Working in marketing, many of us have had the distinct pleasure of being involved in a new-product launch. There is something about watching the spark of an idea come to life on paper and then take physical form. Having lived through a product launch, we also know that bringing a new product to life pales in comparison to bringing it to market.
Despite the merits of the product, the challenge still remains to gain visibility, attract paying customers and generate enough revenue to justify future production runs. We tend to focus on the high-profile, front-end activities such as where and how to advertise. Behind the scenes, the decisions we make about where and how to distribute the product can be just as important. Finding effective and cost-efficient distribution channels can make or break the success of a product in the early stages.
How do you decide which distribution channels will work best for your unproven product? How do you allocate your supply chain marketing efforts on a limited budget? This issue's dilemma asks: “How do you determine the best channel of distribution, when the options are many and your budget limited?”
Suffering from a post-launch party hangover? Let us know what keeps you up at night. What dilemma do you take with you when you leave the office? Your peers would love to help. Write to us and ask our SWOT Team about your dilemma. Tap into the collective strength, wisdom and experience of this group. It works, and you could win a free copy of our book, A Marketer's Guide to e-Newsletter Publishing.
Revisit our previous dilemma—read below for your peers' best advice on how to salvage your investment in CRM.
Unite and make a difference!
- Give advice about this issue's dilemma.
- Read your peers' responses to the previous dilemma (below).
- Submit your own dilemma.
This Issue's Dilemma
SWOT Category: External Opportunity
We're launching a new product, with many distribution options. How do we decide which channels to use?
We are about to launch a new product that spans several retail categories and types of retailers that would carry the product. It's geared toward kids—mostly girls 6-12; it's educational in that it teaches basic cooking skills and history; it's fun because it involves role playing, challenges the imagination and can be done with parents, siblings and friends. The challenge is: we're a small company and there are so many retail and marketing options. We have some funding, but need to be judicious in how we apply what we do have to the launch. The product can retail through food, gift, department store, catalog, online “Amazon” and educational institutions.
—Pete M., President
SWOT Category: Internal Weakness
After undertaking a three-year CRM project, we have little to show for our efforts.
A little over three years ago, I got behind a staff-proposed CRM initiative that held the promise of streamlining our administrative and management load, improving our customer relations, extending our service capabilities and helping us to take a strong competitive position alongside our much larger competitors.
Three years later, the initiative has brought about only the slightest improvements in our service capabilities and seems to have done little to improve our bottom line, our customer relations or our competitive position.
Despite the prevailing disappointment, I'd like to find a way to salvage our investment and use what we've learned to help us better predict the success of future projects.
How can I assess our CRM shortcomings and use this information to support our future efforts? Can your readers help?
—Anonymous, Director of Customer Service
Summary of Advice Received
Anonymous, your peers have provided their best advice to refocus your efforts and salvage your CRM project. One SWOT Team member even shared experiences from the trenches, providing valuable insights for anyone working out kinks in his or her own CRM system or thinking about implementing one.
Often with technology-supported initiatives, we lose sight of the primary focus—in this case, building stronger customer relationships that support the goals of your company and your customers. Lofty objectives for delighting customers and improving the bottom line quickly become overshadowed by the details of developing or implementing a new system. Never known to abandon a project without a hardy effort, your peers delivered the following advice:
1. Put internal and external customers first, technology second.
2. Reassess underlying objectives, practices and processes.
3. Try a “holistic” approach to improve your results.
4. Define success and be specific—the metrics matter.
5. Learn from experiences in the trenches.
1. Put internal and external customers first, technology second
Technology itself cannot deliver your desired CRM results. Employees and customers are critical to the success of the project. Enlist the full support of your team, from CEO to CSRs, and involve customers in the process.
