Customer Relationship Management (CRM)

During times of volatility it is of paramount importance to stay in tune with your customers. Otherwise, you could set and execute strategies that are a waste of limited time, money, and resources as conditions evolve. We are seeing a great reset occur. Baby boomer owners of closely-held companies are selling. Depending on the buyer, everything changes. For example, if a strategic buyer purchases the company, and they happen to have a manufacturing facility with excess capacity in the same region, it is likely they will consolidate, thereby changing the entire supply chain. On the other hand, if a strategic buyer purchases to gain entry into the marketplace as their current operations are in Europe, they are likely to invest and expand the facility. Or, the buyer could have production sourced from Asia but want a footprint domestically. A private equity buyer will have different objectives altogether. There are countless scenarios that could occur.

Additionally, public companies are reevaluating their supply chain based on lessons learned from the pandemic and emerging goals such as sustainability. As they reconfigure their supply chain, impacts will be widespread on their end-to-end supply chain. Additionally, mid-tier companies are evaluating the risks of producing in China in conjunction with their customers’ increasing expectations for rapid deliveries and order changes. Forward-thinking organizations see opportunity to take market share as their competition struggles, and so they are preparing for the future. And this is before you consider the shortage of resources and skills. The bottom line is that customer requirements and supply chains are “on the go”. Thus, you must keep up with your customers and ideally get ahead so that you can create your future instead of responding as they occur.

Customer Relationship Management to the Rescue

Customer relationship management has always been an assumption to achieving a superior customer experience and profitable growth. There is no doubt it will be even far more integral to survival in the future. More importantly, those who can stand out from the crowd will have an opportunity to take market share and thrive.

CRM processes offer several benefits:

  • Increase customer lifetime value
  • Grows revenue
  • Improves profitability
  • Supports SIOP with the alignment of business silos
  • Improves products, services, and customer support
  • Allow you to be ready for what’s next

The best practice customer relationship management processes boil down to a few core concepts:

  • Staying in touch with customers on a regular cadence with the frequency and mode related to the customer’s strategic relevance, profitability, opportunity for growth etc.
  • Tracking potential customer opportunities for expansion (new ship points, products, regions, etc.) including the probability of success, likely timing, likely products, likely regions, funding status and/or gate status (also known as pipeline management)
  • Uncovering and tracking new potential customers and market opportunities
  • Tracking the order fulfillment cycle from lead to quote to order to installation etc.
  • Keeping track of your relationship network and what’s important for future success
  • Tracking key events and changing conditions related to your industry, network, etc.
  • Using a coordinated and proactive approach with customer communications including feedback loops.
  • Tracking customer agreements (inventory agreements, service level agreements, etc.)

The bottom line is that a CRM process will increase BOTH your value and your customers’ value.

Do You Need CRM Software?

Of course, the answer to whether you need a CRM software to be successful in customer relationship management processes is “it depends”. Multiple clients utilize CRM tools and consider them essential and directly supportive of customer growth and success. On the other hand, there are several client examples of success using old school tools such as tracking contacts in a black book, picking up the phone and using Outlook or Excel to track additional details (inclusive of all core best practices).

With that said, CRM is different from other software functionality such as sales forecasting where it depends on the complexity of the business, volume of customers etc. All modern ERP systems have at least a minimum level of CRM functionality, and so using CRM will make sense in most situations. The key question will be timing vs resources and benefit for your situation. With that said, not all clients choose to use the base CRM functionality provided in their ERP system. It depends on the system functionality needs that will best support your sales team and customer needs. Of course, not all CRM systems are created alike!

How to Select a CRM Software

You should pay attention to selecting the best software and partner to meet your business needs. As is true with best practices in ERP selection, selecting CRM software starts with your business requirements.

