1. Recognize the Customer's Role

The phrase "Customer Relationship Management" is backwards. Successful firms don't succeed because they "manage" their customers. They use technology to allow the customer to manage the relationship with them.

From a customer's perspective, the companies that they most enjoy doing business with are those that let them choose how the relationship works. CRM isn't about trying to control or manage the relationship with the customer so much as about providing the customer options to choose how he or she would like to do business with you.

Companies that have effective CRM efforts become easy to do business with. Customers return because they want to. Beginning any CRM initiative with this mindset is critical.

2. Build a Business Case

Where's the money? How exactly is CRM going to pay off? Will it lower the cost of selling/marketing/servicing? How much? Will it increase the effectiveness of your selling efforts? If so, how do you quantify this, and what is the specific financial return you can expect? What are the specific cost savings? What's the revenue benefit? How will it be measured and accounted for?

So-called soft metrics should not be ignored (customer satisfaction and "360-degree-view of the customer" are good examples). These may be real but can't be accurately measured. But for CRM to be embraced across the company, particularly in those parts that pay for it, hard-dollar financial returns need to be demonstrated and recognized. Some examples are in steps 5 Sales, 6 Marketing and 7 Customer Service.

What to include in a business case:

• True total cost of the project, including people costs such as training, implementation, customization, integration and other service.
• Expected revenue gains and cost reductions, and Return on Investment (ROI) percentages and timeframes-how will the initiative pay for itself, and how quickly? 
• Total cost of the technology, and whether it will be treated as a capital investment or an expense (see Step 9 for more)
• Specific customer metrics (satisfaction, loyalty, service cost, etc.) to be improved, and the financial gains expected
• Timeframe for change management, the costs of user adoption and training, and expected effect on current and future staff.

The good news for making a business case is that the ROI is significantly and realistically there. And CRM has become ever more affordable. Even smaller businesses can now use CRM to implement strategies that had been possible only within larger organizations.

3. Gain Buy-in From End-Users to Executives

Like any investment CRM will only pay off if it's used. Would your company invest in new office space if they did not expect any employees to occupy it? Of course not. Yet far too many CRM and related technology investments have been deployed without taking the steps to make sure they're utilized. The key to utilization is simple: the technology helps people do their jobs. If CRM doesn't help, or worse it hinders, it won't be used, and it won't pay off. At every stage of CRM planning and implementation, the users of the solution must be consulted and their buy-in assured.

This doesn't mean that you need to take your sales team off the road to deploy SFA. It does mean that at least a few selected representatives/advocates from the sales team should be part of the implementation team. See step 9 (Who's on the Implementation Team) for more. Keep in mind who the application is for. Since management normally budgets for and approves CRM, their needs are fulfilled. However, the needs of the users in Sales, Marketing and Customer Service are given less attention, or none. This is common with SFA deployments-see step V for more. Management needs CRM but so does your staff, and considering those respective needs appropriately will affect your likelihood of success.

4. Make Every Contact Count

A common mistake is focusing exclusively on the CRM applications while ignoring the data infrastructure that sits below them. Customer data can be found in just about every corner of every application within a company's IT environment-and most certainly not just within the CRM application.

The benefits of integrated data are many:

• Smarter Marketing: by using ideal customer profiles, you can target prospects
• that look like your best customers-and recognize them when they make inquiries
• Sales Effectiveness: by targeting ideal prospects and keeping the sales force focused on the right opportunities, you can increase overall close rates as sales maximizes their time with qualified leads (and minimizes time with unqualified suspects)
• Proactive Service: by understanding your customers' needs and preferences, not just for what they purchase, but how they prefer to be serviced, you can both dramatically reduce cost(s) of service while enhancing quality, gaining loyalty, and promoting cross- and up-selling. 

What's most important is to be able to utilize all customer data-not just the data within the CRM application. This is the most critical role for the IT department-insuring that this integration takes place right from the start of the project. CRM is not a stovepiped application. When embraced as a business philosophy of integration, CRM success can soar.

5. Drive Sales Effectiveness

CRM generally applies to applications for customer-facing employees, specifically three groups: Sales, Marketing and Customer Service. The goal of CRM is to not to simply automate each area independently but to integrate efforts such that customer data and processes are handled in a coordinated, consistent manner. 

The specific needs of each department must be independently considered as well. With Sales, CRM efforts must drive Sales Effectiveness, often labeled a soft metric but is critically important to making Sales-related CRM investments pay off. Sales Effectiveness is seen in more granular metrics, including close rate, win rate, order size and other metrics that measure how much revenue sales brings in, not how little sales efforts cost.