Ken Freeden, principal and owner of NeuTech Consulting, makes this point:
My assessment would begin with a critical look at who is supporting the initiative and who is affected by it—both positively and negatively. If the CEO is not supportive of the initiative, this is a big hurdle. If other departments or individuals are impacted by it (which they should be), but have no ownership (i.e., have no voice) that is also a problem. Once the current situation is understood, I would create a plan to overcome any resistance—department by department and individual by individual. Focus on the value of CRM to each departments' or individual's particular circumstance.
For the CEO, frame opportunities in the language she/he speaks—money. For example, if this system could help expand your service offerings, explain how this could increase revenues by $XXX and the bottom line by $YYY. I believe in the potential power of CRM systems, but find that ownership within companies is often very narrow (e.g., sales or customer service). Since relating to customers is the job of the entire organization, each part of the organization should have a say in the implementation. While this will undoubtedly require some compromises in the process, having everyone onboard with the initiative is the surest way to make it successful.
Bill James-Wallace, director of Business on Purpose, believes that you need to refocus on the customer, using technology as a support:
My experience with CRM has been that the software/hardware usually becomes the primary focus. All the effort goes into making it “work,” while the client is forgotten as the PRIMARY focus. I know that sounds simplistic, but if so many CRM projects start and fail, you have to look for the source of the issue. In my opinion it is ALWAYS about what the client wants and the system facilitates that.
Solution: keep the IT people away until you have your customer strategy down and have proven it “manually.” Then go to IT and ask them to automate the process according to your proven strategy—as opposed to asking, “Please design a system that helps us here.” BIG difference. The customer business must dictate to the technology side of the business. (I've never had a hammer tell me what to do with my nail!) As a small shift in thinking, instead of CRM think of it as CMR (Customer Managed Relationship). In summary, to assess your CRM shortcomings, go back to your customers, ask them what they want and how they want it, and deliver that using technology to support and drive it.
An anonymous SWOT Team member adds:
On its own, CRM can only deliver part of the benefits you envisaged. Service alone will not differentiate your product offering from that of your competitors, unless you have customers gush over how good it is. Work with account managers, or line managers, or those who have a direct relationship with clients to tap into customer knowledge. Use your CRM to test mini-campaigns and assess effectiveness.
2. Reassess underlying objectives, practices and processes
Your SWOT Team peers suggest taking the time to review your original objectives, existing practices and processes. A reassessment may reveal system bottlenecks or kinks that are hindering the success of your project.
Managing Director of Aceda, LLC, Suzy Teele offers this:
Statistics show that over 70% of CRM initiatives fail because companies do not have clearly defined processes for sales, services, etc. So the fault does not lie in the technology (which is the common belief), but in the implementation of the technology to match or support your business processes. The best way to salvage your investment is to review each area separately (sales, customer support, etc.) and develop/enhance the processes that you believe will truly impact the bottom line, and then ensure your technology supports them.
An anonymous SWOT Team member suggests revisiting the original objectives behind the initiative to uncover any shortfalls:
It is sad to see yet another casualty of business fads…. While the logic behind CRM is sound, it was made out by many of the so-called Management Guru spin-doctors to be the magic bullet that would save ailing companies. Sadly, many of them grabbed this imaginary lifeline with such enthusiasm that they forgot to do the basic analysis of the pro's and con's of the tool. And that is exactly what CRM is… purely a tool. A tool that will structure the activities of your sales force to ensure better customer relations and hopefully more repeat business. But as the old saying goes, “a bad workman always blames his tools.” Those who blame CRM for project failure need to look long and hard at their customer management practices in totality as well as their motives and objectives for using the CRM tool. CRM starts with having the right attitude toward your customers and no system can help you get attitudes right, only the staff and management can control that.
As for CRM, in order to assess its shortcomings you need to determine what your original CRM objectives were and where the shortfalls are. Secondly, determine whether the shortfalls are attitudinal or procedural. Having determined what the original objectives were and what the shortfalls are, you can then formulate action plans to close these performance gaps. If this does not show an improvement, reassess your objectives. Lastly, do not forget to remunerate accordingly. It is pointless to pay for A and hope for B. You must link the financial incentive package to the successful and consistent use of the CRM tool. Remember that CRM should be one element in your customer satisfaction strategy and in itself will not solve customer service problems. This will only be solved using a holistic approach.
