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Forrester: Reengineering a CRM strategy for the age of the customer

"The customer comes first" has never been more true than it is today. The only source of competitive advantage in an era of technology-fueled disruption is an obsession with understanding, connecting with, serving and delighting

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customers. But as organizations strive to cope with digital disruption and succeed in the age of the customer, they often do a poor job of defining their customer relationship management (CRM) strategies. Business and IT professionals responsible for CRM struggle with how to re-engineer customer-facing business processes, how to acquire and deploy the appropriate supporting technologies, and how to lead and sustain the necessary organizational changes.

William Band

The foundation of a sound CRM plan is a customer experience strategy that defines the right experiences to suit customers' needs and expectations. This is especially true in a digital age of proliferating customer interaction points. Too many organizations fund CRM initiatives based on soft statements such as "exceptional customer service," "maximum customer value" or the infamous "360-degree view of the customer." Even concrete CRM objectives -- for example, increasing revenue or improving profitability -- are difficult to achieve without the next level of detail. CRM strategies must address specifics: What is the desired customer result? What is required of employees and partners? Which opportunities should we focus on first?

Without a sound CRM planning process, the strongest participants can hijack CRM, turning a business initiative into an IT architecture project, or a political land grab, or a mire of conflicting objectives and feuding special interests. The traditional Waterfall planning approach for CRM strategy and technology development also doesn't work. Instead, business and IT leaders must adopt a business technology approach that strives for more "outside in" thinking, uses Agile planning and adopts co-creation processes that represent a joint business and IT strategy for which IT is responsible for executing on the technology component.

Here are five steps you can take to help formulate your CRM plan in the age of the customer:

Understand the business drivers

CRM leaders need to take a systematic approach to understanding the business drivers that affect the organization; this sets the context for the CRM strategy. Forrester defines business drivers as the "evolving customer, competitor, and technology trends that collectively act as an environmental force driving your company to evaluate and hone its CRM strategy and practices."

As organizations strive to cope with digital disruption and succeed in the age of the customer, they often do a poor job of defining their Customer Relationship Management (CRM) strategies.

William Band,
vice president and principal analyst, Forrester Research

To do this well, you need a strong understanding of your customers' behaviors and of the competitive and technology landscapes. As a marketing and sales executive at a global company told us, "The increasing pressure on our customer value proposition and competitive offerings is driving our cross-brand strategy and forcing us to rationalize an increasingly complex sales process."

Articulate a business vision and goals

It may sound obvious, but this can be a serious undertaking. Regardless of how well-articulated the vision and goals were in the past, you can improve results by reaffirming the business vision and describing customer-facing business goals. The vision describes the intended target state in the broadest terms possible. Good visions articulate a compelling view of the future that resonates with a broad set of constituents. Forrester advises IT and the business to work together to articulate clear, concise, meaningful and attainable goals -- specifically, SMART (specific, measurable, attainable, relevant and time-bound) goals.

Prioritize the business capabilities required for success

Forrester defines a business capability as the organization's capacity to successfully perform a unique business activity to achieve a specific outcome. So, how do you define and prioritize the business capabilities needed to help your organization succeed?

  1. Understand the current state of CRM capabilities.
  2. Anticipate future-state scenarios.
  3. Pinpoint the capability gaps that must be closed.

Define future-state strategies

The CRM steering committee should now have two or three future-state scenarios, with the relevant CRM options that map to those scenarios, mesh with the business vision and goals, and keep the business ahead of its competition in light of external forces. A senior executive responsible for front-office applications at a global company told Forrester that his company provides two or three technical solutions to the CRM team.

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In order to narrow the field of choices, business leaders should ask technology experts to provide guidance on the viability of each option. This review process has three parts. First, assess the business impact of each strategy; all stakeholders should fully review, understand and vet the expected business benefits of each future-state CRM strategy. Second, investigate and present the inherent technology risks of each option. The risks associated with technology stem from the limited track records of new solutions and the risk of complexity with strategies that involve a myriad of integrations across multiple platforms. Third, estimate how long it will be until each strategy will likely start to yield benefits and when the full benefit will be realized.

Establish measures

All CRM goals should have metrics that tie back to strategies. Start by defining CRM metrics early in the project. Next, use process metrics as proxies for business outcome measures and measure what's important to customers. Too many companies spend money on the wrong things -- or actively annoy customers -- because they never bother to ask what would help their customers.

Finally, measure employee engagement and use metrics to guide their engagement. Your CRM solution will only be effective if information workers actually use the system -- and use it properly. In this age of the customer, managing the customer relationship is everyone's job. Clear metrics will help them know what success looks like.

About the author:
William Band is a vice president and principal analyst at Forrester Research, where he serves application development and delivery professionals.

This was first published in July 2013

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