| Experts Corner |  Having spent the money to identify our online customers, how can we maximize that investment by knowing the best time to reach them?
David King, Fulcrum Analytics
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Hidden Benefits Are Key to CRM
Roger Cole, Business Software Specialist, CPiO
 Improving Customer Information Through Customer Relationship Management (CRM) can result in surprising hidden benefits, but organisations need to target operational focus to leverage the opportunity. To date organisations have approached CRM with the single goal of improving customer knowledge to drive sales strategies. Understanding your customer has meant, in essence, easy access to consistent information about sales history. As a result, too many companies have been sold CRM as an extension to the 'contact management' concept, and have therefore focused on delivering customer information to sales people.
This information of course has value. Tracking customer buying patterns is a key tool in proactively managing the customer relationship and spotting early any potential problems with that relationship that may result in customer loss. Additionally, sales people can leverage this information to facilitate the cross selling and up-selling that is key to increasing the customer value, a vital factor in managing business success. However, this exclusive focus on sales not only constrains the scope of the project, it also significantly undermines the potential benefits and overall value that can be gained.
This is particularly relevant in the current challenging economic environment where making the business run as efficiently as possible can be as much an operational focus as retaining and increasing sales. For CRM provides, in fact, a platform for information visibility across the organisation. By pulling information from finance, sales, marketing, even support into a central, customer focused database, an organisation can attain significant insight into business performance and attain attendant benefits including enhanced financial control; improved forecasting; and in depth business understanding. Insularity Challenge The open business concept associated with a central repository of cross-organisational information available to all is a cultural challenge for businesses used to protected information silos.
Many UK organisations, especially those created through merger and acquisition, have a historic tendency towards information insularity with branches and departments fiercely protective of their customer data and highly competitive with each other. But an open environment is integral to achieving the hidden benefits of CRM: enhanced financial control, for example, will not be attained if organisations retain their traditional information brick walls between departments and branches. Indeed, organisations can actually undermine the value of CRM to the sales force if they fail to embrace an open culture. Too many organisations with non-cooperative departments and branches are commercially hamstrung by the inter-company competition that not only undermines collaboration but actually creates significant customer information inaccuracy and data duplication.
In one UK firm, competition between two local branches for the same customer enabled that customer to play off the branches to achieve the lowest price: both branches were regularly undercutting each other in a bid to win the business. And this firm had CRM. Indeed, it had excellent customer information; but only at branch level. With no central sales picture the company had no visibility of the customer's real buying behaviour. Nor was it aware that the customer was cleverly manipulating its credit limits with each branch to further extend its credit position far beyond acceptable business risk.
In this case good customer information supported by CRM in fact exacerbated the problems rife within an insular business environment. Without an organisational wide view, local information becomes meaningless and the business is in danger of actually undermining performance and profitability. It certainly has no chance of attaining significant additional benefits in finance, stock or business control. Information Visibility in Practice The hidden benefits of CRM are demonstrated by design technology provider Stanford Marsh, which is using CRM to deliver a single, detailed customer view across its product sales, support, training and financial contracts businesses. In addition to boosting the effectiveness and efficiency of service and support engineers, this single view provides sales staff with both financial and stock information as well as up to date sales and support call history.
Credit risk is flagged in red to ensure awareness of problems and enforce credit limits, while immediate access to stock information enables them to place orders immediately for the customer and set delivery time expectation. This information has also significantly reduced internal calls, particularly to finance, further improving efficiency and effectiveness. The integration of CRM to its financial software has enabled Stanford Marsh to improve utilisation of its engineering staff and enhance financial management, as well as providing excellent information to sales personnel. Customer service has improved and the company has expanded its service contracts by 60% in two years. Since implementation equipment sales have increased by 24 percent and debtor days have reduced by approximately 20%, releasing £500,000 back into the business.
The company is now using CRM to undertake detailed customer analysis to further boost sales by using targeted cross selling to maximise the value of each customer to the business. Conclusion For Stanford Marsh, the goal of CRM was to improve the efficiency of support engineers and deliver enhanced information to sales. Yet by successfully drawing appropriate information from core business systems the company has been able to attain significant and unexpected financial and commercial benefits.
It is clear that CRM offers so much more than the contact management systems of the past - but only for those organisations that can successfully embrace an open culture underpinned by access to the key business systems. Visibility across finance, sales, service and marketing provides an organisation with the joined up business understanding required to achieve return on investment, whether from credit control or stock reduction, and drive operational strategy, while supporting the CRM objective of enabling improved customer value.
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