Many early SFA and CRM applications were not designed to improve Sales Effectiveness-but for efficiency. While efficiency and lowering cost of sales has a return, it does not directly benefit the sales force. In addition, many SFA tools offer the "benefit" of helping Sales management track the activity of the sales force, again an organizational benefit but not for the salesperson. If the application does not benefit the salesperson, he or she has little to no incentive to use it. When management has forced an SFA application upon a sales force (sometimes forcing reps to stop using personal contact management applications that had worked well for them) based on vague promises of helping, the application did not help and sometimes hindered sales efforts. Salespeople refused to use the application and the investment failed.

The perception that CRM has failed is often a result of this dynamic of misguided metrics and unrealistic expectations resulting in low (or no) utilization. It is critical to focus on helping sales, specifically on helping them sell.

6. Measure-and Manage-the Return on Marketing

Marketing must also benefit from CRM but in a different way than Sales does.

Marketing's biggest problem is that they are regularly asked by management to prove that they are providing tangible value to the company. This isn't the type of intangible value (a stronger brand, enhanced product positioning) that marketers have long promoted as the value of marketing; rather, it requires evidence of real financial return delivered to the corporate bottom line.

While this in no way devalues the intangible benefits of marketing, it does force Marketing to work more closely in particular with both Sales and Customer Service executives to determine how their expenditures and efforts are resulting in higher sales revenue, and increased customer loyalty, profitability and lifetime value. In particular, CRM systems should allow Marketing executives to manage the overall marketing/mailing list, directly contribute to the lead flow into the organization, to allow them to participate in managing that lead flow as well as the movement to and from the 'prospect pipeline' (such as keeping potential leads 'warm' via, regular, multi-channel communications so that Sales can focus on 'hot', ready-to-buy-now opportunities), and to provide the product, competitive and market information that will provide the key to success in front of the customer.

7. Leverage the Loyalty Effect

You have probably heard "It's 10 times more expensive to get a new customer than it is to keep an existing customer"? While it's oversimplified, it's also true. It also points to how CRM initiatives that enhance customer service can provide measurable value to the organization. But before implementing technology, a different view of customer service and its value to the organization must be put in place. 

Most customer service departments are treated and compensated as cost centers, not profit centers. They are managed on metrics such as cost of service and call volume per service rep. Management and service personnel are compensated entirely on their ability to lower service costs. It always makes sense to both measure and manage cost of service, but a purely cost-based approach can work at counter purposes with the broader goals of CRM. While customer profitability is affected by both revenue and cost factors, the larger goal of Customer Service is to increase the former, not reduce the latter.

For Customer Service to play a larger role in CRM and work more proactively and effectively with Sales, Marketing and other parts of the organization, a new mindset must be in place regarding how to do three tasks: manage service, give incentives to service personnel, and deliver supporting applications. Metrics are important, especially the rate of cross- and upselling, which takes place on service requests and the correlation between satisfaction and repeat business. In other words, all functions (Sales, Marketing and Customer Service) must work together for CRM initiatives to be successful. That success is measured by the holistic value of customer relationships, both in revenue and profitability.

8. Build the Team

Making the best choices requires having the right team driving the decision. You must assemble the team before you select the technology! Many companies do the opposite and find themselves with technology decisions that are inappropriate or unsuitable for their business and technical requirements. This leaves a frustrated team trying to retrofit an investment that shouldn't have been made.

Begin with leadership. A CRM project has a better chance of success with an owner of the implementation, technology and strategy, who is the internal CRM advocate and rallying point for organizational momentum. The leader should have a cross-functional team that encompasses needs and perspectives from business-critical areas other than the leader's. The team should include at least one representative from each of the following areas:

• Sales
• Marketing
• Customer Service
• Finance or Executive Management
• I.T.

While important, leadership and team concerns shouldn't become the focus. For example, in an SFA-centric deployment, Sales would no doubt lead the project (with support from IT) but both Marketing and Customer Service should at least be aware of the project at a detail level, so that they can tailor and integrate future efforts in their departments to utilize and work with the applications and the data they produce. Without participation across the company, the 360 degree view of the customer will not happen. 

Involvement from finance or executive management ensures financial issues are factored into CRM decisions. This has the benefit that investments are subject to approval, and that tangible financial benefits are agreed upon beforehand and incorporated into the investment approval criteria. Finally, while IT rarely should be leading the CRM process, they must be on the team. They will have to support the application and integrate it with other business systems.