IESE Insight
Relationship Advice: Improving Your CRM Strategy
Carles Cabré; Lluís G. Renart
Editor: IESE
Artículo basado en: How to improve a CRM strategy
Año: 2007
Idioma: English

When it comes to customer-relationship marketing (CRM), many companies need no convincing. Some may already have a CRM strategy and programs in place - even experienced a degree of success with them. Yet knowing about CRM is different from doing it well. In their study, "How to Improve a Relationship Strategy" ("Cómo mejorar una estrategia relacional"), IESE marketing professor Lluís G. Renart and research assistant Carles Cabré approach this subject from the perspective of a general manager. They don't just explain what managers already know about CRM, but as the title suggests, they offer a specific action plan for how to make an existing strategy even better.

Putting It Into Practice
In their previous paper, "Seven Keys to Successful Relationship Marketing," Renart and Cabré outlined the four basic steps for implementing a CRM strategy:

  • Define the company's mission, values and culture.
  • Design the actual CRM strategy.
  • Launch a set of CRM activities.
  • Establish the leadership and good governance needed to get each of the CRM activities up and running. This step involves acquiring technology (CRM applications, websites and other software) as well as preparing the team responsible for managing the strategy and maintaining quality control throughout the entire process.

The CRM strategy should be implemented gradually, with each activity added progressively and then followed up, in order to gauge the customers' level of receptiveness, usage and satisfaction.

After observing numerous CRM programs over the past several years and interviewing the managers behind those programs, the authors have identified eight keys to success when implementing a CRM strategy:

  • Transaction excellence: customers should feel reasonably satisfied every time they carry out a transaction with the company.
  • Gradual implementation: it is not advisable to offer a wide array of CRM activities from day one.
  • Create truly bilateral relationships: in other words, the benefits of creating and maintaining the program (for the company) and the benefits of having a relationship with the company (for the customer) should be greater than the respective costs involved.
  • Neutralize the "relationship hindrance": the company should try to minimize the customer's costs for having a relationship with it.
  • Generate virtuous cycles: the program should increase customer familiarity and levels of satisfaction, making it easier for the company to personalize its offers and, in turn, build greater customer satisfaction, and so on.
  • General management support: needed from the outset and for the life of the program.
  • Use a multichannel approach: each of the customer contact channels used should be fully integrated.
  • Avoid false presumptions: such as the belief that a satisfied customer is loyal, or that all loyal customers mean profit.

Continuous Improvement Process
After designing and implementing a CRM strategy, companies must then put a process in place for continuous improvement, involving four complementary steps:

  • Review and elaborate on the company mission, culture and values.
  • Reconsider or redesign the CRM strategy.
  • Improve the way each CRM activity is managed.
  • Review or improve the quality of the governance system, namely that of the team and the necessary technological resources.

When it comes to writing up the mission, the authors recommend being specific about the contribution the company is hoping to make for its customers, employees and society in general; avoiding abrupt changes, which can create confusion; and incorporating it at management level, which means moving from a statement of intentions to action. Finally, the mission must be conveyed to all employees, so that it can be used as the code of conduct for day-to-day decision making.

In laying out what the company can and cannot do in its customer relationships, the CRM strategy is essentially a subset of decisions contributing to the sales strategy. Thus, when reconsidering your CRM strategy, you will need to clearly define where it is that you would like to go, how you are going to get there and what makes you believe you will be successful. To do this, you will need to know what your competitive advantage is, how you will position your program and what value proposition you will use for connecting with your customers.

Managing CRM Strategies
According to Renart and Cabré, the first step to improve the way your CRM activities are managed is to take stock of: the existing activities that clearly define the content; the cost/benefit relationship, for the customer and for the company; the target for each; the access conditions; the part of the mission being addressed; and the part of the CRM strategy being fulfilled.

The second step is to analyze the knowledge, participation, perception and attitude of your customers with respect to each activity.

The third and final step is to make decisions regarding each CRM activity, such as: promoting a particular group of activities; starting a new activity; reviewing the access conditions to increase participation; bolstering promotion efforts for certain activities; phasing out activities that do not further any of the strategic objectives; identifying partners; or grouping activities together by levels.

After reviewing the mission, the strategy and the activities, it is important to ensure that the systems responsible for making the program operational, as well as the department responsible for carrying it out, are both working properly. Good governance must be evident in six key areas:

  • the program's management team and its members;
  • the organizational structure of the managing department;
  • the technology infrastructure of the CRM program;
  • the channels of contact and interaction with the customer;
  • the processes involved with relating to customers, such as customer service or attending to complaints;
  • knowledge management, i.e., integrated information management with the introduction of new concepts such as return on investment (ROI).

This entire improvement process should be evaluated periodically, which will allow for new improvement processes to be created, thereby initiating a virtuous cycle to help ensure that high-quality sales relationships are maintained.

A properly designed and implemented CRM strategy may seem like a lot of work, but the authors remind readers of the reason for all this activity: ultimately, to get customers on board with the company.

© IESE Business School - University of Navarra