How to develop an effective CRM strategy (and 7 signs you’re not ready)


A CRM strategy is a series of processes and projects focused on one goal: transforming every customer contact and conversation into a corporate asset. It’s a set of incentives and standards about how we and our channel partners interact with prospects and customers, and it requires sales and marketing and customer support and even finance to work together (perish the thought!).

If all you’re hearing is “I want to measure dials per hour,” “we need to accelerate the sales cycle,” or “we need to reduce our call queue depth,” you know that people are thinking tactically and probably aren’t up for a strategic effort.


Benefits and goals of a CRM strategy

The ultimate payoffs of a successful CRM strategy are pretty powerful: better marketing efficiency, more effective messaging, more profitable sales cycles, better forecasting, higher customer loyalty, better executive visibility and decision making, and even reduction in email volume.  In nearly any business, the cost of sales and marketing will dwarf all other cost structures—so even incremental improvements there have a big impact. A CRM strategy is all about decreasing the cost of customer acquisition and increasing customer lifetime value: fancy-talk for profitability.

The goals for a strategic CRM investment need to be realistic: over-promising might get you budget, but practically guarantees under-delivery.  Be particularly careful when setting expectations about reports and dashboards, as these provide perfect distillations of every possible bug and data quality issue.

Goals should be set along several axes, but focus on things that the business can see.  Typically, cost-cutting or efficiency goals aren’t as sexy as revenue-oriented ones.  But it’s not all about money: some goals will be expressed as percentage improvements in key performance indicators (KPIs) for each department.  To quickly discover a department’s KPIs, get ahold of the VP’s quarterly or annual presentations to the executive committee or the board.


CRM strategy development process

Determine scope: A CRM strategy that actually works will span several quarters, but it must show some positive results every single quarter.  You’ve got to scope each of the phases so they can actually be achieved. The first scoping decision: how wide (how many different groups covered) and how deep (is more than one system involved with this quarter’s deliverables).

The strategy should really be a roadmap showing the affected systems, people, and business processes, building incrementally on prior quarters’ deliverables.

Set goals: The goals need to be phased to match the milestones and deliverables of the roadmap. In a given quarter, only two or three of the goals may be advanced; that’s OK as long as there is a steady progression and every effected team can see that they’ll get their benefits in the fullness of time.

Make the business case: A CRM strategy will mean investment of cash and internal effort, and by definition it will take longer than a year to come to fruition.  So you’re going to need a spreadsheet or two.  The easy part is the cost structure: vendors and consultants will help you with that.  The vendors will also offer up their ROI calculators – but these don’t bear up under scrutiny, and actually undermine your credibility.  The benefits side of your business case needs to have solid numbers for better revenues and cost efficiencies, but it also needs some non-monetary “grabbers” that will push motivational buttons at the executive level.

Getting to that business case means recruiting good people in any department that’s going to be directly affected.  What you don’t want on the team is a powerless “strategy weenie” – you want to have drivers from marketing operations, or sales ops, or the call center director…you get the idea.  As a certified Agile bigot, I urge you not to write an enormous requirements document: work at the PowerPoint level, focusing on business processes that need to be better coordinated.  Pay attention to internal constraints, little things like data quality and uncooperative channel partners.

In developing a CRM strategy, never think of it as “final the day it’s approved” because in truth, it’s obsolete the day after.  Make sure to present it to the team and the executives as a roadmap that must evolve over time.  Why? Because competitive realities and internal politics will evolve at their own pace, and the most effective strategy must accommodate that change.


7 warning signs

There are many ways to do it wrong — too many to list here. At a high level, though, here some signs that your company isn’t ready to develop a CRM strategy (and what to do instead):

  • Your company doesn’t do “process” or make disciplined, long-run investments in sales, marketing or support. (In this case, just do a bang-up job on tactical CRM projects.)
  • Your company hasn’t been successful integrating data and systems, and has never been able to clean up key databases. (In this case, limit the external data dependencies and use an outsourced service for data quality.)
  • Your company’s sales, marketing and customer support VPs think of each other as internal competition or even obstructions. (In this case, limit your “strategy” to one VP’s domain.)
  • Your company’s decision process stimulates a “bid to win” or “name that tune” business case. (In this case, limit the time scope of anything you propose to less than 6 months.)
  • Your company is too small to achieve strategic benefits, no matter how perfectly executed the strategy. (In this case, just focus on tactical gains.)
  • Your company already has dozens of CRM, support and marketing automation systems, or is too large to coordinate all the moving parts of a comprehensive strategy. (In this case, reduce the scope to be just one division or business unit.)
  • Your company suffers from collective ADD and mood-swings. (In this case, relentlessly manage expectations downward and always “get it in writing.”)


The takeaway

If all this sounds hard, I’m here to tell you that it will be, at least for the really big payoffs. It’s perfectly OK not to have a CRM strategy, as long as your company thinks of the CRM system as just a tool or “pipeline tracker.”  It’s also perfectly OK not to have a CRM strategy if you don’t have an executive champion with the requisite level of enthusiasm.

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