New Customer Relationship Management Programs new

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Customer Relationship Management

I. WHAT DOES CUSTOMER RELATIONSHIP MANAGEMENT DO?

Customer Relationship Management (CRM) is a way of building customer loyalty, which ultimately increases profit. CRM works by helping your company make the transformation from focusing solely on raw numbers to an increased emphasis on the customer. As we know, a happy customer is a repeat customer. CRM makes it simple for companies to focus on their customers by using familiar business processes like those used in hiring and compensation strategies.

You may have noticed that technology and software are not mentioned in the definition of CRM. It is NOT a technology issue, CRM is about human relations and what makes a person happy and keeps them coming back to your company.

II. WHAT ARE SOME PITFALLS OF CUSTOMER RELATIONSHIP MANAGEMENT?

PERIL 1

The organization is not customer-focused.

CRM requires a customer-focused organization to function correctly. This means revamping anything from customer service to order fulfillment, including job descriptions, performance measures, compensation systems, and training. For example, incentives or performance measures in the sales department should be based on the customers acquired and profit margins instead of raw sales.

PERIL 2

The Failure to conceive of and implement a customer acquisition and retention strategy before CRM

is implemented.

CRM should not drive an organizations' approach to customer management. It is important for the organization to first make a commitment to improving customer relations prior to selecting a CRM program. Do not attempt to retrofit a customer strategy to an existing CRM program and expect success.

? 1999-2003 TalentSmart, Inc.



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Customer Relationship Management

PERIL 3

Believing that hi-tech products are better.

Low- or no-tech solutions may also be the best fit for your organization. First, consider the low- or no-cost methods that are currently working in organizations, such as personal "thank you" calls, handwritten "thank you" letters to customers, or courteous, charismatic initial contacts made by receptionists.

PERIL 4

Stalking, not wooing customers.

Telemarketing can annoy customers instead of winning them over. Just because a manager can contact a customer does not mean they should. Contact with customers depends on the customer strategy, not the CRM program.

III. Why might CRM Implementation may be unsuccessful?

The reason so many trials of CRM have failed is because most companies do not understand the purpose of CRM, how much money should be spent, or how long it takes to implement CRM properly. It is costly, and a viable CRM takes time to build and implement.

Before selecting a customer relationship management system, make the transformation into a customerfocused organization. Develop a customer acquisition and retention strategy, patch up any holes in customer service, and bring customers to the forefront of all business processes. This lays the groundwork for your organization to be able to determine how a customer relationship management system can best meet your needs.

This piece was created by TalentSmart consultants Ken McKay, M.S. and April West, M.S.

and adapted from an article by Darrell Rigby, Frederick Reichheld, and Phil Schefter in the

Harvard Business Review (Feb. 2002),

"Avoid the 4 Perils of CRM."

? 1999-2003 TalentSmart, Inc.



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