Below is a rough transcript of an interview I gave to Chuck Schaeffer, CEO of Vantive Media, for CRMsearch.com You can download the interview as a podcast from iTunes here.
CS - Before we talk about designing and implementing CRM strategy, let’s start with a clear understanding of what we mean by CRM strategy. Can you define or explain what you mean when you reference CRM strategy?
LB - Let's start with defining CRM. For me the oldest and simplest definitions of CRM are still the best. There are 2 that I like: one is "treat different customers differently" and the second is "CRM is a business approach that aims to build long term, mutually beneficial relationships with customers"
So CRM strategy for me is about forming a vision of where you want to get to with CRM, evaluating your current state and the strengths and weaknesses of your capabilities and then defining the path to achieve your goals. Typically a CRM strategy would look at improving a range of capabilities required to enable your vision (from technology to people to process) and then forming a prioritized roadmap for implementation.
CS - Has it been your experience that CRM strategy is changing or evolving?
That's an interesting question - on one hand, if you go back to the definitions of CRM that I previously gave then CRM as a topic has changed very little.
The problem is that for the first 15 or so years of the CRM market people approached CRM in a technology-centric way and an extremely inside out way. So a typical CRM strategy was about defining a future state that was a static destination 5 years in the future, enabled by a monolithic technology program. The over-riding ethos was one of command and control - CRM initiatives tried to control all customer facing data, processes and customer facing employees e.g. forcing them through a script or forcing them to enter their contacts into a database. CRM initiatives even tried to control customers (defining when customers bought e.g. end of quarter, and what service channels they used).
As understanding in the market has improved, the original definitions of CRM have really come back into fashion and so CRM strategy has evolved. I think people are going back to basics and are thinking if we really want to build “mutually beneficial customer relationships" then we need to focus on more the customer, rather than the technology and understand what the customer values from a relationship, what jobs the customer is trying to do when they interact with us and how we can help the customer do those jobs better than the competition. So I think what's changed in CRM strategy is an increasing importance of customer experience.
The second thing I think has changed is technology - both the technology that enables CRM systems (cloud-based services, flexible, modular) but also the technology that customers use to interact with organizations (over the last 10 years we've seen the rise of social media, mobile devices, apps). This trend makes it increasingly difficult to try and define a static destination as a CRM vision - the reality is that both consumer and enterprise technology is constantly changing so a CRM strategy needs to reflect that and really design for change from the outset
CS - How do you recommend business leaders go about designing and implementing their CRM strategy?
LB - 1. Create a compelling need for change - people have got to want the change. This could be a competitive threat, customer numbers on the decline, or an opportunity that excites people, but we need something that galvanizes people.
2. Get customer-centric, outside-in thinking into the definition of your vision. A good way of doing this is through customer journey mapping - looking through the lens of the customer at the jobs they are trying to do and the moments of truth they face in their journeys.
3.Clearly articulate that vision (which again, may not be a static destination) it may be a set of principles, but key is that people understand and buy into them.
4. Evaluate your existing capabilities (tech, people, process)
5. Form a prioritized delivery plan of which capabilities you need to improve (of course acknowledging that many are interlinked)
6. Start small, iterate and iterate and iterate!
CS - Is it necessary to first build a business case to support implementing a new or revised CRM strategy – and if so, what should that business case include?
LB - For me, CRM should be linked to an organizations corporate strategy. If the corporate strategy is to compete in the market with a differentiated service experience then CRM should be about enabling that and the business case should in turn be directly linked to those corporate objectives.
The types of benefits you would look for in CRM usually related to improved revenue and profitability from doing more business with existing customers for longer. But of course some CRM projects are justified with cost savings derived from channel shift or process efficiencies.
Ideally, when you think about benefits you should also think about value to everyone in the chain e.g. employees, customers, suppliers etc
CS - Do you find that implementing a CRM strategy often entails a cultural change in the business?
LB - Without question and that's the hardest challenge.
If you look at the rise of social media and big data - everyone is obsessed by the technology challenge of filtering through vast quantities of data, but to me the biggest challenge is an operating model challenge. I've seen countless organizations struggle with social media because it challenges their silos, their speed, their command and control mindset
CS - Do you find that there’s often a mismatch between what businesses think they do well and what they really do well - or between how businesses believe there customer relationships are as opposed to how customers would rate those relationships?
LB - yes - frequently.
One Pharma client I worked with was shocked to discover that their sales people were spending over 50% of their time on activities that their clients valued as low or insignificant. The top things that clients valued accounted for less than 10% of total sales activities
CS - if so, why the mismatch? And what do about it?
LB - It's a difficult challenge.
First – you need to make people aware - in the example I've just given the CEO and sales director were shocked and that created a need for change.
But realistically many of these behaviors are ingrained in an organization - most sales people are still taught that the most important customers are the ones who are going to place an order this quarter and are measured ruthlessly in closing the deal before quarter end. It's a big shift in culture to prioritize long-term relationships and to do the right thing by the customer - both senior management and front line employees have to believe that it's the right thing to do
CS - When developing a CRM strategy, how and when does CRM software fit into the process?
LB - Quite simply technology is one enabling capability within a CRM strategy. It's unfortunate that the terms has become so synonymous with technology because the reality is that most organizations buy far more technology than they actually use and they cannibalize on the complimentary capabilities required to release the value from their investments
CS - Do you find that its still a common scenario whereby companies implement CRM software before they’ve articulated a CRM strategy or defined their customer-facing business processes? Why?
I hope we're through that phase in the market but reality is I think it's still the case that people buy technology first and than 6 weeks / 6 months into a program they start to question why are we doing this? What's in it for customers? How can we prioritize our delivery sprints if don't have a clear picture of what's important.
CS - How is developing a CRM strategy influenced by disruptive technologies such as SaaS or the cloud, or social media or social CRM?
LB - To some extend SaaS has made things worse - because it's so much easier for a line of business manager to purchase (outside IT) and get up and running with a siloed technology solution, SaaS can be seen as a silver bullet (which of course it is not!).
However, at the same time, SaaS of course presents a fantastic opportunity to deliver some of the technology capabilities required to enable a vision much faster and in a more flexible way. Let’s be clear though - you still need a vision and strategy – there are no shortcuts here.
Social CRM has reinvigorated CRM because it has created a compelling event for most organizations to change. It demands the acknowledgement of customer power and control which in turn demands outside-in, customer experience thinking.
CS - When CRM strategies fail, what are the most common reasons they fail?
LB - In my experience most tend to blame the technology but technology is rarely to blame. I wrote this piece on “6 ways CRM projects go wrong” which covers reasons for failure like the inside out mindset, “analysis paralysis”, “once bitten twice shy”.
CS - If we look ahead a little bit, what changes do you suspect we’ll see in terms of creating, implementing or refining CRM strategies?
Actually I think we will see a theme of back to basics thinking on relationships. It’s easy to get caught up in the hype of a new technology but the reality is that people not technology build relationships and healthy relationships are never one sided.
The second theme I see is the pressure to try and design for change. It’s clear that product life cycles are getting shorter and shorter and consumers are constantly swarming to the latest device, social network or app. We have unparalleled ability to interact with consumers in new ways and learn vast amounts about them – they challenge is how we apply that insight to the business and how fast we are able to respond.