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June 29, 2007

Do I Really Need CRM?

Munching Koala

Did you read that the Australian National Rugby League recently implemented a CRM system? It is easy to ask the question, why does a Rugby League need this kind of technology, which then easily transitions to the question, “gee, does my company need CRM too?”

Actually, sports teams and leagues are jumping on the CRM bandwagon right and left, the Aussies just being the latest. CRM is really popular in AAA baseball where attracting fans is more about marketing than the appeal of the national pastime. But it does beg the question, what drives the rationale for the CRM investment?

I think there are three questions to ask to determine whether CRM makes sense for you business.

First, are you satisfied with your customer outcomes? The NRL was not. They wanted to have more attendance at games, possibly doing more to improve gate revenues and ancillary sales. What about your customer outcomes? Do you sell as much as you want to as many customers as possible, and at the price you prefer? Or do you feel cost of service is too high? These are all examples of outcomes that can be improved with CRM.

Second, what changes to your business capabilities are required to improve your outcomes? The NRL believed that they do not know well enough who their fans are and believe that some traditional marketing capabilities would help. How about you – could you benefit from better marketing, or better customer targeting, or improved tracking of buying behavior? Are you good at keeping on top of service issues? Again, these are examples of common customer-facing capabilities that many organizations want to improve. CRM is intended to address these, either through technology, or through process improvements included in a broader CRM program.

Finally, will technology do anything to further your capabilities, and will it be worth the price? This is a harder question to get right. Some companies feel that CRM technology is a necessary ticket to play in the big leagues and make the investment without worrying about a clear ROI. I even had one client executive tell me, when working to determine if a CRM purchase made sense for their business, “The fact that we don’t have a real CRM system at this company is immoral!” Those are strong words, but it does reflect a sentiment that CRM is simply part of the fabric of the modern enterprise. However, it is possible to improve capabilities through better process, policy, and human resource initiatives.

For most businesses the benefits are pretty strong. Automation of sales, marketing and service processes lead to both effectiveness and efficiency results improving both growth as well as profitability. A third outcome is also common, which is the improvement of customer satisfaction through CRM. Automated auto registration and license renewal is a great example there.

So what about the Aussies – will they benefit? Go see for yourself, starting here http://www.nrl.com.au/
but maybe take in a match and draw your own conclusions.

June 22, 2007

Analytics for the Masses

There is some pretty useful point-of-view provided by McKinsey in a late May posting on the Computerworld site. The article explains three sources of common data that can lead toward insight regarding levers for improving sales effectiveness. The research is pretty sound and the best news is that the data sources are common for any company with a large sales force or set of channel partners.

The problem is that if they had not performed the research to point out these best practices for utilizing analysis to uncover better sales actions, you might not know it. However, you may still have somebody crunching a lot of numbers anyway. This is the problem with the new BI. Analytics tools are getting easier to come by and landing on more and more laptops across the enterprise. Crunching numbers has gotten easy, but the trick to crunching effectively is asking the right questions.

No Limit

You may have people generating reports based on sophisticated calculations that lead to erroneous conclusions. This happened to me early in my career when I was running a training function for management development. We were using SAS to generate reports for managers based on 360 degree competency surveys. Unfortunately, due to an error in the report set up, the tool spit out random numbers. Because a large number of people were participating in the overall data collection and reporting process it was caught before doing too much damage. However, when individuals are given really powerful analytical tools and are not correctly schooled in their use, the same random results can lead to dicey decision making.

So, the salient term in that last sentence is “correctly schooled”. If you are going down the BI path, which is a great idea due to the rewards at the end of the path, take the correct measures to ensure that your ROI is as great as the software vendors promote. Even a little education will go a long way.

June 15, 2007

What Channel Are You Watching

There have been a number of studies recently passing through my inbox that laud the benefits of using channel partners to increase reach with best margins. I would say the evidence is pretty sound that utilizing channels is an effective way to maximize growth while keeping cost of sale in check. However, simply deciding to push more revenue through your partners does not a good strategy make.

'Til Death Do Us Part

How do you plan to manage channel conflict? How do you plan to keep your partners loyal? How will you know if you are using your channels for the right market or product? For many of my clients leveraging channels has been a key step toward more effective attainment of business goals, but the most successful of them has built a defensible plan are using their CRM technology to maximize results.

Planning is a good idea generally speaking, but the involvement of channel partners in representing your business to prospective customers probably requires some extra forethought. Recently a client of mine decided to exploit a channel that had, up until very recently, been reviled as the arch enemy. The 180 shift in policy was taken in order to take advantage of a window of opportunity to develop a new market. My client pounced on the chance, but did not think through all the variables, including two key issues in particular. One was not thinking through a means for efficient order capture. As a result the call center became swamped causing order errors, billing delays, and generally driving up the cost of order. The market got penetrated but at a lower than planned margin.

As second issue was the about face with the long-term competitor. Sales people were expected to collaborate with the enemy in a change that literally happened over night. The problem was in not communicating the change properly. As a result, the expected collaboration took much longer to develop than expected further delaying the originally proposed margin benefit of the new program.

Part of the planning process should include how to capitalize on CRM to achieve the best outcomes. Involving your channel partners in your CRM program will help to reduce the risk of channel conflict, help assist the promotion of partner loyalty, and provide the best chance of performing the analysis required to determine if your channel approach is achieving the best results.

