PivotalCRM - How to profit in a downturn by PivotalCRM

VIEWS: 34 PAGES: 7

Many businesses are currently struggling to find ways to cut costs and make ends meet, and ambitious new strategies and growth goals are being put on hold till the economy rebounds. But even in a time of uncertainty and contraction, smart companies can find opportunity and growth.

More Info
									                                                                                                  W H I T E
                                                                                                  P A P E R
How to Profit in a Downturn
4 Customer-Centric Strategies for Growth in a Challenging Market




        Executive Summary
        The sub-prime meltdown hit the housing and financial markets hard, but its ripple
        effects, combined with rising gas and food costs and general economic uncertainty,
        have resulted in a slowdown being felt across industries and around the world.
        Many businesses are currently struggling to find ways to cut costs and make ends
        meet, and ambitious new strategies and growth goals are being put on hold till the
        economy rebounds.

        But even in a time of uncertainty and contraction, smart companies can find
        opportunity and growth. The secret lies in the invaluable assets your company
        already has: your customers.

        In this white paper, learn how your organization can use customer-centric strategies
        and CRM tools to maximize the value and loyalty of your customer base, get insight
        into new areas of opportunity, and do more with less, not only surviving, but thriving,
        in a time of economic uncertainty.
             Introduction: Tough Times                                        Unfortunately, companies' internal adjustments are
                                                                              just the tip of the iceberg. Market volatility, economic
             Call for Strategic Moves                                         uncertainty, and negative headlines have made customers
                                                                              skittish—about their finances, their purchases, and their
             While the word “recession” causes many to bristle,               vendors and partners. Consumers and businesses alike
             there is no question that financial markets in developed         are rethinking their plans and budgets, concerned about
             countries worldwide have taken a lashing due to the              the hit their own finances have taken or could take as a
             sub-prime lending collapse and ensuing credit crunch.            result of the current economic situation. As they do so, the
             The financial services and housing industries took the           knowledge that many of their vendors are busy grappling
             first—and worst—hits, but the ripple effects, combined           with cuts and their own financial concerns may lead
             with the high price of oil and other commodities, have           some customers to question whether their best interests
             led to a widespread economic slowdown that is affecting          are really top of mind for their vendors at the moment.
             businesses across most industries.                               Unless steps are taken to correct this perception, a lack
                                                                              of customer trust and loyalty is the inevitable result—and
             If any word best characterizes current economic
                                                                              one with the potential to have a more lingering effect on
             conditions, it may be “uncertainty.” Not all companies are
                                                                              your business than short-term cuts or losses. Erosion
             pessimistic, per se, but at a minimum, most are feeling
                                                                              of your customer base and customer confidence could
                                          cautious, as uncertainties
                                                                              present serious long-term problems for your company. As
                                          abound: regarding consumer
                                                                              a result, it’s imperative to give customers the increased
Companies that take                       spending, commodity prices,
                                                                              attention they need in times of uncertainty—in spite of
