How to Create a Winning CRM Strategy

At a Glance

  • The top cited reason for CRM software failure or disappointing results is a poor or missing CRM strategy.
  • Without a strategy, CRM software deployment is aimless and adopts a trial and error approach, which is certain to incur some wrong turns and detours that result in questionable leadership, a more chaotic execution and the waste of valuable time and resources.
  • With strategy, CRM software deployment occurs more quickly, achieves more significant business objectives, increases user adoption and achieves a much higher ROI.

Reaching any new destination is best done with a map. You need to understand where you are starting from, where you want to go, and invest in some planning to plot the shortest route to get there.

A Customer Relationship Management strategy is a lot like a map. It identifies your baseline performance (which is your starting point), your destination in SMART (specific, measurable, actionable, realistic and timebound) user, customer and business outcomes, and designs the methods to achieve those measurable objectives in the shortest route.

It's the destination, or the identification of measurable objectives that matter where most companies fall short. Instead of identifying specific objectives such as applying CRM technology to achieve a 5% increase in customer acquisitions, a 10% growth in customer share or a 15% increase in customer retention, uninformed implementors simply install CRM software and hope for the best. Hope is not a credible business strategy and configuring CRM software in a vacuum is not going to achieve measurable objectives that matter. This is why the top cited reason for CRM software failures and disappointing results is a poor or missing strategy.

CRM is not part of a business strategy; CRM is the business strategy.
— Claudio Marcus, Director of Research at Gartner

I find strategy is about 5 percent of the journey to CRM success. That said, it is a precursor to everything that comes after. Great execution won't get you anywhere if your strategy is wrong. But a solid strategy leaves the remaining 95% of the journey to be tackled with clarity of focus, reduced guesswork and measurable execution.

Depending on your company's strategy – whether you have one or not, or if it's shallow or complete – the same CRM investment will yield wildly different benefits and payback. To maximize your payback, your strategy should do six things.

CRM Strategy

Align with your corporate strategy

CRM is strategic when it directly supports your company's top priorities. Most company strategies include things like achieving double digit revenue growth, realizing a customer-centric culture, delivering unique customer experiences and the like. If your CRM software isn't designed to directly aid these objectives, then it's not strategic, and probably relegated to delivering departmental efficiencies or incremental cost savings.

A CRM software strategy is not an implementation plan. It's the pursuit of prioritized business outcomes that create value and differentiation. CRM strategy should be thought of as engineering user, customer and business outcomes. These outcomes often include methods to acquire, grow and retain more customers. Business outcomes without supporting methods are little more than wish lists. CRM objectives such as increasing customer loyalty, decreasing customer churn or growing customer revenue must also include the next level of detail.

Most companies don't have a top business priority of getting software to run correctly. So if your CRM implementation goal is focused on little more than getting the software operational, or your objectives are expressed as software features and functions, it's probably more of an IT project than anything that will increase revenue from customers, decrease the costs to acquire, serve and retain them, or otherwise grow the business. When the application fails to align with the company's top priorities, it struggles to gain executive sponsorship and user adoption, and is rarely sustainable.


Align with your customers top priorities

Most companies got the memo they must become customer-centric to survive and thrive, and for good reason. Customer experience (CX) leaders grow revenue faster than CX laggards, drive higher brand preference, and can charge more for their products (source: Forrester, Improving Customer Experience Through Business Discipline Drives Growth.)

Unfortunately, while 80% of companies believe they deliver "superior experiences," research shows only 8% of customers agree (source: Bain & Company, Customer-Led Growth diagnostic questionnaire, n = 262). Saying your company is customer-centric doesn't make it so. Virtually every company says its customer centric, but most are self-centric. Self-centric companies define Customer Relationship Management from an inside-out perspective, that is mostly or solely from the company's perspective, and thereby craft a strategy or CRM objectives designed to create the most efficient and low-cost business processes possible, or other objectives that serve only the company's interests.

Customer-centric companies define CRM with an outside-in perspective, which means defining what successful customer relationships look like from the customers' perspective. They then craft a strategy designed to achieve customer relationships which include those objectives.

Customer top priorities change in each phase of the purchase cycle and over time. Methods to understand customer top priorities include customer segmentation, personas, insights, voice of the customer (VOC), satisfaction measurement (NPS or CSAT), loyalty, purchase history trend, customer health score and many more.

Customers are not homogeneous, so their top priorities and preferences must be recorded as part of the 360 degree view and applied to deliver relevant, personalized and contextual communications, offers and engagement. If your CRM software isn't designed to deliver on your customers' priorities and preferences, then it's not going to contribute to customer relationships or value derived from customers.