It all sounds good in theory, right? It does have one significant challenge. For the most part your partners have to be willing to utilize your CRM system. If you think user adoption was hard with your SFA deployment, wait until you roll out your new PRM system. Ultimately you have much more leverage over your own employees than you do with your partners. But if you build it, it is possible they will come, with the right incentives. For example, send them leads on your partner portal, but require that they register their deals in order to get their leads. Let them pull down sales reports from that same portal, but remind them that those reports require entering sufficient opportunity information. I have clients who are doing both successfully.

Partners will work for you, but it does require executing on a good plan.

June 08, 2007

Who's Listening?

You might have seen the May issue of CRM magazine that has an article proposing that marketing needs to think of themselves as feeding sales. I especially like the elucidation of the metaphor that claims that marketing is not exactly starving the sales function as much as it is causing malnutrition by feeding them junk food. Excellent stuff!

I like the use of metaphors to describe things and this led me to a variation that I think is also useful in understanding the relationship between these two business development functions. Lead generation is like a conversation and marketing is the speaker with sales as the listener. Think of all the other well known dysfunctional relationship types that are plagued with speaking and listening problems (all of you married folks in the audience know what I am talking about).

Back in a previous life, I ran an exercise in one particular workshop that helped illustrate a thing or two about listening. It went something like this. Two people had to draw a complicated geometric diagram, but without the ability to see – each had someone describing the diagram verbally – one person would serve as the speaker and one as the listener. However, the catch was that one of the listeners could ask questions and one could not.

What do you think were the results? You guessed it – the person who could ask questions would replicate the drawing almost exactly. The person who could not ask questions would make all kinds of bad assumptions about what was being said, and the drawings were horrid. The conclusion that everyone would glean from this exercise was that good listeners need to ask questions, give feedback, and in general be in control of the conversation – not the speaker!

So what - what could this possibly have to do with sales and marketing? Let me get to the point. Marketing is the speaker – they need to give stuff to sales – leads, messaging, market insight. Sales is the listener, but the problem is that they are not listening. They need to be in control of the conversation, but marketing mistakenly keeps control (there is no control, actually). However, with control comes responsibility, and that includes giving feedback and asking clarifying questions.

Getting back to the listening exercise for a moment; I would ask the listeners how successful they thought they were. The one with no feedback felt they did a good job, and expected to get a good picture in return. The one with feedback felt they did a bad job because there were so many questions, and expected the pictures to be poor. Of course we know the results were just the opposite.

Now, getting back to marketing, the measurement is the picture, not whether we think we are doing a good job of communicating. What should marketing be measuring to determine if the speaking and listening process is working? Well, the equivalent of the good picture in this case is something like lead conversion. If the process is working well, sales will convert a higher percentage of leads to opportunities. But the feedback needs to be there as well. Information about what leads are good and what are not must be returned back to marketing to achieve the best results.

So, marketing, give control to sales. Sales, take control, but don’t be apathetic – ask questions and give feedback. Let’s generate some business.

Stay Away

June 01, 2007

This Millennium

The other day I was having breakfast with my kids at a local diner where we were entertaining ourselves with all the photos scattered about the walls serving as a pictographic history lesson of that diner and especially that corner of our little neck of the woods. One picture that featured a phone booth located in the parking lot between the diner and the highway really struck me that morning. My two teenagers have never been in a phone booth or had the need to use one. They had a chance to see hordes during a trip to London where they still exist plentifully, but I think purely as ornaments for the tourists. My kids are so wired with their mobile phones and wi-fi that the concept of a phone booth is just on the edge of surreal. It is a great manifestation of the differences between our current millennium and the one just completed 7.5 short years ago.

I recently ran across another similar juxtaposition in the March issue of CRM magazine (yes, loyal reader it is the second time I have cited that specific issue of the trade rag recently). You will find there a few top ten lists which, when comparing the marketing and sales content, become fairly interesting. What I find particularly interesting is that the advice given in the marketing list is taken straight from advanced thinking of marketing experts right now. It is extremely current – social networking and the whole nine yards.

On the other hand, take a look at the top ten list for sales. If we were to get in the locker room at IBM when they were coaching sales people how to get more results during the great depression, we might have heard the same advice. This is vintage stuff. If it were scotch it would be really expensive.

Solar Fleet

So what is up with that whack? Are you telling me that there is no new advice for sales folks? I’m not buying it.

One thing for certain is different today. All the extremely sophisticated stuff that marketing is doing on the web is for sales benefit. Leads are coming faster and better as a result of the web 2.0 revolution. Lead fresh dates are much shorter as a result. A lead that may have been fresh for a month a few years ago is probably measured in hours now. If nothing else, sales folks need to have a mechanism to act fast. If they don’t the lead goes stale and they blame marketing for poor qualification. Everybody loses, except the competition.

Anything else new? You betcha. How about buyer intelligence? You don’t stand a chance today if you are not better prepared than your buyer. They know amazing stuff about you and your product when you do finally show up. They also just read a blog written by one of your unhappy customers. This is serious bananas. We can’t sell like we did in 1937. They might know more about your competitor than you do if you don’t prepare well.

We need a new top ten list for sales. Any takers?