Small Steps, Big Returns: Building Your CRM Vision in Increments
BY Adam Honig
Companies have discovered that they can continue to invest incrementally in one mission-critical business strategy -- Customer Relationship Management (CRM) -- while still reaping measurable returns on these investments.
Henry Ford noted, "Business is like an automobile. It won't run itself, except downhill." In other words, regardless of the economic climate, you've got to do something positive, or the business will fail.
The natural response of many companies to today's slack economy is to curtail or sharply cut back business-system investments, the very engine of growth and change. Some companies, however, have discovered that they can continue to invest incrementally in one mission-critical business strategy -- Customer Relationship Management (CRM) -- while still reaping measurable returns on these investments. In doing so, these companies are building for a grander CRM vision down the road, all the time reaping an ROI on the incremental investments they make today. The fact is, companies choosing to make incremental investments today in CRM can generate immediate cost reductions and efficiency benefits, while building on vital customer relationships and efficiencies that contribute to long-term growth.
Debunking the ERP myth Unfortunately, some organizations think of CRM as "another enterprise resource planning (ERP) exercise." ERP initiatives supporting back-office operational functions, such as inventory management, fulfillment, or shipping and billing, often translate into intensive, long-term projects whose payoff is years away at best, and nonexistent at worst. Woefully long ERP implementations are rooted in the difficulty and complexity of tying all of these functions together. And until these multiple knots are tied, the real value of ERP is elusive.
Afraid to get stuck in an ERP-like quagmire, many companies are opting to put off their CRM implementations -- choosing to maintain the status quo with their existing systems and processes until they can afford a more robust, enterprise-wide solution.
The fear is understandable -- but it's wrong. It is commonly assumed that a customer-focused strategy is as costly and time-consuming as ERP, with just as long a payback period. Additionally, because many piecemeal ERP implementations have failed to demonstrate real value after much time, money and effort were invested, the same is assumed of CRM.
In reality, this is not the case. Industry best practices have shown that transitioning toward a customer-centric business is most effectively implemented in phases. This has the obvious cost advantage of requiring a smaller up-front investment at any given time, allowing companies to address their most critical needs and build an enterprise-wide system over time, as business demands and budgets allow.
Pick and choose your CRM targets Unlike ERP modules, CRM applications add immediate value to a business in their own right; the benefits of combined applications simply compound their value. Good examples are lead-tracking and proposal-generation technology.
The very nature of CRM allows businesses to cherry-pick granular, achievable elements that offer fast and tangible business benefits. For example, let's say a company's goal is to boost the number of new customers through more targeted marketing and better lead generation. That, too, can be reflected in the vision of the company's CRM implementation. However, this vision can be attained in logical, incremental steps, with each step generating real business value along the way. Thus, the company in this example may begin the CRM journey with some basic sales force automation tools. Once those are in place and delivering benefit, a business could add contact and lead-management capabilities. As users gain familiarity with the CRM applications, more ambitious rollouts can follow, including marketing-campaign management processes, designed to bring in more qualified leads.
Small steps vs. big bang Very simply, there's much to be gained by making even a relatively small investment in CRM today. The reason is demonstrated with simple mathematics: Each incremental investment yields virtually immediate business and economic returns that continue to compound over time, putting your company in a more profitable position. You can strategically reinvest these returns and continue to expand your business, paving the way for additional ROI at a time when others are still pulling back.
Price today vs. tomorrow The longer you wait to implement CRM, the more difficult and costly it becomes. The business and economic costs of waiting to invest in CRM are significant and widespread. At the most fundamental level, inefficient business processes can result in a stagnating business -- and the longer you wait, the greater the damage.
Phased implementation builds project momentum, while end users experience the value of CRM right away. Moreover, unlike with ERP, the nature of CRM permits companies to start small and spread investments over time. The fact that CRM's benefits can be realized piece-by-piece and implementation-by-implementation strikes a resonant chord in organizations today, where funding for mega-projects is scarce yet the need for systems that deliver immediate value is very high. With CRM, companies gain the ability to build their CRM vision brick by brick. With incremental value accruing each step of the way, the company ultimately realizes a sizable cumulative payback while positioning itself for continued long-term growth.