Essay: Implementing a stakeholder strategy / Customer Relationship Management

Book Report
Reading 1 – Implementing a Stakeholder Strategy: Jack Springman
Various Harvard Business Review commentators have proposed the case for more emphasis to be put on the stakeholders of a business. This includes the likes of employees, customers, suppliers, and society. This case has been backed up by research that states better long-term results to shareholders are achieved when their interests aren’t put first. This is due to the creation of better productivity with the focus on stakeholders, which ultimately results in better financial performance for the shareholders. While a business’s ultimate goal is profit, in the bid to achieve that goal the business must create value for all its stakeholders. It is not viable for a business to put one of its stakeholders ahead of the other as it can lead to damaged relations between stakeholders, which ultimately would lead to lower performance. For example, suppliers could prioritize other customers, employees may leave for better work elsewhere, and customers may default to competitor’s products/services. The aim is not for short term profits, it is for long term profits. Thus, all stakeholders must be taken into account by creating or sharing value with its stakeholders to achieve long term profits. To help achieve this balance amongst stakeholders there are some steps to be taken:
1. First, identify your company’s stakeholder groups
a. Shareholders, suppliers, employees, customers etc. (be specific)
2. Create a value proposition for each stakeholder group
a. How will the business create value for each group i.e. Financial, functional, emotional, good service, or convenience.
3. Determine what you are seeking from each stakeholder group
a. Financially and Operationally – prioritization, loyalty, referrals etc.
4. Compare the capabilities you need with those that you already have
a. Fill gaps with organizational redesign, training, process improvement, systems implementation, and/or cultural change.
5. Use this information to create a profit model to manage the inevitable trade-offs among your stakeholder groups
a. Profit model helps decide between interests and returns provided by each stakeholder group, which helps output (financial returns)
6. Determine a set of key performance indicators
a. Tracks how effective the value creation for each stakeholder group is, and how well the business is capturing the return. Helps provide a wholesome view of performance.
Reading 2 – Customer Relationship Management: Anderson and Kerr
Chapter 1: Customer Relationship Management Is Not an Option
Customers are only profitable in the second year of business they conduct with a company. CRM is the backbone to customers becoming and staying loyal. CRM allows for customer intelligence – “data turns into information and information turns into a customer satisfying action” (Page 1).
Customer Relationship Management Defined:
– CRM = “A comprehensive approach for creating, maintaining, and expanding customer relationships” (Page 2).
– CRM should be implemented in all areas of business
– There must be a strategy for implementing CRM. This serves as a guide for all strategy in the organization, all of which should serve to create, maintain, and expand customer relationships. If any strategy does not have this key part then it does not serve the organization.
– External customer satisfaction is directly proportional to internal customer satisfaction.
– Customers want to do business with businesses that understand what they want and need.
Technology does not Equal Strategy:
– While millions have been invested into CRM systems, customers satisfaction is still declining.
– Technology is confused with strategy – strategy should drive organizational structure, which would help decide choices of technology implementation. However, technology is being used to help implement strategy.
– Business must be clear about their purpose and what their approach to creating, maintaining, and expanding customer relationships looks like.
The Power of CRM:
– The more clarity a business has on its CRM intentions the more likely they are to choose the right tools to support the intentions, and actually follow through on using the tools.
– The power of CRM lies in the clarity of the purpose
CRM Success Factors:
1. Strong internal partnerships around the CRM strategy
a. All management in all departments comes together to form strong partnerships while discussing each of their needs for the CRM implementation
2. Employees at all levels and areas collect accurate information for the CRM system
a. Employees must understand what information is being collected and how it is useful to them. They will trust the information more when they know how it has been collected
3. CRM tools are customer and employee friendly
a. CRM tools must be seamlessly entered into the natural customer service interactions
4. Report out only the data you use, and use the data you report
a. Only use data you will actually use, and share it with your team
5. Don’t go Hi-Tech when Low-Tech will do
a. Look for the simplest solution that fits the business’s needs.
CRM is here to stay:
While most managers have to deal with an overload of unorganized data, CRM sets the agenda for what data is to be collected, how it is transformed into information and customer intelligence, and how that information is shared across the business. For example, when aggregate customer information is collected, that can be used to target new customer prospects.
Chapter 2: The Customer Service/Sales Profile
– Sales do not equal relationships – Sale is just the beginning of the relationship e.g. “more like a marriage than a one night stand” (Page 18). While important sales are more about the quality of service a business is willing, able to, and credit the customer with.
– Service extends beyond the buyer – The business must consider all the people who are touched by the product or service offered.