their focus off of customer               construction costs, interest
                                                                              reduced staff and budgets and a multitude of other issues
satisfaction at this time                 rate changes, GDP growth,
                                                                              and distractions arising from current conditions.
                                          inflation, and more.1 And in a
risk more than losses:
                                          July 2008 speech to Congress,       Companies that take their focus off of customer
they miss out on                          Federal Reserve chairman            satisfaction at this time risk more than losses: they
a compelling opportunity.                 Ben Bernanke cautioned              miss out on a compelling opportunity. The fact is that
                                          that the U.S. economy faced         existing customers are the secret to weathering the
                                          “numerous difficulties” 2           current storm. With new-customer acquisition costs far
             and serious risks in the road to economic recovery,              exceeding retention costs and difficulty attracting new
             leading many companies to believe that a recovery is             customers in a down market, it does not require advanced
             not yet imminent and that they could be grappling with           calculation to understand why companies should be
             a challenging market for many months ahead. Similarly,           looking to their customer base as a cost-effective source
             Bank of Canada governor Mark Carney has recently                 of revenues. Similarly, with the credit crunch and the
             underlined that the “deterioration in economic and               reduced availability of private equity funding, mergers and
             financial conditions in the United States will have direct       acquisitions are expected to decline globally in 2008,4
             consequences for the Canadian economy,”3 and indeed,             meaning that most companies will need to look internally,
             the downturn is far from reserved to the U.S.: countries         rather than externally, for additional sources of revenue,
             around the world are feeling the impact.                         focusing on organic growth.
             How are companies dealing with the uncomfortable                 To survive and thrive in a downturn, businesses need to
             combination of an economic slowdown, high costs, and             adopt a thoughtful and strategic approach to building,
             widespread uncertainty? First, job cuts have become              extending, and unlocking the value in their customer
             a necessity for many businesses as they try to reduce            relationships. The tools to implement these strategies are
             expenditures. Accompanying these job cuts, many                  customer relationship management (CRM) solutions.
             companies are engaged in belt-tightening, trying
             to cut costs as they prepare for whatever the months
             ahead hold.                                                      Using Customer-Centric
                                                                              Strategies to Survive and Thrive
                                                                              The concept of “customer-centricity” has been steadily
                                                                              gaining traction across a number of industries for the
              1. Hines, Patricia. “From Crunch to Squeeze: Global Impact      past several years. More than just a feel-good concept,
                 of the Credit Crisis on Commercial and Small Business
                                                                              when taken seriously, customer-centricity is a model that
                 Lending.” TowerGroup, January 2008.
                                                                              can profoundly impact a business’ processes, culture,
              2. Bernanke, Ben. Semiannual Monetary Policy Report to the      and technology. Customer-centric strategies make
                 Congress, July 15, 2008.                                     the customer the focal point around which a company
              3. Carney, Mark. Opening statement by Mark Carney, Governor
                 of the Bank of Canada, at a press conference following the
                 release of the Monetary Policy Report, April 24, 2008.        4. Hines.




