CRM and improving order fulfillment...

As I’ve touched on in previous posts, the art of getting value out of CRM is to embed key business processes within the technology. While a lot of attention gets paid to sales and marketing processes, ‘downstream’ areas, such as order fulfilment, are often overlooked but often offer rich potential to add value to the organisation.

Let’s take a hypothetical example. A company sells widget making machines. When an order is received for a widget making machine, there are a wide range of activities, involving a lot of different departments, before the system is installed and paid for. So, in this example, there might be a need to complete contracts, arrange finance, send a welcome pack, survey the site, ship the machine, install it, train staff on it, activate the support contract, handover from sales to account management, invoice, etc. etc.

This is all very difficult to do, or do well at least, without any central coordinating technology. By embedding these processes in an enabling technology like CRM, a range of benefits may accrue. For example:

The fulfilment processes becomes faster with less manual handovers.

There’s less work involved in fulfilling an order, and that work can often be performed by less skilled people.

There’s less of an overhead in monitoring the process, the system can identify the exceptions.

There’s less scope for error, so the quality of delivery goes up.

With fewer errors there’s less management time spent fire-fighting problems.

Cash flow improves because orders are shipped faster, and, since quality is higher, there are fewer reasons for customers to delay payment.

Better visibility of problems and bottlenecks in the process allow the process to be further tuned to increase performance and quality.

The system supports more sophisticated processes that allow customer satisfaction generating activities to be integrated in a way that was impossible with manual systems.

Customer satisfaction increases, which, in turn, ripples through our Web 2.0 enabled world to increase order volumes

OK, so you’re almost certainly not selling widget making machines, and this is a very hypothetical example, but we’ve seen a lot of benefit in managing a wide variety of fulfilment processes in CRM. Funnily enough, it’s often not the most obvious processes that ultimately generate the greatest value.

Getting a CRM education...

One of the points I made in a recent post on CRM requirements specification, was the part that education plays in CRM requirements gathering. In brief, the more people understand about the use of CRM technology, the better their contribution to the requirements gathering process.

Expanding on that a little; the more people understand about CRM technology and the realities of implementing it, the more likely the overall project is likely to be a success. The question is ‘where do you get that education?’. And that isn’t so easy.

Sure, it’s no challenge to see as much CRM software as you care to view. There’s no shortage of vendors more than happy to show you their wares, but what about the ‘realities of implementing’ part; now that’s a challenge.

In fact the realities of implementing CRM are something the CRM vendors would probably prefer you didn’t know. They are inconvenient details that can interfere with the main event – selling software. Since the vendors tend to dominate the airways, then there’s not much ‘reality’ available.

Anyway, this all leads to my last plug for a while at least. We’ve launched another new service (the last for a while - I promise) the ‘elegantly’ named CRM Executive Briefing service, which is designed to provide would be implementers, or indeed re-implementers, with an executive primer on the realities of implementing CRM technology. Further information can be found here.

CRM - buyer beware

I was talking to a salesman the other day about a sale he’s working on. We discussed his potential client’s requirements, and I asked him what pricing he was putting forward. The figure he came up with was considerably less than I would have expected, and considerably less than I figured it would take to implement a good system. When I asked how the figure had been worked out, the salesman explained that there were a number of companies bidding, and his proposal was geared to what he felt the customer was going to be comfortable paying.

The salesman in question is a good guy, and I’d consider him to be pretty ethical in his approach. In essence he’s just playing the game. His job is to sell software. If he were to say to the client ‘look what I’m proposing is double what my competitors are offering, but I think it’s what you need to get a great system’ the chances are they’d figure he was trying it on and would buy elsewhere.

And this to my mind is the heart of the issue with CRM; vendors will sell what they think customers are prepared to pay, not what’s necessary to get the job done. For example, I suspect most people in the industry understand that user adoption is a big issue, but know that if they put in the package of services to address it, it’s going to be challenging to get it signed off by the customer in a competitive environment.

I think this problem has got worse rather than better in recent years with the advent of the software as a service (SAAS) market. Apart from the need to install software, a minor part of the implementation process, SAAS offerings are no less free of the need to offer services than their on premise counterparts. Services however just don’t seem to fit well with the SAAS business model, and I’ve had senior SAAS executives tell me that their focus is subscriptions, and services are seen as a necessary evil required to win new business rather than a source of revenue in its own right.