– Service and sales are on the same team – The two departments have to be working together not against each other.
Three levels of Service/Sales:
1. Initial Transactions
a. When the initial transaction runs smoothly, with minimum fuss or error, it provides a platform for future business transactions.
2. Repeat Customers:
a. Focusing on getting customers to come back the second, third, fourth time will allow for a deeper economic and emotional connection with the business.
b. CRM strategy will tell employees how much importance to place on repeat customers to allow for them to be valued and extend the relationship
3. Customer Advocates:
a. Customers spread the word about the business due to their continuous positive experience.
The Shape of Service/Sales Profile:
1. Pyramid Profile – Starts with Level 1 (Initial Transaction) and builds up
2. Hour Glass Profile – Broad base for initial transaction, narrower level for the few repeat customers, and inverted base at the top for advocates who are made from initial transactions. Less common than Pyramid Profile
3. Hexagon Profile – For business that is stable. It has many repeat customers so it focuses more on getting them to level three rather than putting more focus on initial transactions. It is very vulnerable to changes in supply and demand.
The Pitfalls of the customer Service/Sales profile:
1. Focusing on the top
a. Business must not take all advocates’ praise to heart and then disregard all other customers
2. Focusing on the front door
a. Initial transactions while important, are only one costly step in the relationship. Focus must not be on the quantity of customers but the quality that you provide them.
Chapter 3: Managing your Customer Service/Sales Profile:
For a business to determine their profile they must look at the percentages of customers at each level, and move from there. The business must study their shape and see if it truly works for them.
It is important to note not all repeat customers are good, therefore customers must be segmented. E.g. Customer call center – who is calling about a service problem and who is calling because they receive value from the call?
Right Practices for Repeat Customers:
Customers can be more economically important to the business than others, and thus they should receive more concessions and accommodations in the form of discounts, special deals, or offers.
This allows for depend relationships as customers will know that they are valued and rewarded for their continued loyalty.
Opportunities to Improve Initial Transactions:
The special treatment for the repeat customers can make initial customers unvalued. To change this team members at all levels, need the soft skills of when and how to explain the different service levels.
Nurturing Customer Advocates:
The business should find out about who is talking about the business, and what they are saying. This may change from industry to industry but someone somewhere is talking about the products or services that the company is providing.
Managing for Repeat Business:
– Key #1: Track the Relationship.
o The CRM system should be able to track the history of each customer. This allows the business to analyze patterns and predict future purchases.
– Key #2: Allow for Variation
o Creating ways for customers to have the experience of customizing, which allows for customers to shape their own service experience.
– Key #3: Look for Opportunities to Expand the Relationship
o If you are selling or providing one good or service is there a complimentary good or service that you could provide your customers with?
– Key #4: Connect the Relationships.
o Customer with multiple relationships provides more economic value along with greater expectations and assumptions
o When CRM tools connect and capture relationships they help meet the customers expectations.
– Key #5: Don’t hold one Relationship Hostage to Another.
o Usually an accounts payable issue. If a small bill is overdue don’t let that take over the entire system.
– Key #6: Calculate the Total Value of the Customer.
o Helps employees know economic value of the customers.
Managing for Customer Advocacy:
– Key #1: Know what’s worth talking about.
o Find out exactly what your advocates are talking about, see what aspects they liked about your service and what they are telling others.
– Key #2: Changes Worth Talking About:
o What was impressive yesterday is expected today. The business cannot keep advocates by continually doing the same thing.
– Key #3: Prompt Advocates to Share their Recommendations:
o Advocates may not be talking to the right people
♣ Ask satisfied customers for referrals
♣ Collect and distribute customer testimonials
Chapter 4: Choosing your CRM strategy
CRM Strategy Starting Points:
– If there is no CRM strategy in place then one can be designed for the whole company or for specific departments.
Picking the Players:
– Gather management and representatives from each department that will use the CRM strategy but they must:
o Understand customer needs and expectations
o Understand the businesses goal and vision
o Be able to commit time and energy into the CRM implementation process
Preparing your First meeting:
– Gather and distribute summaries of information, strategy statements, business objectives
– Might want to survey key customers to gather more data
CRM creation Meetings:
– Schedule the timings and place of your meetings depending on the complexity of the business
Identify Potential Strategies:
– Allow for everyone to gather their thoughts on what can be done to improve customer relationships through brainstorming themselves and writing it down.
– Share the ideas that everyone has.
– Organize the brainstorming’s into similar clusters.
– Organize groups and distribute clusters of the individual brainstorming.