3. Try a ‘holistic' approach to improve your results
Branko Zunec, managing director of BM Consulting International, also believes in a holistic approach. He suggests starting with your product and offers these seven principals for improvement:
Anonymous, I would start with the main question: “What is our product?” It's not about the strategy or tools. It's about satisfying the needs of customers. The answer gives us the real opportunity for application of CRM principles. The next question is, “What makes us so special?” or “Why would somebody use our products/service?” And the third question: “What is it that our costumers and employees like/dislike in our products/services?” If you have research on hand, you have useful data to operate with.
Then develop your sales and CRM activities according to the following 7F principles:
1. FAST—How is it shown to the customer? Have you any proof of being really fast with satisfying the needs of your customers?
2. FOCUSED—What have you improved for the customer in the last 12 months? How did your customers respond to that?
3. FLEXIBLE—Have you adjusted to the needs of your customers? Is your sales and CRM strategy driven by giving the customers opportunity to choose and feel the difference when comparing you to your competition?
4. FRIENDLY—Are your employees friendly with the customers? Are they thinking positively in their free time? They are the real ambassadors (image builders) of your company. Are you friendly with your coworkers? (Is there a positive climate in the company?)
5. FIT—Do you take care of your health? What are your employees, especially those who work with the customers, doing to stay fit at work?
6. FUN—Do you have fun, when doing your business? Do you laugh often? Do your customers laugh with you? Are you having fun with each other—business is not all serious!
7. FREE—How creative and innovative are your employees? CRM starts (and usually ends) in the minds of the people whom work in your company and customers notice that!
4. Define success and be specific—the metrics matter
As we discussed in our column last week, it's important to clearly define what success looks like. This becomes particularly relevant with a project of this size, where it may take many years to realize the benefits of your hard work.
Steve Tennant, managing director of Tennant Consulting, offers this detailed guideline for reviewing and, perhaps in some cases, establishing clear and measurable metrics:
I applaud your efforts to learn from this situation. For any project, obtain executive sponsorship and work with those executives to understand the specific business drivers and metrics you want to improve. In your case, many are listed, but these descriptions require tighter definition along with specific metrics and owners who are accountable to deliver those results.
Before embarking on any project, confirm the value delivered in specific improved metrics (e.g., 500 fewer workdays/year of admin. load; 2% won/loss rate improvement in competitiveness; 2% improved overall customer satisfaction score; $X generated on the bottom line; and $Y earned on our CRM investment). Have owners commit to delivering their value elements—their pieces of the pie—in specific timeframes. Have executives commit to making the resources available and making the change efforts a priority on their agenda for the year. Different companies have different thresholds of expected return on investment to proceed with a project, but a 5-10 times payback on your investment is not uncommon. That means, even if some value elements are not delivered, you'll still have a positive return.
For your CRM project, work with management and customers to develop a set of balanced metrics based on the expected value to be delivered (the previous numbers you gathered). For example, if improving customer relations is the goal, how do you measure this? What issues have customers had in the past—lost orders, cases not followed up on, etc.? What metrics do customers feel are most important in driving their overall satisfaction?
If improved competitive positioning is the goal, what are the metrics— improved won/loss rate? Market share change? Get very specific, to a level where the metrics can be quantified as part of your business case. Working throughout the marketing, sales and service areas, each metric should then be mapped back into the business processes (presumably supported by the CRM system when possible—but don't limit yourself to those areas) and improvements identified that will enhance the metrics.
For example, to improve competitiveness, a new process may be defined to take the output from won/loss analysis and drive it into upstream product development, sales and service activities. Consolidating customer IDs may lower marketing mailing costs. Salespersons' abilities to view credit history may result in reduced bad debt, etc. Consolidating case histories may improve customer service responsiveness. Unless specific business process changes are identified over your current (or in this case, three-years-ago) environment, a CRM system will not deliver additional value.