                                                                                                                    Pivotal CRM | White Paper   1
             structures its operations. The goal is not only to deliver    When a prospect becomes a customer, the real
             a more satisfying customer experience, but to provide         relationship management begins. Businesses need to
             greater customer insight and value to the business,           implement consistent and reliable processes to ensure
             thereby improving profitability.                              that the drive to acquire customer knowledge does not
                                                                           drop off at the point that the business is won, but
             Given that retaining customers, finding new avenues for       instead intensifies. During and after the welcoming
             organic revenue growth, and improving performance             of new customers and processing of their orders,
             despite cuts are among businesses’ most urgent needs          companies need to use CRM workflows to build out
             under current economic conditions, customer-centric           deeper customer knowledge and strengthen the
             strategies offer compelling advantages, now more              relationship, using a CRM-defined relationship plan
             than ever.                                                    to ensure regular touch-points and continually refresh
                                                                           and add to their customer intelligence.
             So how can customer-centric strategies help your
             company survive and thrive under tougher economic             Under tougher market conditions, this holistic view of the
             conditions? As the concept suggests, it all centers on        customer and regularity of contact becomes invaluable.
             the customer.                                                 Not only does your business have a complete and current
                                                                           view of the customer, but also an established relationship
             1. Get Closer to Your Customers                               to leverage. This provides opportunity to your company on
                                                                           multiple levels.
             As customers react to negative headlines, economic
             uncertainty, and market volatility, your business cannot      First, companies with a 360-degree view of customers
             afford to keep them at a distance. In fact, you need to get   provided by rich CRM data can more accurately assess
             closer to your customers than ever before.                    customer value. This value is not always direct or obvious
                                                                           from basic account data. For example, a customer that
           Customer-centric strategies are predicated on the               represents modest revenues to a business might be
           establishment and ongoing enrichment of customer                part of a family, parent company, or conglomerate that
           knowledge and the need to collect and apply this                overall represents major profits to the business, and might
                                        knowledge intelligently at         have influence over several other potential or existing
                                        every stage of interaction.        customers. In B2B scenarios, a customer business might
True customer value is not              This means not only getting to     represent significant revenues to a company, but it could
always direct or obvious from           know your customers better,        be that only a few divisions, departments, or offices are
basic account data.                     but having the tools to take       the true sources of this value, and the opportunity to
                                        advantage of this knowledge        extend and expand this relationship is being overlooked.
                                        where and when it offers the       For large companies with multiple product lines, operating
           most value. To accomplish this, companies need to use           regions, and divisions, the same customer might be a “tier
           CRM systems to their true potential: not just as data           5” asset to one area of a company but a “tier 1” customer
           systems, but as the technological enablers of customer-         to another area. Furthermore, a customer might have a
           centric business strategies.                                    moderate direct impact on revenues but could be bringing
                                                                           in exponential value by referring other customers to the
             Building up this customer knowledge begins long before
                                                                           business. With the proper application of CRM technology
             an individual or organization becomes a customer. It
                                                                           and strategy, all of these different facets of customer
             begins the moment they are identified as a prospect.
                                                                           value can be made clearly and easily discernible within
             Using good CRM marketing tools, companies can build
                                                                           the system.
             out prospect profiles that combine demographic data and
             publicly available information with behavioral responses      Applying this knowledge, the company can ensure that
             and information provided by the prospect through each         it keeps its focus on customers with an understanding
             marketing or sales interaction. Using this information, the   of their true overall value to the business, making it
             business can more effectively segment its audience and        clear exactly which customers are most critical to the
             target its marketing activities, engaging the prospective     business’ bottom line. As economic conditions impact
             customer with high personalization and relevance from the     not just companies, but their customers, this can also
             earliest stages of the relationship.                          help companies take a longer-term and better-informed
                                                                           approach to navigating the downturn. For example,
             When a prospect becomes a defined business
                                                                           a company may want to extend particularly flexible
             opportunity, this rich CRM profile ensures no employee
                                                                           payment options to certain customers, with a view to
             need ever walk into a sales opportunity blind. With
                                                                           keeping its most valuable customers for the long term,
             comprehensive information about the prospect, past
                                                                           rather than losing them to short-term economic dips.
             interactions, and the lead source, sales personnel have
             the background they need to position products and
             services more effectively and win more business.