– Allow them to identify the strategy each cluster has
– Create a list of each strategy found
CRM Strategy Selection:
– Create strategy selection criteria and then evaluate the strategies against that criteria.
– See which strategy meets which criteria with a table.
– The strategies that meet the most criteria should be your CRM strategies.
Reading 3 – CRM Done Right – Ledingham Dianne, Rigby Darrell
Companies invested millions of dollars into CRM systems in the 90’s and into 2000 in the hope of improving customer relations and overall business productivity. However, after IT budget cuts in 2001-2003 companies could not reap the benefit of the systems, and labeled the systems as another overhyped IT investment. However, in 2004 CRM disappointment turned into satisfaction and optimism was revived. This is because companies were taking a more practical and disciplined approach by creating targeted and focused projects to achieve modest goals in their customer relationship cycle, instead of using it to change the entire business. Before implementation companies should ask 4 essential questions:
1. Is it strategic?
2. Where does it hurt?
3. Do we need perfect data?
4. Where do we go from here?
Is it strategic?
Before investing into a CRM system, a company’s management must make the sure that they have their targets clearly laid out. CRM is not to buff out the edges but to enhance operation and processes that help make the company more competitive. If the target is not strategic then the company will be pressed to have the strength needed to change established business processes or alter the structure to foster better returns.
Where does it hurt?
After analysis of a company’s customer relationship cycle deep ‘pain points’ are found to be hindering the cycle. Therefore, it is at these pain point that a company should focus their CRM effort. While it is possible to use CRM for the whole relationship cycle, it is usually a bad idea. This approach leads to unused technology capacity, business disruptions, and will not yield a good ROI (return on investment). Focusing on these pain points can also help get an unsuccessful CRM system back on track.
Do we need perfect data?
Few companies need perfect information throughout their customer relationship cycle. Real-time data is not needed for all business processes, but each business must customize their needs. Distinguishing between processes or operations that really need perfect data vs. Processes or operations that can survive “good enough” information is the key to success with the implementation of the CRM system.
Where do we go from here?
A more precise targeted initiative can reveal more opportunities for businesses to refine their processes. Once implemented continual analysis of the data produced by CRM systems is needed to identify new opportunities to refine business processes that allow the company to extend the technologies capabilities. These opportunities often lie adjacent to the company’s relationship cycle.
Business before technology
Management should not focus on what CRM can do for their business but what it should do for their customers and for the company. Businesses need to take precedent over the technology. This allows for more precision in targeting the ‘pain points’ of the customer relationship cycle. By doing this increases the impact of the CRM implementation and can lower costs, and risk as well. CRM is a valuable management tool and the key factors for implementation reflects strong leadership, strategic planning, performance measurements, and operational and process changes with implementation of new technology. This has allowed for CRM to become a basic tool for success.
Reading 4 – Too Many Executives Are Missing the Most Important Part of CRM: Charlie Brown
While there is great emphasis placed on customer relationships these days few corporations understand how to manage the relationships. Implementation of CRM software fails to foster better relationships more than it succeeds. This is not due to mismanagement by the CTO or the technology but it is a result of misguided strategy. Most CRM software is calibrated to increase sales thereby establishing ineffective practices rather than preparing new practices. CRM is meant to be a relationship building tool and when calibrated to spit out numbers it does not help organizations foster its relationships. Those organizations that treat is as another piece of software, and let the CTO handle it instead of all executives, simply miss out on the opportunity to enhance customer relationships. There are three components needed for executives to better manage their customer relationships.
Setting a vision for your relationship network:
All organizations should have a specified purpose when it comes to relations with customers. They must ask the questions of “which relationships are critical to the success of my business?” and “how do I support those relationships to help them grow into a community?” This is the for the CEO to form a goal that sets the company in the direction it needs to go to enhance its relationships.
Prioritizing the right relationships
Not all relationships are important to the organization, and not all are about money. The CEO must decide which relationships to prioritize in order for the continual success of the organization.
Once they have been prioritized they must be told that they are important to the organization.
Assigning metrics that measure relationship activity
Most CRM software can do more than sales actions however, it is up to the management to correct the software so that it provides more. When properly managed CRM provides the most the most crucial insight: how important your organization is in people’s lives. For example, Airbnb’s host ratings incentivize certain behaviors but also tracks the numbers that allows for the company to track how their relationship is doing.
Good relationships matter as they can be long-term. The “relationship numbers” allow for analysis on company performance over the coming years, and it says much more than just sales figures. However, its value comes from specific design to the company’s needs, and supported implementation by the leadership team who set the direction for company relationships.