To salvage your current situation, review the original business case and if none exists, create one. Include Marketing and Sales. Develop 10-20 key metrics and identify owners for those metrics. Work to prioritize and implement the changes required to deliver value. If the business case isn't there, focus instead on higher-priority initiatives. For most companies, a well-implemented CRM can deliver far in excess of its cost, especially if sales and marketing activities are included. Good luck!
5. Learn from experiences in the trenches
SWOT Team, we wrap up this week's column with an insightful look into the pitfalls of CRM through the eyes of two anonymous SWOT Team members who have spent time in the trenches.
One of these members believes that customers are the key, and suggests going out into the field and talking to them:
Ultimately, any problems exist in your customers' state of mind. Are they realizing any benefit from your CRM exercise? Are they aware of it at all? Do they feel you're collecting information to use “against” them in some Orwellian fashion? Do they love you, but feel you offer no products or services they need? Is the lack of bottom-line impact the result of other factors entirely? Your customers are the ONLY source for this information. Get in the trenches and get 'em talking to you. Bribe 'em if you have to.
Another SWOT Team member gives us the inside scoop on the life of a CRM contractor. Team, we hope you take away insight that can help make your CRM initiative one a success story. Learning from others' mistakes is key:
I worked on several CRM installations as a fairly low-level contract worker and could see that they were doomed from the start. There were several categories for these failures. The first category was installations where there was no clear picture of what business problems CRM would address. The second category was training or the lack of proper training programs to get people oriented in using the new system. If CRM was implemented without a very clear picture of how the company conducted business, and how employees in every department should use the CRM system to do their jobs more easily and more efficiently, then it often failed.
The salvage here—send someone in to study how ALL employees use CRM. Rely on structured interviews to ask the same questions of each employee. Attempt to figure out what is working and not working within the system. Listen to your employees' suggestions for change/improvement, etc. Study the “workarounds” that some of your employees may have devised. Have them teach the other employees. You may be able to tweak the CRM program to incorporate these patches or remove some of the stumbling blocks.
In large part, how much you can do to facilitate the CRM program depends upon how you planned it in the first place. Did you go for a “plain vanilla” installation that forced you to change the way you do business to fit the CRM program, or did you customize it so that the CRM program attempted to fit your business?
Most training for CRM focuses on the “how to” (use the CRM program), rather than “why we should” (addressing the reason behind the process). When you implement CRM, for cost reasons, etc. there are a lot of feature sets that get postponed and, sadly, these are seldom revisited. The CRM vendors tend to either pooh-pooh the needs of the user (because they can't do it quickly or they're running out of time, etc.) or perhaps because only a few people are aware of the need for something, so training appears insignificant.
I can think of one installation where the CRM program did not allow printing out customer/vendor, etc. contact information on the theory that you would never need it if you were not on the CRM system. Disaster Recovery and Business Continuity people can tell you what is wrong with this idea…. The road warriors, of course, figured out the work-around very early—they could download information to their PDA, put it in Outlook in their laptops, put it in an Excel spreadsheet and print it.
CRM programs need constant tweaking—sort of like the sliders on the stereo mixer. You adjust these depending upon the type of music. And you adjust the CRM program depending upon your business needs. If you hired some outside contractors to come in and install the system and go away, you're going to have to chase them down and get them to come back and tweak it for you. I'm amazed that so many companies treat CRM installations like furnace installations—you install it, forget it and expect it to work for 30 years. But the true failure of CRM programs to “live up to the promise” of better customer service is that the companies that installed CRM did not have a clear sense of what they meant by “better customer service” in the first place. Automating bad customer service just gives you easier, faster bad customer service.
Way to reclaim this dilemma, SWOT Team—thanks again!
We did our best to provide a thorough overview of your responses to this timely topic. All of the advice we received was insightful. Thanks for your participation. We appreciate it!
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