                                                                                                                Pivotal CRM | White Paper   2
             Furthermore, as they look to increase revenues from           Providing high-quality customer experiences is
             their existing customer bases, companies that have rich       understandably challenging when trying to operate with
             customer profiles are also better positioned to identify      reduced resources. Yet as previously noted, the risk of
             new revenue opportunities by up-selling and cross-selling     losing customers in a time of uncertainty and skittishness
             products and services. Given the significantly lower cost     is very real, and failure to keep focus on customer needs
             of selling to existing customers versus acquiring new         and sentiments could significantly worsen the long-term
             ones, this can prove a very cost-effective approach to        impact for companies of what should otherwise be only
             revenue growth. With deep information about customer          a temporary economic setback. Hard-earned customer
                                          attributes and interests,        relationships could be quickly lost if companies provide
                                          companies can apply              inferior service due to cutbacks.
The same CRM tools that                   strategic plans to expand
                                          and deepen their relationship    How can companies possibly improve customer service
help companies increase
                                          with the customer, up-selling    while cutting costs? The reassuring answer is that the
the value of their customer                                                same CRM tools that help companies increase the value
                                          and cross-selling the most
relationships can also help               relevant products and            of their customer relationships can have an indispensable
them serve customers more                 services. Regular touch-points   side benefit here: they can also help companies serve
cost-effectively.                         established through a CRM        customers more cost-effectively.
                                          relationship plan provide the
                                                                           Some cost-saving insights that can be uncovered through
                                          perfect venue for exploring
                                                                           CRM have already been hinted at in this paper. When
             customer interests and introducing new offerings. The
                                                                           companies understand customer interests and attributes,
             items discussed and customer reaction can be clearly
                                                                           for example, they can focus their efforts more strategically,
             noted within the CRM system to ensure customers are
                                                                           reducing wasted expenditures on poorly targeted
             not offered the same products and services by different
                                                                           marketing campaigns and sales efforts. CRM data can
             parties or at successive meetings unless appropriate.
                                                                           be used to more effectively segment customers and
             Similarly, a good relationship plan and comprehensive         prospects to improve the relevance and success of sales
             customer profile are of tremendous value in identifying       and marketing activities. In the same vein, CRM systems
             customers at risk in a time of uncertainty. Regular           that provide users with an instant understanding of true
             touch-points give the company the opportunity to              customer value, including referrals and influences, can
             gauge customer sentiment and address any concerns             be helpful in determining the level of service appropriate
             proactively. Thorough profiles that aggregate data across     for an account. This need not mean providing inferior
             different areas of the business are also essential to         service to any customer; nonetheless, it is important
             distinguishing true risk from false alarms. For example, a    for a company to understand when the cost of serving
             customer cutting back on their purchases with your firm       a customer is out of alignment with the value of the
             may simply be belt-tightening—or they may be in process       customer to the business, so that it can assess whether
             of switching to a competitor. The ability to differentiate    a better solution or more appropriate fee structure could
             between the two scenarios and react accordingly is a          be offered to the customer to keep them profitable to the
             function of having a true 360-degree view of customer         company. Such insights can help companies prioritize
             interactions and a sound relationship plan that enables       their expenditures and focus reduced budgets on the
             you to gain more insight into your customers’ actions.        most effective activities.

