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Alison Diana CRM Maturity Model

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Customer Relationship Management Evolution – It's a Journey

Lofty expectations, unexpected resistance, unsettling reality and surrendering compromises — all fostering potential disillusionment. No, I'm not describing the [insert your political party here], but your Customer Relationship Management strategy.

With social media, mobility and other disruptive technologies, customers are more connected and informed than any time prior. A trend that shows no signs of abating. Customer expectations are on the increase and barriers to switching suppliers are on the decline. In short, customers are evolving and if your CRM strategy isn't keeping up, your CRM objectives and investment — just like your customer base — will most certainly erode. Perhaps that's why 52% of Fortune 500 companies are now gone; bankrupted or merged since 2000.

CRM isn't a one-and-done technology project. It's a journey. Here's a CRM maturity model that I've developed over many years that may stimulate your planning, aid your customer objectives and help you get the most from your CRM software investment.

CRM Maturity Model

Maturity Model Level 1: Activity-based CRM

Most CRM deployments begin by deploying software. Unfortunately, more often than not the technology implementation doesn't support or accompany a CRM strategy. In essence, adopters naïvely believe that the software is a substitute for CRM strategy. According to analysts, this mistake alone contributes to the oft quoted statistic that anywhere from 30-50% of all CRM deployments fail to achieve their objectives or fail outright.

Most initial CRM deployments also focus on customer facing activities performed by staff. How many calls did the sales team make today? How many cases were resolved by the service team? Important activities for sure, but like deploying business software without a definitive business strategy, activities without SMART (Specific, Measurable, Achievable, Realistic and Time-bound) objectives tend to be like looking at roadkill in the rear view mirror. You want to see what's happened, but it's usually not pretty and has little bearing on what's ahead.

In this CRM phase the sales department will finally get their pipeline and forecast reports, marketing can see campaigns and customer service will gain reports showing customer requests and resolutions. However, while some visibility will be achieved, the lack of foresight with measurable objectives supported with specific business processes generally also means the pipeline is padded with dead wood, the forecast is over-stated, the marketing campaigns show no direct revenue contribution and the service volume is an after-the-fact view without any root cause analysis to actually prevent customer issues in the first place. Some companies will respond to these and similar challenges one at a time, while others will seek to understand what problems have in common and respond more strategically.

Maturity Model Level 2: Tactical CRM

This phase advances CRM from a customer data management platform to include the pursuit of tactical objectives. CRM adopters recognize that a holistic customer view can't be achieved within departmental confines and data siloes so sales, marketing and service become more integrated. Customer data, workflow processes and information analysis are designed to cross departmental boundaries and seamlessly share information needed to support and grow customer relationships.

CRM tactics often change the focus from completing simple software activities to yielding productivity goals. For example, poorly designed sales processes result in about 65% of a sales persons time being spent on non-customer-facing activities (source: CSO Insights). If the activity management focus changes from how to quickly enter activities to how to automate activities within repeatable sales processes, then sales people can spend more time selling. Or similarly, if the focus changes from mandating that opportunities be entered into the CRM system to instead considering how opportunities can be entered to specific funnel stages pursuant to prospect behavioral criteria then management can get a handle on stalled opportunities, propose initiatives to advance opportunities through the pipe and understand how to increase sales win rates.

This phase also considers how CRM integrates with other business applications in order to support use cases which span front to back office and thereby enhance business process automation, reduce cycle times and enable closed loop reporting. Much of the customer information sales and service people need — such as orders, invoices, credit memos, payments, RMAs, credit availability and more — is housed in back-office accounting or ERP software. When CRM software is tightly integrated with ERP applications customer facing staff are provided a richer data experience and support for far more business processes.

To get to the tactical phase, ad hoc user adoption will be replaced with a user adoption strategy and will be tied to productivity measures such as increasing the amount of time sales people sell or improving sales win rates, activities will be prioritized and supplemented with workflow automation and bridged into Key Performance Indicators (KPIs), customers will be segmented, the customer view will mature from a piecemeal data set to a departmental view, and the limited use of packaged reports will be replaced with role-based dashboards and custom reports.

