CRM as Strategy, Process and Tech
One of the challenges with CRM is that it can be thought about in different ways. How it is conceived by a business is extremely important as it directly affects how an entire organisation utilises and on-boards CRM. It’s vital then that organisations understand the different ways CRM can be thought about and how this influences the approach that they are taking and what this means to the inner-workings of their business.
Three common ways of conceptualising CRM are as strategy, process or technology, and it is these that I’ll focus on in this discussion.
The CRM Continuum
Figuring out a place to start when thinking about CRM can be tricky. I find it helpful to think about CRM as a continuum of connected concepts; that’s where the CRM Continuum comes in. This CRM Continuum goes from a narrowly and tactically focussed view of CRM the left to a broader, more wide reaching orientated view of CRM as strategy. It focuses on CRM as a technological asset to an organisation, but within it at the three integral definitions: technology (far left), process (centre) and strategy (far right).
This thinking helps highlight the limitations an organisation can impose on CRM if they see it purely as a piece of technology used for a very specific purpose. When seen as a technology solution, CRM is pigeon-holed as ‘IT’ led. It’s use is not part of the organisation’s bigger picture and therefore users may not buy into it as they see it as something being imposed and key stakeholders may fail to recognise CRM’s ability to realise significant benefits to the organisation.
However, when CRM is seen as a strategic pillar (i.e. in the way to approach the management of customer relationships) the advantages for the business are highlighted. For many businesses and industry professionals, it is this strategic approach that should be the focus of any business since it is concerned with creating improved shareholder value through the development of relationships with customers. Sales, marketing and IT teams are provided with better opportunities to use data and information that helps them understand customers better.
Strategy Models and CRM
A well recognised way of thinking about alternative options for a business strategy is through the ‘value discipline’ choices of Customer Intimacy, Operational Excellence and Product Leadership. Using the CRM continuum, we can see how CRM relates to and supports each of these strategic disciples.
CRM is most easily identified with Customer Intimacy strategy. In fact, when CRM is thought of as a strategy it can be seen as an alternative description of customer intimacy strategy. It is a strategy inherently concerned with customer focus and building strong relationships with customers in an effort to achieve greater loyalty. This strategy demands the use of data and insight to provide value to customers above and beyond that offered by competitors. CRM technology and processes are the means by which the data and insight are efficiently made available to those tasked with executing the strategy. In effect, they enable a customer intimacy (CRM) strategy to be realised.
A strategy built on Operational Excellence is one that is focused on maximising operational and administrative efficacy; highly effective and delivered with low cost. Focussing on CRM as a series of process we can again see a strong link to an operational excellence strategy. CRM related processes will include activities such as customer on-boarding, quotation and order generation, lead and opportunity management, MI generation and customer contact alerts and notifications. CRM technologies are able to support these processes efficiently through workflow functionality and, by managing them through a single platform, create further efficiently and incremental insight by providing an integrated view of the customer relationship. So CRM can be seen to strongly support delivery of an operational excellence strategy.
Having identified strong links between CRM and both Customer Intimacy and Operational Excellence strategies, it’s worth noting that the link between CRM and a Product Leadership strategy is likely to be weak. Product leadership strategies focus the organisation on market level needs and trends rather than customer level insights or operational evaluation. Accordingly, the product leadership strategy is most significantly enabled by product and market development focus and by striving for first mover advantage. Although CRM can likely provide some support for this strategy it is unlikely to be a central consideration.
The fact that CRM is so central to two of these three value strategies highlights that it is of strategic importance. But it’s also apparent that CRM processes and CRM technologies are critical to bringing these strategies to life through effective execution.
Strategy as Doing
Strategy is typically considered to be about ‘analysing and planning’. It is often described as a roadmap to the future and to goals. Building on this roadmap analogy, you can develop the important notion of being as much about doing as analysing and planning. Those following a roadmap can do it to make physical progress to their destination, so implicit in the concept of strategy is thinned for activities to be undertaken. Strategy, therefore, as to result in doing.
‘Doing’ can be seen and managed as processes and activities that ‘bring the strategy to life’ in an integrated, consistent and cohesive way. For example, a significant goal might be to sell additional product lines to existing customers (known as cross-selling). The strategy and related activities might include: establishing customer appetite for additional product lines; analysing the size of the cross-sell opportunity for each product line; creating customer segments by product interest and benefit case; re-organising sales teams and creating new role profiles to focus on cross-sell (structure, ‘rules of engagement’, key activities, targets and incentives); defining the new sales process; creating and delivering training programmes; deploying new technology to create administrative efficiency and support the required sales process activities, deploying marketing programmes to promote identified products to each customer segment; meeting with customers; developing management information (MI) reports to support decision making and analysis of the success of the strategy; reviewing the MI regularly to validate the strategy and develop the activity. Achieving the goals deans doing these things not just planning them.
Evidencing that the strategy, processes, and activities are delivering the goals requires the use of KPIs and targets encompassing both leading and lagging indicators of success. The actual selling of the products would be lagging indicator; leading indicators might be that customers have indicated an interest in specific products and that the product managers those products have ‘pitched’ to the customers. Targets for these leading indicators are as important as targets for the lagging indicators.
Critically, the success of the strategy can only be measured through the execution of the strategy. The strategy cannot be disassociated from the delivery — so those that ever claim “the strategy was sound, it was the execution that was the problem” are missing the point. The success of the strategy is fully dependent on the success of the execution. Because of this then, leaders have to pay as much attention to turning the strategy into action and assuring the quality of the execution (the doing) as to the quality of the strategic roadmap (the analysing and planning).
If it doesn’t translate into action, a strategy makes nothing more than an interesting artefact; like a map to a fabled land that nobody ever travelled to.
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It you would like to read about CRM conceptualisation in greater depth, I recommend reading Payne and Frow’s ‘A Strategic Framework for Customer Relationship Management’ which explores most of that which I have discussed above.
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