities from the more expensive vendor-initiated, on-site and/or telephone-based customer support to lower-cost Web-based, customer-enabled self-support;
- Improve the quality and speed of historically-provided customer support activities by fine-tuning, expanding and otherwise improving them as part of the transformation from traditional to Web-based offerings; and
- Create specific barriers to entry through the combination of the ability to deliver services offerings that competitors do not, or cannot, deliver, through a more state-of-the-art medium, such as the Internet.
Of course, the use of this strategy will only be effective if the shift from the historical to a Web-based delivery system will actually work within your customer base, and if your competitors are either unable, unwilling, or simply slow in adopting a similar Web-based delivery system. In any case, the window of opportunity for adopting this strategy may be narrow in any given services sector, and the nature of the specific competitive environment will be a key determinant for success in each case.
Strategy No. 3: Reinforce Brand
Brand reinforcement is only effective in cases where brand identity is important in the first place. If the services organization operates in an environment where its services offerings are not particularly "productized" (i.e., general lack of brand names for services, services are marketed and sold on a fairly "generic" basis, etc.), then this strategy is probably not for you. However, if your organization is dealing in a market environment where the competition (and itself) has already successfully branded its offerings, and these services are marketed and sold by name rather than by type, then this strategy may be what it will need to bolster its ability to compete directly, on a head-to-head, brand name basis.
This strategy, therefore, can be used to:
- Strengthen an existing (or planned) brand name marketing and sales effort by coordinating all of these activities, along with customer support, in a well-orchestrated and cohesive CRM program;
- Center the overall CRM initiative around the brand name, rather than around a generic set of services concepts, definitions, and offerings; and
- Tie every facet of the overall CRM effort into a total package that promotes all of the customer (and vendor) relationship management into a single program, while continuing to involve brand promotion in the overall scheme of things.
Strategy No. 4: Create Customer Satisfaction and Loyalty
Creating customer satisfaction and loyalty is not only an admirable - and necessary - goal, but also one where you do not necessarily need to embark on a CRM program to get the job done. In fact, it can also be argued that this strategy should probably be the ultimate goal of all CRM implementations. However, if your organization's operations and infrastructure are so terribly behind where they need to be in order to even think about satisfying customers' needs and requirements - let alone attaining any measurable levels of customer loyalty, then, perhaps, this is not the strategy that your organization should select to kick off its CRM initiative. Other strategies, such as extending the breadth and depth of relationships, reducing delivery channel costs, or reinforcing your brand may be better alternatives.
However, if your channel partnerships are already fairly expansive, your costs are already under control, and your target marketplace is already totally familiar - and positively impressed - with your services brand(s), then this strategy can be used to:
- Ensure that all of the components of your customer satisfaction and loyalty efforts fall under a single umbrella of company management so that they may be fully leveraged in terms of their total positive impact in the marketplace;
- Support and tie together all of the companywide efforts that are being undertaken (and planned) to foster service improvement and make customers feel both more satisfied and reliant upon your organization's services offerings; and
- Ensure that the organization's existing levels of customer satisfaction and loyalty are constantly being monitored, measured, reported, and assessed with the ultimate goal of continuous quality improvement.
Which of these alternative strategies is best for your organization? Well, they all are. However, each organization will still need to select the one strategy that will most effectively match its philosophy and mindset, and best serve to "rally the troops" - both internally (i.e., management and staff, headquarters and field, sales and marketing, operations and administration, etc.) and externally (i.e., vendors and channel partners, contractors and integrators, etc.).
Whether the organization ultimately selects a single strategic alternative as outlined herein, or a hybrid that embraces certain aspects of multiple alternatives, is irrelevant. What is important, however, is that a strategy is selected, and that when it does move forward, its efforts will be directly linked to meeting a specific set of appropriate goals and objectives.
William K. Pollock is president of Strategies For GrowthSM (SFGSM), the Westtown, Pennsylvania-based services consulting firm specializing in strategic business planning, services marketing, CRM consulting, market/survey research, and customer satisfaction measurement and tracking programs. Bill may be reached at 610-399-9717 or via e-mail at email@example.com.