How to Use a CRM Strategy to Engineer Company Revenue Growth
- Customer Relationship Management is a business strategy to grow mutually beneficial and profitable customer relationships at scale. That's essential because achieving customer affinity is one of only four sustainable competitive advantages.
- Strong customer relationships are a leading indicator to increased customer purchases, referrals, customer lifetime value and retention; all factors that deliver significant revenue growth.
- CRM Strategy is your roadmap to the most important company results. It priorities the target business outcomes so that CRM technology can be engineered to achieve them. Without strategy, the technology is designed in a vacuum and execution is aimless.
A Customer Relationship Management strategy defines the best approach to achieve customer and revenue objectives. It's a customer expansion strategy that engineers specific methods to improve customer relationships, increase customer acquisitions, grow customer share and increase customer retention. And do these things at the least cost and in the shortest time.
The overarching goal of CRM is to achieve customer affinity. That means knowing your customers better than your competitors, and using that knowledge to better serve them, solve for them, build relationships with them and earn their loyalty.
Achieving customer affinity is one of only four sustainable competitive advantages. It's a differentiator that is not easily duplicated by competitors or displaced by new technologies. In fact, growing mutually rewarding customer relationships creates a connection that can withstand disruptive technologies, competitor encroachment and the erosion of other competitive advantages.
Strategy & Technology – Not the Same Thing
CRM strategy is different than CRM software. The former targets the most important business outcomes while the latter is the enabling technology to achieve the former. The strategy and the software are synergistic together but ineffectual apart.
Company strategies define what's most important. That might be expanding a new market, increasing customer acquisitions, growing a customer segment or reducing churn of the most profitable customers.
The strategy defines the most important things because it's more important to do the right things than do things right. Doing low value, mediocre or non-essential things right does not advance the company's goals. Strategy defines the right things, the most strategic things, the things that most drive revenue growth and profits.
If you have the right CRM strategy, you can actually make a lot of tactical errors and still make progress toward your revenue, profit or other strategic objectives. This reminds me of a quote by Robert E. Wood, a Brigadier General and later business executive, who said the following
"Business is like war in one respect. If its grand strategy is correct, any number of tactical errors can be made and yet the effort still proves successful."
How to Create a Customer Relationship Management Strategy
The best CRM strategies do 3 things.
They span the enterprise
They are holistic and enterprise-wide strategies, not departmental or fragmented. Nothing infuriates customers like inconsistencies between departments of the same company. Nothing frustrates CEOs like departments that fail to align with the company's priorities.
The strategy should show how customer information is shared across departments. It should also show how each department's most important objectives create results that roll up to achieve the company's revenue and profit objectives.
Only when CRM strategy directly supports the company's business priorities does the technology become something the company cannot live without – which makes it both wildly successful and sustainable.
They align company and customer objectives
Most companies omit customer objectives when designing Customer Relationship Management. Maybe they didn't get the memo that they must become customer-centric to survive and thrive.
"Customer experience (CX) leaders grow revenue faster than CX laggards, drive higher brand preference, and can charge more for their products" (source: Forrester, Improving Customer Experience Through Business Discipline Drives Growth). Unfortunately, while 80% of companies believe they deliver "superior experiences," research shows only 8% of customers agree (source: Bain & Company, Customer-Led Growth diagnostic questionnaire.)
Saying your company is customer-centric doesn't make it so. Virtually every company says its customer centric, but most are product-centric or self-centric. Self-centric companies define Customer Relationship Management from an inside-out perspective. That is solely from the company's perspective. They then craft a CRM program designed to create the most efficient and low-cost business processes possible, or other goals that serve only the company's interests.
Customer-centric companies define CRM with an outside-in perspective. That means understanding what successful customer relationships look like from the customers' perspective. Knowing what customers want in order to do continued business with brands creates different objectives in the CRM strategy.
Companies don't get to decide how customer-centric they are; customers do.
To put this into practice, many companies start with customer personas and quantify customer objectives by role.
They engineer customer, user and company outcomes
Once you know what customers want and what each department needs to do to contribute to the company's revenue goals, you can create an execution plan that leads to forecasted results.
We normally illustrate this roll up with a data-driven value chain that includes methods, evidence-based best practices, performance metrics and the forecasted payback. Supporting data is sourced from company history if its available or industry benchmarks if its not. The below diagram shows one dimension of that value chain.
You may need to rethink who owns strategy and participates in the design. It doesn't get decided in the ivory tower and then shared among employees after it is complete.
Participation leads to better ideation, more effective routes to outcomes and employee buy-in. Involving staff and stakeholders from the onset surfaces experience to build upon, better aligns actions with outcomes, and avoids wasting time on things that won't work.
The Point is This
If you follow a framework, creating a Customer Relationship Management strategy is not a big effort. In our experience it's about 5 percent of the total effort and journey to CRM program success. That said, it is a precursor to everything that comes after.
Great execution won't get you very far if your strategy is wrong. But a solid strategy leaves the remaining 95 percent of the journey to be tackled with clarity of focus, measured execution and the realization of targeted objectives that most matter.