             As these customer-centric approaches suggest, customer        Some of the greatest cost savings from CRM, however,
             intelligence is a company’s true goldmine in tougher          come from the automation and process streamlining
             times. Getting closer to customers is the smart way to        achievable with CRM tools. To really look at how
             grow revenues in a time of economic contraction: as           customer-centric strategies can be embedded within
             you increase your value to them, you increase their           their organizations, companies need to drill down to
             value to you.                                                 the level of customer-facing processes. Greater speed,
                                                                           consistency, and efficiency in these processes benefit
                                                                           the customer as much as the business, so fine-tuning
             2. Do More with Less                                          and standardizing customer-facing processes is
             As many companies deal with the cutbacks that are the         a natural part of implementing a customer-centric strategy.
             almost-inevitable result of a tougher economy, they are       Using a flexible CRM system, companies can build
             faced with the challenge of trying to do more with less       these optimized marketing, sales, and customer service
             thanks to lower budgets and fewer staff. At the same time,    processes right into the system, automating formerly
             expectations remain demanding: customers and internal         manual tasks and streamlining the flow from one step to
             and external stakeholders alike demand that companies         the next. Workflow tools define exactly what needs to be
             find ways to perform despite these constraints.               done as part of each process, eliminating confusion. For




                                                                                                                  Pivotal CRM | White Paper   3
            complex processes involving multiple stakeholders, steps           growth and overall profitability.”6 Though this prediction
            can be automatically assigned and can run concurrently             was specifically targeted at the financial services industry,
            or in succession, as appropriate, allowing for smoother            there is little reason to think that businesses in many other
            collaboration and time savings. Multiple individuals               industries, most of which face similar margin pressures
            can serve a customer as part of the same process in                and competitive struggles, will not equally need to pursue
            a coordinated manner, because every person is kept                 different revenue sources to succeed and differentiate
            fully informed through the CRM system’s centralized                themselves. As companies seek new ways to grow
                                         point of reference. At any            organically, not only in response to the current economic
                                         time, team members or                 situation, but also to general competitive and market
Deep CRM data is a                       executives can check the              pressures, they are increasingly under pressure to find
treasure trove that can                  CRM system to see exactly             these “creative” new streams of revenue. Luckily, this is
be mined to uncover new                  what stage a deal or process          another area in which good customer intelligence can
product or service ideas and             is at, allowing for better            provide immense value.
                                         coordination of personnel and
revenue streams.                         resources, as well as more            In addition to helping pinpoint opportunities with individual
                                         accurate and hassle-free              customers and position relevant products and services
            revenue forecasting. This allows for greater efficiency and        to increase up-selling and cross-selling success as
            productivity, effectively empowering businesses to do              described above, deep CRM data is a treasure trove that
            more with less.                                                    can be mined to uncover new product or service ideas
                                                                               and potential revenue streams. As company personnel
             Recent analyst opinion supports the contention that               engage in regular interactions with customers according
             automation, process reengineering, and streamlining are           to the relationship plan, they have frequent opportunities
             key to responding strategically to the current economic           to listen to customer concerns or feedback that can help
             conditions. TowerGroup, for instance, notes that:                 identify product or service gaps and generate ideas for
                                                                               new offerings. Similarly, if a company is considering a
                As a result of recent losses and persisting uncertainty,       new offering but wants to test the idea before investing
                2008 will witness a spate of downsizing and consolidation.     in it, close customer relationships and regular planned
                Savvy companies will reduce their expense base more            interactions provide greater opportunity to solicit input and
                effectively by fundamentally reengineering their business      gauge interest—potentially creating a built-in market for
                processes…. Streamlining to gain cost efficiencies and         the offering before it even launches.
                agility is essential. However, downsizing alone cannot lead
                companies to greatness.… [A]utomation, interconnectivity,      Moreover, companies that focus on strategically building
                and online service capabilities have become a necessity.5      up customer intelligence have the perfect information within
                                                                               their CRM systems to perform advanced analysis to spot
             As this passage suggests, both process and technology             trends and identify important correlations that can help
             are critical to survival. Downsizing without accompanying         them gain insight into potential opportunities. For example,
             efforts to refine processes and use automation and                looking at the common attributes of their most valuable
             interconnectivity to offset cuts will leave companies             customers could help companies focus on new offerings
             unable to operate resiliently. This could explain why, in         for these customers; it could also provide insight into how
             spite of budget cutbacks in other areas, many companies           they might replicate their success with these customers in
             are increasing their technology budgets: it seems clear           other accounts. Analyzing trends around revenue sources
             that technology is essential to enabling companies                and customer retention rates can also help companies see
             to succeed in spite of other cutbacks. As companies               exactly the ways in which the economic downturn is hitting
             examine where they can focus their technology budgets             their business—and their customers—and react more
             to give them the greatest advantage under current                 strategically, stopping negative trends in their tracks before
             economic conditions, a CRM system’s ability to support            it’s too late and spotting positive trends they can take
             both cost efficiencies and new revenue opportunities              advantage of before the competition.
             make it worthy of serious consideration.
                                                                               With the customer data to uncover new ideas and
                                                                               the customer relationships to help test and validate
             3. Find Creative Revenue Opportunities                            them, companies can identify more creative revenue
             Cost-cutting is critical to weathering a downturn. But            opportunities and pursue them with lower risk.
             is it enough to help companies thrive in the long term?
             Analyst firm TowerGroup notes: “In the years ahead, a
             key factor for competitive differentiation will be the ability    4. Benefit from Globalization
             to counter the pressures on profit margins with much              Today, many companies operate on a global, or at least
             more than just cost efficiencies. Successful companies            multi-regional, basis. For most, the process of becoming
             will find creative revenue sources to sustain continuing          a global business has had its growing pains. Many
                                                                               businesses have struggled with the challenges of growing

