MBA On a Page #2: Entry Level Customer Relationship Management (CRM) for SME’s
By Michael W. Piczak, Dipl.T., B.Comm., MBA, OCCAM Consulting Associates Limited May 15, 2001 A daily reading of business magazines and newspaper business sections informs of an emerging business trend – customer relationship management. That the customer is important is not news. That forging a relationship with a customer is not news. And finally, management of that vital relationship is not news. What is news is the use of technology to find and keep customers and to achieve this feat in a time and cost efficient manner. The increasing diet of customer relationship management (CRM) articles tend to feature large companies like Amazon.com, Lands End and American Express that are using specialized CRM software to gather detailed customer information so that electronic marketing and sales strategies can be tailored to enhance the deliverance of products and services. This is tantamount to the “big guys” trying to get back to their roots that made them great and this is to be achieved by getting close to the customer again. Only this time, it will be through individualized mailings whether traditional or electronic. In the early life of a business, most customer contacts will be between the founder/owner and the customer. The founder is most anxious to do well by the customer and provides personalized, tailored service often with direct phone or mail followup to ensure all went well. Successive contacts build a relationship – the business builds loyalty and a partnership is forged. Word spreads about the splendid service provided and the business grows. The business has a chance to be successful because of this level of personal attention, however, the seeds of failure are being planted through this very success. Increasingly, it becomes difficult to provide that individual touch and personal contact if for no other reason than a lack of time and resources. The only hope in many instances is to resort to technological ways and means of maintaining that personal touch. So what are some of the secrets of maintaining a relationship with the customer? Some of the most successful automobile supersalesmen share their customer relationship secrets in both video and books and the common denominator is the maintenance of extensive customer database so that when the customer calls or drops by, data access can remind the salesman of the customer’s last visit, recent vehicle problems, how the family is coming along, customer personal interests and the like. In this way, the salesman “remembers” a lot about the customer and can continue to build on their relationship. Taking the supersalesman to the corporate level is not a huge leap. Enabling staff to access customer information helps break down barriers and eases the sales and marketing effort. This activity cannot rely on memory or commitment. It takes an institutionalized solution to make this happen day in and day out. Amazon.com and the Customer Consider a company like Amazon.com. This firm maintains a massive customer database along with the capability to query that resource so that when a customer places an on-line order, the database is able to offer current products that appear to have been of interest to the customer in the past. There may be other related items of interest to the customer. That is, an individual purchasing a CD of a certain genre could be instantly offered tickets to an upcoming concert, themed clothing or books on the same subject. Cross promotion is the term sometimes used to describe the approach. Additionally, large volume and thus more valuable customers can be flagged so that extra efforts are made to satisfy higher margin/profit wants and needs. This implies instantaneous access to data and information through a designed, built up, current and responsive database. Indeed, some argue that some companies’ most valuable assets are their customer databases. Such databases need mining however. Database mining implies investment in computer hardware and software at levels typically beyond the reach of smaller and medium sized enterprises (SMEs). CRM is a tool being used by larger companies to do what small companies do well and that is stay close and in touch with the customer. Thus, large companies are starting to encroach on the customer relationship using size and technology. The small company needs to fight back but usually does not have the resources to do so. And, as the small company grows, the SME needs a boost to maintain that personal element that built the business in the first place. So what’s an SME to do? More Modest Technology Use In the early life of a business, the owner will likely know all customers by name. Mental notes are made of what the customer wants and what they like. This ability to remember and develop a caring for satisfying customer requirements leads to more business and so on and so on. Over time, the ability to recall everything breaks
down owing to shear volume and a little help may be required. That help can come in the form of fairly easy to use software or devices that can provide an edge and become the basis of CRM at a rudimentary or entry level. Help in managing the customer relationship is available. Much technology is out there today and a look at any newspaper insert for Office Place, Business Depot or Future Shop would reveal the basic options. Consider the choices: cellphones faxes/all-in-ones and faxing software (Winfax for example) database software (such as Microsoft’s Access), other software such as Excel hand held palm devices (RIM, Compaq, HP, Palm, etc.) personal information managers (Outlook, Maximizer Enterprise, etc.) point of sales (POS) systems specialized CRM software Let’s take each in turn briefly to see the possibilities. The solution for a given business will be driven by its objectives. It might be useful to organize these technological marvels into a user hierarchy based size of business which often correlates with level of sophistication. Realize also that these technological devices can be used in combination with one another and increasingly, the devices “speak” to each other. Indeed, some amount of technological convergence is already to be seen. Laptops speak to hand held palm devices, software converts easily across applications and cell phones are increasingly multifunctional including e-mail and internet capabilities. Let’s take