And that is especially true for revenue generating applications such as Customer Relationship Management (CRM).
Improving customer service, and therefore wringing more revenues from existing customers, are high priorities in the current economy, according to a survey of more than 110 senior executives of large companies by BusinessWeek Research Services earlier this year.
“Selling more to existing customers” is as high a business goal as increasing profit margins for the rest of this year and into next year, they said. This is a big change from pre-crash 2008, when reaching new customers was a higher priority.
Focusing on your existing customers is a time-honored tradition during a recession, of course. No surprise there.
However, interest and investment in CRM tools to achieve that goal ranks as the most important development project among the survey respondents, despite the downturn. While more than four out of 10 respondents said they already had a CRM system, another 43% said they would have CRM capabilities in place within two years.
In fact, more companies are working on new CRM implementations than on any other technology, including tools to improve operational efficiency, sales and marketing, compliance or asset allocation.
The ironies abound in the effort to use CRM to sell more to existing customers. I have been hearing consultants, sales and marketing executives and C-suite suits extol the virtues of up-sell and cross selling for two decades. In the late 1980s the up-sell/cross sell concept was the hot button of the day, especially at banks and other financial institutions I was writing about in the pre-Internet era.
One of the primary drivers of the mergers and acquisitions wave was so the bank could be a financial supermarket – it could offer savings accounts, checking accounts, stocks, bonds, insurance policies, retirement plans, mutual funds. And launder your dirty socks, too.
In this scenario (or illusion), the role of IT was visionary: bank tellers, call center operators and other customer facing personnel would be prompted by their workstations to sell existing new customers new services.
Here’s an example of the theory for a call center operator responding to a customer query:
“Oh, I see you just opened a savings account for your child. Would you like to open a college fund account, too? Given the amounts in your accounts, I bet the tax advantages would be substantial.”
Well, we all know how that theory worked out at Citigroup and several other financial supermarkets. But the idea of selling additional products (cross-sell) and increasing sales of existing products (up-sell) still makes sense. The failures were due to poor management and inadequate technology.
Now, however, the CRM technology reality has caught up to the CRM vision.
Here is a checklist for your CRM playbook. I’ve heard from CIOs and others that these five types of data sources must be integrated into the CRM system to provide the minimum standard of capabilities:
1. Prior sales history. What have they bought lately? Which goods sold are at or near the end of their useful life/warranty? What was the pattern of buying–just before key holidays?
2. Prior credit/payments history. It seems obvious to say that your sales folks should be focused on selling to customers who pay their bills on time. But some sales people don’t know who are the deadbeats. Do they know who pays fast?
3. Warranty/service claims history and pattern. If a sales person doesn’t know about a recent problem, any sales call before a happy resolution will be an unpleasant experience.
4. Call reports. Every prior contact should be in the database, along with relevant personal information.
5. Web site traffic logs. If a sales person doesn’t know what the customer has been reading on your web site, how often they’ve visited, any pattern of the visits, everyone’s time is wasted.
And if your shop meets these minimum standards, it’s time to think about the next steps to sell more to existing customers. Using semantic web tools to parse news events and produce customized alerts to sales people should be on your list of things to learn about ASAP.
For example, when the U.S. Department of Defense announces a new contract award to a customer of your company, does your sales person know about that in real time? And does that alert to the sales person include information on prior purchases of components likely to be re-ordered to meet the new DoD purchase order?
If not, add this to your priority list, because your competitors are probably working on it.
For more information about how the semantic web can turbocharge your CRM system, check out this package of articles from PricewaterhouseCoopers.
Another hot new trend is connecting RFID data to the CRM system. This is going to be crucial to meeting mandates from the Food and Drug Administration and other regulators worried about recalls of food, medical devices, toys, and other consumer products.
Speedily connecting your CRM sales and marketing data with your logistics and inventory information can not only simplify recalls, but also provide a sales opportunity.
Consider this script of a telemarketer calling a corporate client:”We just received word that there is a defect in a component of the XYZs we shipped to you last week,” says a telemarketer. “We know they arrived but the cartons haven’t been opened.
“So we can swap out replacement XYZs at no charge? However, we have a new, higher performing version of the XYZ that is available to current customers at a 50% discount. You had bought 1,000 of the XYZ, so should I send you 1,000 of the new, improved XYZ?”
That’s called making lemonade out of a lemon.
Do you have any lemonade episodes to share? Want to vent about dumb cross-sell telemarketer calls? This is the place. Leave a comment below.