              5. Kopp, Guillermo. “The TowerGroup Top 10: Business Drivers,
                 Strategic Responses, IT Initiatives in Financial Services.”
                 TowerGroup, December 2007, p. 9                                6. Ibid.
                                                                                                                      Pivotal CRM | White Paper   4
through mergers and acquisitions, trying to combine            globally, expanding the relationship on a whole new level
disparate systems, processes, and cultures; others have        and taking it to new heights of loyalty and profitability.
faced similar challenges when expanding organically
into new markets with new regulations, competitors, and        As companies look for creative ways to grow under
considerations. For a lot of companies, achieving their        current economic conditions, the smart ones will think
vision of becoming an effective global business is still       beyond the confines of their region. By taking customer-
a work in progress.                                            centric strategies to a global level, companies stand to
                                                               benefit in an unprecedented manner from the efforts
Challenges aside, the current economic situation offers        and investments they have made both in international
a perfect illustration of why “going global” can offer         expansion and in their customer relationships.
great benefits to companies. As interconnected as
world economies are, events that work to the detriment
of one country’s economy often bolster another. As a           Conclusion:
case in point, while the U.S. sub-prime crisis is wreaking
economic havoc around the world, it is having a much
                                                               The Time to Act Is Now
harsher impact on developed economies than on                  While companies are bound to take different approaches
emerging ones. While some countries are bracing for            to weathering current economic challenges, what seems
an uncertain and volatile year economically, others are        indisputable is that they will have to take action of some
positively bullish. IMF growth forecasts for 2008 for China    kind to effectively survive them. With every passing week
(10%), Russia (6.5%), and India (8.4%) significantly           that a company does not have a well-considered strategy
exceed the average of 4.75% worldwide and 2.2% for             in place to combat the downturn—one that goes beyond
industrial countries, not to mention the U.S.’s weak 1.9%.7    just cost-cutting—it is missing opportunities to better
                                                               position itself for ongoing growth.
What this means is that a diversified global company
with the resources and infrastructure to support strategic     In this white paper, we have presented four key ways in
pursuit of worldwide opportunities is in a perfect position    which customer-centric strategies can help companies
to mitigate the effects of the current economic slowdown       increase revenues and cut costs to help counteract
in North America and Europe. This is where the rubber          the negative effects of current economic challenges:
meets the road for global companies: do they have the          by deriving greater value from their customer base, by
systems in place to take advantage of these conditions?        increasing productivity and streamlining processes, by
Those that do can place their focus on regions of growth       finding creative revenue sources, and by taking advantage
and significantly offset the impact of the downturn.           of existing relationships to exploit global pockets of
                                                               opportunity. We contend that by using CRM to implement
Used in tandem, global strategies and customer-centric         these customer-centric strategies, companies can not
strategies may just offer companies the greatest               only survive a downturn, but thrive in it.
advantage yet. Of course, regardless of their region
of operation, companies can use the aforementioned             While it is critical that companies act immediately to
customer-centric strategies to deepen their customer           embrace customer-centric strategies, they can rest
relationships, maximize the value and opportunities from       assured that such a move is neither a quick fix nor
their customer base, and cut costs through process             a short-term solution. By introducing tools and strategies
optimization and automation. But when taken to the             that provide more customer focus and insight, companies
global level, the opportunities made possible through this     are taking part in a seismic shift in the modern business
scenario expand dramatically.                                  world away from product-focused operations toward
                                                               customer-centric ones. Even if steps taken now are
For today’s company, a true “360-degree” customer view         in response to current market conditions, companies
is a global 360-degree customer view: one that reveals         should not be short-sighted: they should take care to
worldwide value, opportunities, and connections. Using         reengineer processes to be effective over the long term
this view, a company’s operations in India or Russia can       as well and choose flexible, powerful supporting solutions
see which businesses and individuals the company has           that will evolve with their customer-centric strategies. In
relationships with in other regions and use this information   doing so, they will not only empower their employees to
and related contacts to help build new business in their       derive value and growth in the short term, but create a
region. The simple fact is that just as companies have         resilient platform for ongoing insight and returns from their
gone global, so have their customers—opening up                customer-centric strategies.
a wealth of new opportunity. For example, a manufacturing
company that is a customer of your business in the U.S.
may well have plants in India or China. With a global
CRM view, your company’s operations in those regions
could use the U.S. relationship to approach the overseas
branches about additional opportunities. In this way,
companies can build their relationships with customers


 7. Hines.
                                                                                                      Pivotal CRM | White Paper   5
Pivotal CRM
Pivotal CRM helps organizations create superior customer experiences and offers rich functionality, a highly flexible
application platform, a full customer relationship management application suite, and best-in-class customization
abilities, all with a low total cost of ownership. The Pivotal CRM software suite includes a powerful application platform
and additional capabilities in analytics, mobile CRM, partner management, and marketing automation.

Designed to produce meaningful increases in revenues, margins, and customer loyalty, Pivotal CRM is used by more
than 2,000 companies around the world.

For more information about Pivotal CRM, please visit www.pivotal.com, or in North America, call +1 877-PIVOTAL.




For more information or a complete list of our worldwide offices, please visit www.pivotal.com.
Copyright © CDC Software 2008. All rights reserved.
The CDC Software logo and Pivotal CRM logo are registered trademarks and/or trademarks of CDC Software.

								
To top