Collect your business requirements to support your CRM process. What functionality is important in developing a customer relationship management plan for your situation. For example, a few questions to consider in getting started include:

  • Starting with the basics, will the software track contacts, customers, leads, and prospects?
  • Will the software allow you to track contacts at each customer from different departments? For example, in several industries, the key point of contact is one department such as engineering or maintenance whereas the orders go through another department such as purchasing. You will want to keep track of key contacts, not just those related to the order.
  • Will the software support tracking inventory agreements and service policies? To what degree?
  • How sophisticated is the pipeline tracking? There are a large number of questions related to this topic.
  • How does the software integrate with email? There are varying levels of integration options that can make or break success.
  • How does the software integrate with social media and email communications? Again, each of these could break into a multitude of questions.
  • Does the software have artificial intelligence (AI) capabilities?
  • What advanced reporting and analysis capabilities are built into the software?

Next, research CRM software options. Although this appears easy to do online, it is far from easy to get to the appropriate level of detail to end up with software options in the appropriate price range with the most critical functionality features. As a globally recognized expert in selecting software, our Google searches only yield appropriate results less than 20% of the time. Frustrating! You don’t need a lengthy list. A few decent choices that meet the majority of your requirements will suffice.

Depending on your company size, complexity, investment budget, and other factors, you will perform a simplified or comprehensive RFP (request for proposal) where you compare the software options to your business requirements to narrow the selection options. Typically, you should demo 2 or 3 options to see how the software will be used to meet your business requirements. Track how each software satisfies your business requirements and focus on those critical to your process. It is easy to get lost in bells and whistles the software suppliers want to show you instead of focusing on what will drive value for your business.

In addition to comparing functionality, you’ll want to compare pricing and partners. Pricing is another black hole. Getting apples to apples pricing is nowhere near as easy as it appears, and it is always extremely misleading. Dig into pricing until you have a side-by-side comparison of like items, considering short term and long term. Typically it is best to use a total cost of ownership calculation over 5 or 10 years, depending on your circumstances.

Finally, dig into the partner. 80% of success is in implementation, and your partner will be integral to this result. Every supplier will have success stories and talk a good game or they will not be in business very long. In fact, there are more sharks in software sales than in almost any other industry. They sound wonderful, but when rubber meets the road, it is often a different story. Make sure you don’t marry the wrong partner while selecting the “right” software.

Using CRM Software

You will be performing customer relationship management processes prior to rolling out software. Thus, you can ramp up over time, starting with the top priorities from a functionality perspective that will drive results and minimize manual labor. For example, if you aren’t using a CRM software currently, start by tracking contacts. It will be easy to ramp up from there with potential client contacts. Build a rollout plan that best supports your business. You’ll gain a quick payback with CRM software if rolled out in a thoughtful way. For example, do NOT track unnecessary, nice-to-have information that ties up your sales team with keying into CRM software instead of talking with customers. On the other hand, tracking key information will provide exponential value when analyzed and is worth taking 5 minutes to input. Use common sense!

Incorporating into SIOP, also known as S&OP

CRM software will not achieve the intended results if not incorporated into a SIOP process (Sales, Inventory & Operations Planning). CRM is incorporated into the demand plan which is the “S” of SIOP and required to drive capacity and staffing, sourcing, long-lead time material, and customer and product priority decisions at a minimum. SIOP inclusive of demand planning is not a one-time process; instead it should be conducted on a monthly cadence, looking out at a 12-24 month horizon. Results will follow.

As clients gain traction, they are tempted to skip monthly cycles. Keep the priority focus on SIOP inclusive of your demand plans. If you focus on exceptions and changes, the process will be quick yet critical to keeping resources aligned on priorities and addressing changing conditions. Undoubtedly, with the level of volatility in today’s business environment, sticking to the process will yield exponential results. For example, one of our most successful clients is vigilant in prioritizing Executive SIOP meetings (and associated processes). Even in months where key executives believe there are no changes, 80% of the time something arises through the process that keeps them ahead of the curve in pivoting strategies or ensuring the alignment of demand and supply, and most importantly, the related resources. This client will undoubtedly be better prepared for the next curve ball.

If you want to pursue upgrading your demand planning process, upgrading your use of technology and/or incorporating into a SIOP process, review our SIOP webpage of resources or contact us to discuss further.

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