each of these in turn briefly to see if any of them can help with staying closer to your customer. Cell phones permit the business owner to maintain contact with clients especially when there is some amount of dead time such as in traffic (although be careful with attention to the road), waiting in doctor’s offices or otherwise unavoidably delayed. A brief phone call to simply enquire about product or service performance is all that is necessary with such reminder calls. There can no better form of direct marketing than a personal phone call from the boss or owner. Customers are often surprised and impressed that anyone bothered to call. Faxes and faxing software permit the assembly of distribution lists to launch faxes to customers satisfying particular criteria. If used in a stand alone fashion, then the business must provide the criteria and comb a data base to develop the fax listing. Regretfully, this can be time consuming and is prone to memory lapses. Accumulating distribution lists is a relatively simple matter with maintenance of such lists done with ease. Microsoft 2000 has a built in faxing feature that can be used in concert with other Suite software to develop faxing lists. Off hour send outs keep long distance costs down. Database software such as Microsoft’s Access permits the accumulation of an ordered and searchable cache of data about customers. The data contained in such a database is limited only by the user’s imagination, time and ability work the software. Queries using criteria are relatively easy once the database is setup and a query model set up. Query results generate tables containing information that can be used for direct mailouts, telemarketing campaigns, or targeted e-mailings. Realize, however, that database programs rarely resemble or behave like programs to which most business operators have become accustomed such as word processors and spreadsheets. Database programs demand an investment in time to become knowledgeable in their workings. An alternative to such database software is to use a spreadsheet program that also permits extractions and queries. Excel and Quattro Pro are the most common pieces of software in this area. They are easier to use than database software. Palm devices or hand held computers continue to improve in their capabilities. Such hardware is useful to have on the road and can be used in combination with the cell phone or laptop. Customer information can be accessed fairly quickly and with wireless devices such as RIM’s (a Waterloo, Ontario company) wildly successful Blackberry, sending and receiving e-mail messages while out of the office is a possibility. Updating the main computer or laptop is done with the press of one button.
Maximizer Enterprise represents a quantum leap forward in managing customer information. The software permits the search of databases for product information although can be somewhat cumbersome since it was designed to be a customer database. The web site reveals that the new and improved version of Maximizer Enterprise can do contact management, opportunity management and order management among other things. The cutaway at right shows the major features and for more information visit www.maximizerenterprise.com. Point of sales systems (POS) represent a significant step forward for many industries. Retailing and food service operations can benefit significantly in the general operation of the business by resorting to POS systems. Customer preference and loyalty programs can be accessed with relative ease. Such systems integrate accounting systems, inventory systems, customer databases and more. CRM systems represent the pinnacle in customer relationship management. The CRMA Canada (Customer Relationship Management Association of Canada), a non-profit organization aims to educate business people on making CRM successful. CRM by way of definition is the means by which companies “acquire, retain and expand relationships with customers. It’s all about understanding who your customers are and servicing them in a predictable manner”: Such software is probably most ably handled by information technology specialists, is fairly expensive and may take some amount of time to set up. Check out the CRMA’s web site for more information. A Case Study: Bullas Automotive, Hamilton, Ontario Rick Bullas owns and operates a successful Firestone Automotive store in Hamilton, Ontario. Each fall, Rick addresses the students in Mohawk College’s Small Business Management Program. Last year, he indicated that he does targeted mailings to selected customers on his 7,500 customer database. Who received a particular mailing depended on a number of things such as recency of service use, type of service provided etc. A database would be queried and a letter or post card sent out inviting the customer to come to the store for a particular service or upcoming sale offering. Customers who had not come to Bullas Automotive over a specified period of time are removed from the list. All this was done on a POS system that builds customer history files, performs invoicing, builds receivables reports and does integrating accounting functions. Since that time last fall, the Bullas Automotive database has grown to 10,000 customers and Rick is considering a new piece of software to replace his integrated POS system. A new Napoleon system is sitting on his desk where this software will permit database searches, generate personalized letters for direct mailing, develop phone and e-mail lists for other means of direct contact. For example, the database will permit a search by customers who had an emissions test done, 2 years ago. Such customers can be reminded that the time limit for emissions validity has expired and that it is time to come in again for a retest. Customers who put snow tires put on in the fall can be reminded of the need to come in in the spring for removal. Summary So what is best for your operation? To some extent, it depends on what you are trying to achieve. Consider the table below to help you decide. Technological Sophistication Hierarchy Palm WinFax Excel Access POS Device Systems
Business Business Size Sophistication
Startup SME Large Low Moderate Higher
Cell Phone
Full CRM System
Do your homework regardless of the option you are considering. This is an investment in the future of your business. Get it right up front and it will pay dividends for years to come.
Michael Piczak