This isn’t going to be an easy problem to solve. Vendors have a driving need to sell software, and it isn’t in their interest to identify things that might make that process any more difficult. People like us may give the independent perspective – and you can be sure we’ll continue to work hard to do so - but the airwaves are dominated by the vendors. Some day perhaps one of the vendors will take a stand, but until that time, buyer beware.

An explanation as to why implementing CRM may or may not be easy....

I was asked this week what the pit-falls were of implementing CRM technology. This is the sort of question that can tempt you into gushing out a long list of potential hazards, but, when you come to think about it, for many, maybe most people there are very few pit-falls in implementing CRM. If all you are looking to do is to keep track of your contacts, or remember to call Fred again in January when we know he’s go some more budget, then it’s pretty hard to go wrong.

Where CRM can have a far bigger impact is managing the wider range of business processes involved in winning and retaining customers. And since whenever I mention the term ‘businesses processes’ people’s eyes tend to glaze over, and I generally sense they are losing the will to live, I’ll try and illustrate what I mean with a few use cases:

A capital goods manufacturer spends a significant sum on marketing in order to generate leads for the sales force. The sales force is very good at following up leads where there is an immediate intention to buy. They are very bad at managing leads where the interest is longer term. The company uses CRM technology to help it better track those leads. It creates processes to ensure leads are never lost, and that longer term leads are returned to the marketing department, who, through carefully developed campaigns, nurture them until they are sales ready. Lead to sale conversion rates increase significantly, and since small changes in conversion rate have a highly leveraged impact on profitability the company grows significantly.

A company sells a wide range of IT products and services. It has a large customer base, but the sales team tend to focus on winning new business. Relatively little attention is given to expanding the range of products it sells to its existing customers. The company introduces a new set of account management processes. These require the sales team to identify for each of the customers the products and services they might buy, but currently don’t, and plan how these will be promoted. This planning process is managed through the CRM system. The shift to a proactive planning approach generates a significant growth in sales.

A membership organisation offers a help-desk service to its membership. Contact with members is not systematically recorded. The company introduces a CRM system to ensure all calls to the help-desk are logged. The company automatically generates customer satisfaction surveys for all calls. The statistics for the number and type of calls received, and the related satisfaction levels are carefully analysed. The company is able to improve the quality of its service, and reduce call volumes by proactively addressing common issues. Membership renewal rates increase.

A housing association has a legal obligation to track and address complaints in a timely way. Complaints are logged in a spreadsheet and allocated to staff to follow up. The administrator spends a lot of time chasing up responses, and from time to time complaints fall between the cracks. The association implements a CRM system. The system tracks not only complaints, but also other less ‘formal’ expressions of dissatisfaction as well as the compliments it receives. Careful monitoring of this process allows it to increase compliance, and improve its services based on better visibility to what it’s getting right and wrong.

A company selling marketing services has a complex order fulfilment process which needs careful managing. The company uses hard-copy files. The work is time-consuming and prone to error. The fulfilment process is embedded in the CRM process. Orders are delivered quicker, at a higher quality level, and with less work. The company scraps plans to hire new staff to help it manage an increase in orders.

In essence, in order to attract and retain customers, organisations operate a myriad of business processes. In the absence of effective systems to manage these processes they are often inefficiently or inconsistently performed. It comes down to the maxim – you can’t manage what you can’t measure. The customer facing operations of a business can often be considerably improved by embedding them in a CRM system where they can be more effectively monitored and managed. However, and coming back to the pit-falls of implementing CRM technology, this more process oriented approach throws up issues that don’t arise if the use of the system is more limited.

Firstly, you have to think through what you want the processes to be, and that may be very different to what they are today.

Secondly, as each process is generally unique, there’s a need to tailor or customise the system to support it.

Thirdly, you need to get everyone using it in a structured and consistent way, which is no small undertaking.

Fourthly, you need to develop a reporting suite in order to help monitor the processes, because the out of the box reporting isn’t likely to reflect how you do business.

Fifthly, once your processes are being run through the system, you have to manage it in a way that quickly adapts to the inevitability that things will change over time.

Which is why a process oriented approach to CRM is not for everyone. The potential benefits of doing it are huge, but there’s an overhead as well. For organisations that are rapidly changing, and/or don’t feel they can persuade their employees to consistently use a system, this is not a good approach. The key is to know what camp you are in. It’s a lot better to recognise up front that it’s not in your DNA to use CRM technology in this way, than spend a lot of time and money proving it.