Planning for Transformation:

Because transforming the organization must be a proactive effort,an enterprise-wide planning initiative will be critical. In fact, effective and successful execution of CRM requires that the first step be the development of a very detailed and comprehensive CRM action plan.

The key to building the CRM action plan lies in first understanding where the organization stands relative to each of five aspects of change. The next step is planning process should be a Gap Analysis. This analysis is essentially a comparison of current stage against optimal, relative to the five aspects of business, to identify and specifically describe the gaps. In addition to the more obvious gaps, this analysis should identify exactly where the CRM organizational holes are relative to:

• Marketing, sales and service practices
• Collection, capture, processing and deployment of customer information
• Distribution and operations effectiveness at customer touch points

Another key factor in identifying gaps is to understand how the organization functions relative to the CRM Business Cycle. In the CRM business Cycle, the stages are interdependent and continuous. As one moves from one stage to the other, one gains sufficient insight and understanding that enhances subsequent efforts.

As shown in the diagram, for any organization, business starts with acquisition of customers. However, any successful CRM initiative is highly dependent on a solid understanding of the customers.

Understand and Differentiate:

Organizations cannot have relationship with the customers unless they understand them-what they value, what types of service are important to them, how and when they like to interact, and what and when they want to buy. True understanding is based on a combination of detailed analysis and interaction. To create and foster a relationship, organizations have to act on what they learn about customers. Customers need to see that a company is differentiating service and communication based both on what they have learned independently and what the customers have told them.

Develop and Customize:

In the product oriented world of yesteryears, companies develop products and services and expected customers to buy them. But in today’s customers focused world, product and channel development have to follow the customer’s lead. Organisations are increasingly developing products, services and even new channels, based on customer needs and service expectation.

Interact and Deliver:

Interaction is also a critical component of a successful CRM initiative. It is important to remember that interaction doesn’t just occur through marketing and sales channels and media; customers interact in variety of ways with different divisions of the organization, including distribution and shipping, customer service and online.To foster relationships, organizations need to ensure that

• All areas of the organization have easy access to relevant, actionable customer information
• All areas are trained how to use customer information to tailor interactions, based on both customer needs and potential customer value.

With access to information and appropriate training, organizations will be prepared to steadily enhance the value they deliver to customers. Delivering value is a cornerstone of any relationship. Value is not price of the product or the discount offered. In fact, customer perception of the value are based on a number of factors ,including the quality of products and services, convenience, speed, ease of use, responsiveness and service excellence.

Acquire and Retain:

More the organizations learn about customers, easier it becomes for them to identify areas that fetch great value for the organization. Those are the customers and customer segments a company will want to clone in its prospecting and acquisition efforts. And, because they will continue to learn about what is valuable to each segment, they will be much likely to score a “win” with the right channel, right media, right product, right offer, right timing and most relevant message. Successful customer retention is based simply on the organization’s ability to constantly deliver on three principles:

• Maintain interaction, never stop listening
• Continue to deliver on the customer definition of value.
• Remember that customers change as they move through differing life stages. Be alert for the changes and be prepared to modify the services and value proposition as they change.

Prioritizing the changes:

Since there might be many gaps, an organization has to be prepared to make several changes to make, prioritization is critical. The organization should evaluate each of the strategies identified to plug gaps based on-

• Cost: To implement including initial one-time costs, as well as anticipated on-going expenses.
• Overall benefits: Some changes may have larger impact on the organization’s ability to increase customer value and loyalty.
• Feasibility: Based on organization’s readiness, data and system support resource skill-sets and a number of other factors.
• Time required: including the time necessary for training and addressing ‘cultural’ change management issues related to a specific strategy.

Measuring Success:

Implementing CRM is time consuming and demands a significant commitment across the cross-section of the organization. It is crucial that the action plan-

• Establish means of measuring your progress on CRM initiatives
• Establish enterprise wide measures of success and metrics that can be applied to all of your CRM initiatives.
• Apply these metrics on an ongoing basis to ensure continued funding of your CRM initiatives.

A common challenge in many organizations is that various groups, departments and divisions have varying means of measuring and reporting on the success of their CRM and customer related initiatives. Some may look at response rates and others may look at capture rates. Some may look at increasing in average order, others may look at number of contacts required to close a sale. Needless to say, the result is a lack of consistent results on CRM initiatives, and confusion between departments ad in senior management about the measures of success of these initiatives.

Ideally, each of the potential initiatives should be tied to projected improvements in customer dynamics-acquisition, retention, penetration and/or reactivation. The next step is to determine how improvements in these dynamics impact revenues, costs and/or competitive differentiation. Finally, it is important to establish universal metrics around these customer dynamics. Each of these four dynamics can be measured by the following: percentages, number of customers, number of products per customer etc. Since customer relationships represent ongoing investments, it is important to also project the future behavior and projected value of your customers while measuring the success of your CRM initiatives. This is the concept of Lifetime Value (LTV).

A customer scorecard can be developed to reflect customer dynamics in a way that is most meaningful to your organization, This scorecard should reflect measures of acquisition, retention, penetration and reactivation across al business lines,divisions and functional areas. The customer score card concept reinforces the concept of cumulative enterprise-wide impacts on customer relationships. A scorecard should be fairly simple in order to facilitate easy understanding.