Growing mutually rewarding customer relationships creates a connection that can withstand disruptive technologies, competitor encroachment and the erosion of all other competitive advantages.


Optimize your business processes

Too often, CRM systems are implemented as systems of oppression, using the application as a surveillance tool to micro manage the salesforce or customer support staff. While staff measurement for continuous improvement is important, if this is your first goal for a customer relationship management system then it is non-strategic, likely to incur user adoption challenges and deliver scarcely little ROI.

A better approach is to first define your customer facing processes using journey maps. Then follow by documenting your As-Is processes. The reason this is important, is that expert designers do not begin searching for improvements until they have thoroughly defined the real problems. As Einstein once said, "If I had 20 days to solve a problem, I would take 19 days to define it."

Once the real problems are diagnosed and prioritized it's time to design your To-Be processes and show how to remove friction from processes, eliminate non-value-added steps or activities, and deliver improved user, customer and business outcomes. From my experience of having done this for three decades, I've found the Component Business Model to work best for process design in large companies and Agile Value Stream Mapping to work best in small or mid-size companies.

This is also an area to consider adoption of sales, marketing and service best practices such as sales processes which increase sales win rates, marketing methods which generate the highest conversions and service techniques which result in the lowest cost and highest satisfaction.

Agile Value Stream Mapping

Improve your products or services

Most company executives think they know what their customers want. They are partially right. Their inaccuracy lies in subconsciously inflicting their own bias, thinking customers are all the same, believing customer wants are static, and all customer wants translate into willingness to pay. Small inaccuracies in customer preferences for your products and services result in large losses in sales and customer tenure.

CRM methods and technologies can engage customers to create better products and services. Customers will tell you what they want, and how to improve your products or services, if you ask them. You also need to record the results by customer segment, take action and measure frequently. Companies that collaborate with customers during product design, manufacturing, distribution, sales, service and returns create more valuable products and services.

We're in the age of the social customer. Customers want to provide input to their suppliers. That input is valuable in steering the company to produce products and services that are enthusiastically embraced by customers and producing customers that make repeat purchases with their suppliers. CRM systems can apply social engagement tools for customer input, crowd sourcing tools and portals for customer collaboration, self-service processes for customer empowerment, virtual agents or bots for 24x7 communication and automated surveys for any or every type of customer engagement.

Failing to verify exactly what different customer segments want at different points in their supplier relationships creates a cascading effect that degrades product R&D, marketing offers, sales effectiveness, services delivery and customer experience (CX) objectives. The negative financial impact incurred in any one of these areas is a significant hidden loss than goes unrecognized by most business leaders. If your CRM program isn't telling you how to build better products or services, you're missing a big opportunity.

Innovation Dashboard

Help staff make better decisions

CRM Business Intelligence (BI) tools should be designed to deliver the right information to the right decision maker at the right time. I typically create prioritized information-based use cases to determine the biggest upsides, and so I can start small and evolve.

At a minimum, CRM BI tools should deliver actionable information to staff (i.e., role-based dashboards with prioritized actions), real-time deviation reporting (i.e., notification alerts), performance reporting (with benchmarks and trends), and business process reporting that drives continuous process improvement. With maturity and data accumulation, BI tools will also permit predictive analytics.

Customer Experience Dashboard

Transform data into actionable information

Research shows that companies which implement CRM software in a vacuum – that is without an accompanying strategy – use less than 5% of their data. Data is an asset if used and an unproductive expense if not. Every person, process, information system and decision in your company is improved with more relevant data.

If the data is correctly captured, the system can apply data to deliver differentiated customer experiences, score leads or sale opportunities, identify actions that improve sales win rates, identify content that improves customer service responses, measure customer health, or flag customers in decline or at risk of churn.

The system can answer simple but often unanswered questions such as what 20% of customers generate about 75% of my margins and profits? Or what 20% of customers deliver 80% of the referrals that result in new sales? Or what 5-10% of customers contribute negative profits? But to answer these questions, we must be able to capture and convert data into information, and deliver that information to a person for action. CRM applications can do this, but it's generally not out-of-the-box functionality.

Data Transformation

The most successful businesses are defined by their ability to collect and curate the right data, use data to create differentiating products, services and customer experiences, and apply analytics to make insights actionable at every customer engagement or decision point. With enough data the company can create models for what-if analysis and predictive analytics. Converting data to actionable information is a complex undertaking for sure, which is why those who succeed will achieve competitive advantage over those who don't.