Posted on : 05-11-2010 | By : Dinesh.Chandrasekar | In : BI, Technology
One third of CRM projects generate great results, one third create minor improvements, and the final third produce no improvements at all. You’re probably wondering: “How can I tell where I’ll end up?
To get a good feel for how ambitious your CRM plans should be, first take a serious look at your existing CRM processes—the way in which you market to, sell to, and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.
Over the past ten years, I have seen a trend emerge regarding the relationship between the maturity level of a company’s CRM processes and the types of CRM systems that company is able to implement. I now classify companies into one of five levels of CRM process development. A company’s maturity level often dictates the level of CRM technology it can successfully absorb.
CRM Maturity Level 1: Adhoc CRM Processes
Anarchy prevails in an organization at the level one stage of CRM process development. Account managers tend to view themselves as CEOs of their own territory, unbound by a structured methodology for working with customers. There may be a suggested sell cycle, but it is used haphazardly at best, based on the whims of the individual salesperson.
Being a level one organization does not mean you are a failure, it simply means that results are unpredictable. In this type of company, leads get generated, sales get made and accounts are serviced. However, sometimes lead conversion rates are 20 percent, sometimes they are 1 percent. Sometimes deals close in three days, sometimes in one year. Sometimes customer satisfaction ratings are near 100 percent, sometimes they are in the pits. The problem is nobody can explain why these things happen.
The success of a level one firm is not dependent on CRM processes—because there aren’t any! Instead, it is based solely on the skill levels of individual marketing, sales, and support personnel. If there are no CRM processes in place it is impossible to implement a sophisticated CRM system, as there is nothing to automate. A firm at this level of maturity would be best served by providing its people with CRM tools that focus on increasing individual efficiency (contact managers, word processors, presentation systems and e-mail) versus organizational effectiveness. Such companies need to do a lot of work on process definition before they try to expand their CRM technology plans.
CRM Maturity Level 2 : Replicable CRM Processes
A level two organization has things pretty much under control. Salespeople hit their numbers regularly, future business is forecasted with a fair degree of confidence, customer satisfaction is within an acceptable range. The key attribute of a level two organization is that it achieves its success not through sophisticated CRM process methodologies, but rather through solid management. Level two companies are driven by “tribal folklore”—the belief that, “If we keep doing the best practices of the past, we will keep hitting our numbers in the future.” These types of companies tend to be successful, but only as long as there are no major changes in the way business is done in their marketplace. This type of company can successfully implement a more advanced CRM system than a level one firm. Since there is a recognized way of doing business, such tools as opportunity managers, forecasting systems, configurators and help desk systems can be implemented to help improve operations.
CRM Maturity Level 3: Focused
A level three organization is one where CRM processes have become a way of life for the company. Every employee in marketing, sales and support has the “bible” for how things need to be done—not just the accepted way of doing things, but the only way to do them. Because these processes are so ingrained into daily operations, they can be analyzed and improved. This type of company is rarely caught off guard by changes in its marketplace. It can detect very early when product requirements begin to shift, when competitive strategies are becoming more effective, or when customer satisfaction is just starting to decline.
This type of company is an optimal candidate for a more sophisticated CRM system. Processes are so well disseminated throughout the enterprise that these companies can successfully absorb technological innovations such as marketing automation systems, sales coaching systems, interactive selling systems and systems for marketing, sales and support performance analysis. These companies will probably also have no trouble implementing e-business extensions to their CRM systems to allow channel partners access to the tools.
CRM Maturity Level 4: Dominant
Level four is where we all want to be. A firm at this level has solid CRM processes that are optimized by the most sophisticated CRM systems. These companies also are strong believers in gathering and continually analyzing metrics about their performance. They have a solid understanding of how they sell, how their customers buy and how they need to service clients to create long-term loyalty.
Level four firms are constantly questioning the status quo. They ask themselves such things as: Why do 30 percent of the people who visit our Web site abandon their shopping carts? Why do 15 percent of our “A” leads never get followed up? Why do 23 percent of the orders we process have errors? For these types of companies, CRM systems are not an option—they are a necessity. Implementing CRM is the only way level four companies can get the information they need to analyze and improve their performance. A level four company is in a position to implement, not just great CRM systems, but great Analytics/BI System as well. These companies’ knowledge of how they, their channel partners and their customers do business gives them the insights they need to determine how to best leverage technology to optimize their operations going forward.
CRM Maturity Level 5: Visionary
Level 5 is a state of predicting the future for your business and a state CRM completely stays in Nirvana and often this is pulled to Level 4 and companies put forth stupendous efforts to get back to Level 5. We hardly find very few companies in this state and this requires customer experience optimization as a daily affair.
WHAT’S YOUR LEVEL?
To get a feeling for how successful your CRM systems will be, first do a realistic “gut-check” on what type of organization you have. If you find yours is a level one firm, and you are currently planning to implement a very sophisticated eCRM system, chances are you will fall flat on your face. You are talking about running a four-minute mile when you can barely walk around the block. Pick the level of CRM technology your organization can successfully absorb today. If you don’t like the level of maturity of your CRM processes, then work to improve it. Once the changes have occurred, then upgrade your CRM systems to match your new level of process performance.
Thanks for your patience reading and appreciate if you could experience and share with me your views.