It is now widely recognised that it is the employees who deliver customer service and who have the relationships with the customer’s staff.  Customer satisfaction is not an abstract measure but is the sum of the effectiveness of these relationships. The role of management is to facilitate and support the constructive development of these relationships. In this respect, it turns the logic of implementing CRM systems on its head. Rather than staff completing reports in order to provide management information, management need to understand where they can engage in forming real relationships with the customer. Until this is done, it may be meaningless to task the sales teams with winning more business. If the customer is experiencing problems, then the initial plan has to focus on putting your own house in order first, before the customer will consider offering you further new business. 

This Byte is about business-to-business relationships and we will lead you through:

• What the problems are (both within your organisation and from the customer’s point of view)
  • How sales staff view CRM systems
  • What the Marketing Department’s experience is of using CRM systems.
• Explain how engaging with the customer can cut through the fog and help you to help them
• Describe some of the tools and techniques that facilitate building a deeper relationship with your customers.

The problem – financial evaluations are not adequate

Leading consultants have identified some of the major problems:

• 52% of companies cannot measure the Return on Investment (ROI) from their CRM systems – Cap Gemini Ernst & Young (CEGY) survey 1
• 68% of executives cannot measure the ROI on marketing campaigns 2
• 70% of these executives say they continue to have trouble capturing the attention of customers
• 65% are struggling to integrate and share customer data across the organisation (Web, call centres, etc.). 3

What are the core issues?

We believe that these are the symptoms of some age-old issues between sales and marketing teams. The introduction of CRM has simply magnified an issue that has been present where companies have Sales and Marketing functions that are not fully integrated. This has resulted in the two camps having different views of CRM. In addition, this will almost certainly differ from what Senior Management expect CRM can deliver for them, and hence justify the significant investment that they have approved.

Sales behaviour

We believe that Sales-staff in many companies see the CRM system as a ’beast’ that requires feeding at least once a week. In some organisations, the sales staff set aside two days a month to do their reports! The whole drive of company reporting cycles tends to be to provide senior executives with the information they need. However, the systems and processes that are in place provide little useful information to help the sales people to be more effective. At best, it tells them where they are but gives them little advice on what to do next.

The same is true for the interaction between the marketing and customer service departments. Here, the processes can actually generate disagreement and conflict both within and between the very teams that should be cooperating in serving customers. This leads to the situation where Sales staff wonder why Marketing can’t produce more competitive products; and Marketing wonder why they are not getting feedback on customer’s needs and competitor activities.

In addition, Sales Directors find that they need to play two roles that sit uneasily together – that of coach and that of company ’police officer’. The coach role is intended to get the best out of each member of the sales team. This requires openness, trust and a willingness to address the situation as it is. On the other hand, the police officer holds staff accountable for their commitments and forecasts to the business. After all, the business is relying on the accuracy of the sales team’s forecasts for all manner of other dependent activities such as finance, purchasing and production. This frequently puts sales staff on the defensive, where they feel that it is in their interest to disclose as little as possible, until an order is signed. On the other hand, when the sales person does get the order, they wonder why the organisation reacts negatively to the surprise order. Surely they should be treated as heroes for winning more business?

Marketing expectations

We believe that Marketing has a contrasting view of CRM that is very much tainted by their view of Sales.

Whether it is through a CRM system or some other feedback loop, there is a lack of feedback from Sales on customer needs, in particular with lost bids. When companies do try to understand why they were not successful in gaining business, they usually get sketchy feedback from the account manager - either price was not competitive or product deficiencies lost the sale. Although these may be true on some occasions, the work that we have carried out for clients has shown that there are often much more complicated reasons why they lost and their competitor was successful. The key thing is to gain a thorough understanding that allows actions to be taken in the future, so that win rates can be improved. Whilst salespeople have incentives to forget losses, and to focus on gaining new business, there will always be shortcomings in companies’ knowledge. Just imagine the value for the whole organisation if this could be formally collected and fed into a shared CRM system!

CRM systems are potentially a valuable tool in helping plan, develop and execute Marketing plans, but whilst the system contains questionable information, Marketing teams are more than ever dependant upon Sales’ feedback on the effectiveness of Marketing plans.  With the exception of demand from Sales for tickets to hospitality events, often there is no input into the development of the marketing plan or feedback during its implementation.  If companies are to increase their Return on Investment from their Marketing budget, this link with Sales for what works and what doesn’t work is essential.

We have found over the years that even the most basic customer information is not readily available in many B2B companies. There has historically been a feeling that knowledge is power within Sales, and that sharing information would reveal a lack of customer knowledge. In addition, Sales are reluctant to trust others to use their customer contacts, as they have no control over what is being said or how this is done.

The reality today is that when asked to produce a single source list of customers, with full contact details, the majority of companies struggle to deliver. Without this in place the dream of CRM offering the opportunity of delivering highly focussed marketing cannot become reality.

One of the most common frustrations with CRM strategies is that the cost of implementing the system is often four to five times the cost of the software, combined with a timeline of three to four years for full integration into the company. We often find that in this development and deployment stage, present users of CRM start to believe that there are too many holes in customer data for CRM to be a valuable strategic tool. This can lead to the situation where neither Sales nor Marketing own the CRM system, because of its lack of perceived short-term value, and it just becomes viewed as a systems implementation. The end result is that the CRM approach does not become accepted as the preferred way of working and does not become integrated into the core processes of the business.  Without full integration into corporate processes and cultural changes in employee commitment to use the systems, CRM will struggle to be a success.