Maturity Model Level 3: Strategic CRM

The phase is most characterized by a cultural shift to advance from a product-centric to a customer-centric company. It requires a change in customer strategy, and most notably a change in perspective. Instead of defining successful customer relationships strictly from an inside-out company perspective, it's now apparent that to grow mutually rewarding customer relationships you're going to need to include some outside-in perspectives and understand how your customers define successful relationships.

This change in thinking will impact how you interact with customers. For example, suppliers will finally recognize their customer engagement must evolve from a monologue whereby vendors broadcast (mostly marketing) messaging to customers into a dialogue whereby the conversation flows in both directions. In this phase, smart CRM programs will be supplemented with Customer Experience (CX) strategies.

Also in this phase, your CRM technology continues to morph with other business applications so that customer facing staff, line managers and knowledge workers all have access to real-time and on-demand customer information, reports and business intelligence regardless of where the data resides.

To get to the strategic phase, business leaders will perform Voice of the Customer analysis to understand what customers really want from their supplier relationships, customer strategy will include what’s most important to customers, KPIs will be inextricably linked to the company’s most important customer and revenue objectives, customer segments will be defined by behavioral personas, the customer view will advance from a departmental to an enterprise-wide view, and information analysis will evolve to include flexible analytics.

Maturity Model Level 4: Business Critical CRM

In this phase CRM transcends from a mix of effective departmental programs to a central enterprise-wide strategy and CRM software becomes the primary technology enabler in the company's quest for customer and revenue growth. CRM software provides the data, automation and information to enable customer acquisitions, up-sell and retention programs.

This phase is all about linking CRM strategy to revenue performance realization. For example, CRM software will automate up-sell, cross-sell and Next Best Offer (NBO) techniques using database profiling for product combinations and recommendations. Or Customer Service will perform up-sell and cross-sell using "like/type fit scenarios." Or CRM will enable sales people to better up-sell and cross-sell by looking into ERP to see what clients already have and know how to sell them more of what they need or can use.

Marketers will develop customer segmentation or even algorithms to identify customers based on the Pareto principle – that is identify which 20% of the customers are delivering 80% of the margins or profits, and with this information treat this segment differently as well as identify their traits so that proactive efforts can evolve other customers into this segment. Customers are now grouped into segments based on behaviors across life cycle stages. This allows marketers to identify like customers and predict what those early stage personas will do, or can be influenced to do, based on what late stage customers in the same persona group have already done. This type of predictive behavior is extremely powerful when creating marketing campaigns.

When you understand how customer relationships mature, you can proactively respond in a way that caters to customers. Customers don't stand still. They evolve, change preferences, move from one segment to another and churn. Understanding and predicting customer behaviors is a dynamic and fluid process — which explains why so few businesses tap into this capability and why software automation is required. By understanding, predicting and facilitating customer evolution, smart businesses can better engage customers, influence spend behavior, grow customer share, increase Customer Lifetime Value (CLV) and keep customers longer.

In this phase CRM intelligence will become more predictive. For example, CRM software may tell sales people things like — don't make 100 (untargeted) calls, instead make 25 (targeted) calls to this particular segment or profile and you'll be more successful. This CRM phase uses predictive analytics with data interrogation, what-if analysis and sophisticated modeling to not just forecast what's ahead, but understand how any initiative implemented now will impact future revenues. With this predictability, different programs can be modeled and the highest impact initiatives selected. Guess work is replaced with data driven models and financial results are improved.

KPIs become revenue-focused and forward looking. Many businesses track customer metrics such as profit per customer because they're easy to calculate. Unfortunately, these metrics are all historical. Performance measures such as CLV are forward looking, permitting business leaders to craft strategies whereby even a small change to CLV can have an extraordinary impact to the business over many years.

You'll know you've reached Business Critical when the CEO is tying the CRM strategy and enabling software to the company's top revenue objectives.

None of these CRM Maturity Model phases are prescriptive and the examples are largely for illustrational purposes. Every company's customer and revenue strategies are unique and will traverse a path that makes sense for them. But do recognize the one thing every company's CRM strategy has is common is that the pursuit is a journey. End

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By understanding, predicting and facilitating customer evolution, businesses can better engage customers, influence spend behavior, grow customer share, increase Customer Lifetime Value (CLV) and keep customers longer.


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