MISSION VIEJO, Calif. — We’re going to go out on limb and make the assumption that the goal of your business is to make a profit by acquiring customers, selling and servicing them, and retaining them for generating future revenue. If this is not the goal of your business, there’s no need to read further in this week’s column – although if that’s the case, we would love to hear what actually is the goal of your business.
The truth is that most companies do a poor job of managing customers and growing sales, which has a dramatic impact on achieving business goals. Customer Relationship Management, commonly referred to as CRM, is the key to getting a handle on that challenge.
CRM is utilized, both very well and very poorly, in every industry. Perhaps the best example of CRM being used effectively is in the dental care industry. Our grandparents’ generation usually only went for a dental visit when something in their mouth hurt. Dentists earned a very good living spending the majority of their time extracting or repairing poorly maintained teeth. But then societal and educational changes occurred that created a need for dentists to transform themselves from repairers to maintainers if they wanted to remain profitable. Fluoridated water, improved toothpastes and brushes, dental hygiene education and programs for children, better diets and other factors resulted in current generations having healthy, well-maintained teeth for a lifetime. It’s not unusual now for a child to never even have a cavity.
So dentists had to recreate themselves and the perception of themselves by consumers to remain profitable. Today, regular checkups and maintenance are the highly profitable revenue lifeblood of the dental industry. Once your dentist has you as a patient, he uses CRM to retain your business. The last thing you receive at each appointment is a card that pre-schedules your next visit. When the date of that visit is approaching, you get a telephone reminder from your dentist of the appointment. He probably sends you and members of your family birthday cards and holiday greetings. He wants to be considered a member of your family. Your dentist has figuratively put his arms around you and removed you from the market. He wants to own your business.
The reason your business needs CRM is the same as your dentist’s…to own the business of your customers. Without CRM, you don’t know how much prospective business you have, which current or past customers you will lose, how many you are regularly providing attention or what the rest of your organization is doing that will affect your success or failure.
For years, aftermarket companies distributing parts and providing service relied mostly on inside and outside salespeople to maintain good relationships with customers. They kept their own customer records, followed up on new opportunities and grew the account base and customer service reputation of your firm. But in an era of cutthroat competition, decreased customer loyalty, high employee turnover, the need for multiple locations, sophisticated buying groups, overwhelming numbers of choices, discounted pricing, high delivery time expectations and other challenges, relying on old fashioned methods of achieving business goals gets many companies in more trouble than they can handle.
A well implemented CRM solution will provide your business with a powerful management tool and provide you with the information needed to target and transform obstacles to achieving your business goals. CRM technology will provide affirmative answers to questions such as:
* Does everyone who communicates with any given customer know what their coworkers said to them or did for them?
* Is all customer information kept in one centralized area or program for easy customer service reference?
* Do you know how many prospecting telephone calls your sales reps make each day and what the sales cycles and close ratios are?
* Do you have several databases of information that you need to access to benefit sales?
* Are you able to manage the top 20 percent of accounts that give you 80 percent or your revenue?
* Do you know how many customer service issues each customer has had and why?
* Do you know which customers consume most of your time?
* Do you know the revenue per sales representative?
* Do you know the numbers of existing customer contacts and repeat business orders?
* Do you know the average order size and order frequency?
* Can you rate your marketing or lead generation program effectiveness?
* Do you have profitability comparisons for individual products?
* Do you have profitability comparisons for orders from different channels?
* Can you do mail merge or e-mail broadcasts to your customer base?
* Do individuals in your organization have critical customer data that could be lost or taken? CRM and the technology to employ it should be a business priority because it can have such a profound affect on your business. It greatly affects employee satisfaction and turnover, the ability to target and close sales, the management of customer interactions and profitability, and your firm’s ability to grow. More than a software system, CRM is a cultural change and companies should invest time and effort into the new culture. How would you estimate what your ROI on CRM could be? The best way to accomplish that is to ask some questions about the cost of NOT implementing CRM:
* How many existing accounts did your company lose in the past 12 months and what were their annual revenues?
* How many new sales opportunities did you lose in the past 12 months and what were they worth?
* How much non-sales activity are your salespeople doing (writing reports, processing paperwork, implementing their own marketing programs, dealing with customer service issues and getting trained)?
* What is the estimated dollar amount of missed sales opportunities because of timing or lack of follow-up?
* What are other departments doing to support sales? How many calls a day are fielded by people in inventory management, finance or administrative departments to answer questions for sales reps and what is the cost of all that time?
* How much time is spent processing or adjusting orders, due to inaccurate or incomplete information?
* What is the cost of servicing your most difficult customers?
CRM is much like a Total Quality Management effort, where business opportunities and defects are quantified and prioritized and reworking is initiated. The better you can measure and track problems and mistakes, the better you can improve the process and your customer’s experience with your firm. This is what CRM technology does for sales and marketing efforts. It helps track employee actions and gives managers a 360-degree view of their operation to see the results of sales, marketing and customer service efforts. Once this data is collected, CRM provides your firm powerful new capabilities for enhancing customer satisfaction, growth and profitability.
Send us an email at: [email protected] or give us a shout at 1.800.700.4DST.
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