Customer and executive expectations

This frustration for both Sales and Marketing is further multiplied when considering the experience of customers and Senior Management. Both can see the theoretical advantages of improved knowledge gained by CRM, and both parties see little coming out of them, and with so much focus on the systems, rather than the customer, the customer is in fact losing out in the short term.

One of the key issues, that need to be solved by companies, is where the CRM system is positioned within the company relative to customers and senior management. Many executives see the introduction of CRM as a way of gaining additional revenue (on average, companies are sold systems with an expectation of a 10% increase), combined with significant cost savings. On the other hand, the customer is looking for better quality service combined with well-targeted products that increase their company’s profitability.  Unless a Win:Win scenario can be found, any CRM system is likely to fail. The chart below illustrates the importance of a very clear direction on the positioning of the CRM system. Too close to the CEO focuses it on budget management, and too close to the customer doesn't allow the company to understand their long-term needs and therefore just react in a short-term “knee jerk” fashion. This may not be profitable for either the company or the customer.

“Cutting through the fog”

“The missing piece of CRM, in most organisations, is really understanding clients (and their customers).” 4 In a recent review of best practice, Cap Gemini Ernst & Young (CGEY), recommends addressing three areas – the organisation, the systems and the customer journey. 5 They describe them as journeys – you have to travel the road to understand the experience of each group.

It is the last of these, the customer journey, which is the hardest to address and may require the most attention. If you implement new CRM systems, then the experience of both your staff and the customer will change. The challenge is to recognise this and define and then deliver the experience you want customers to have. All of this is hard to imagine in isolation. It is also hard to manage progress on three concurrent separate “journeys” at the same time.

The ideal answer is a single journey – one that you can share with your customers and a journey on which they guide you. In this there is a role for Sales and Marketing that redeems the apparent poor return on investment. Earlier we discussed that employees who deliver customer service are key in any customer relationship. Combining the knowledge they have of customer needs with traditional market research tools such as customer surveys and focus groups, ensures that the tools exist for a company and its customers to shape the experience they both want i.e. one in which they can both prosper. The same is true for Sales and Account Managers, if they can understand how to engage on the business issues that really concern their customers.

Solutions and “Tools for the job”

There are a number of useful tools for the job ranging from Customer Advisory Councils to Shared Expectation Workshops and joint planning with key customers.

At the strategic level, the CEO can form a Customer Advisory Council with participation by a core group of executives from key customers. Ideally this should be at Board-level and consist of sharing information about the strategies of both organisations. It also becomes a forum for listening, managing expectations and demonstrating that you can respond to the changing needs of your major customers.  There is also the prospect of real and fundamental change, if the CEO finds himself directly accountable to customers for the quality of service.
At the next level, companies can engage in joint strategic planning. This is especially valuable if you are dependent on a few large customers for the continued success of your business. This leads to real understanding and commitment. It also minimises the risk of the Board having to issue a profits warning, when revenues and profits fail to materialise ’as planned’.

In Sales, again there is value in joint planning with key strategic accounts.  However, in many cases, preparation is inadequate and the customer is not consulted during the planning exercise. The result is an interesting statement of intent, from the sales team, that rapidly diverges from reality. At the planning stage, key customer staff should be invited in to contribute to and comment on the account plan produced by the account manager. Then the plan should be reviewed and jointly signed by Directors from both companies to confirm that the parties are committed to achieving the actions. Finally, dates should be set to review progress against the plan. This is an area where a brief meeting and constructive support from the Directors can set both organisations up to be successful. It can also be used to clear a logjam and empower the teams to succeed together.

However, the context of the plan has to be realistic. In the simplest of terms, if the customer is experiencing poor service, then the first and only plan they will want to consider is a “get your house in order” directive. While the CEO and the Sales Director may be driving everyone to think in terms of more new business, it is pointless asking customers to buy more from you, if their current experience is awful. They will feel that they have already “bet their careers on you” by recommending your company as a supplier in the first place. If the current issues are not addressed, they are not going to place further business with you. However, if you do address their current issues then our experience is that you build trust and confidence that will lead to deeper relationships and genuine loyalty in the long term.

In Marketing there is value in joint product planning and allowing your customers to shape your product development plans. Frequently, this leads to collaboration on product and market testing that gives you and your customer a competitive advantage in their sector.

There is huge value in knowing and agreeing what you can really do together. More than that, once it is working well you will wonder why you hadn’t engaged so openly with customers before.  Previous forms of ‘guestimating’ or planning will seem crude and unreliable. 

The following table summarises some of the key tools that can be used to gather and understand customer needs in order to have a true partnership approach, which in turn will fully support the development and deployment of a CRM system.

Although the vast majority of large companies allocate budget for getting customer feedback, very few allocate budget and support for fixing the processes, the product or the resource issues raised by customer feedback. Also, budgets are not provided for informing their customers of the actions taken.

Our own survey of major European companies shows that although 95% capture customer feedback, less than 1 in 10 then implement change based upon that feedback, and only 1 in 20 communicate back to customers.

Conclusion

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