Using CRM to maximise the value of your Service Operation

The original concept of CRM was as a sales tool designed to enhance the capture and dissemination of information about a customer. We were for a time wowed by the abilities of these IT relationship data bases to capture all manner of information at any time across the business, and to make it available when required. It didn’t take long to realise that gathering, cleaning, validating, maintaining and continually updating this data was a mammoth task, and not surprisingly, very few did it for very long. CRM IT data bases in many cases became large and growing files of information, with legislation-imposed restrictions making it harder to use and so they gradually fell into disuse.

Nearly 12 years on from when Tom Siebel set up the first truly CRM IT solution, most enterprise suppliers, big and small, now offer Customer Relationship Management solutions. The original niche CRM players have mostly been bought up, and many operations are becoming wary of “too good to be true” offerings, knowing that they may bring with them more problems than they seem to resolve.

Most CRM IT solutions are now used to help management to monitor and manage their sales team in the hope that they will execute a better job using it to measure customer contacts, conversion rates, number of visits, and son on. Yet, all this suggests that productivity is still at the core of the process – not building customer relationships.

It is now realised that it is necessary to identify who is best placed within an organisation to carry through relationship building. In many businesses this mantle has been taken up by the service organisation, which has become the advocate of CRM but in a guise that would have been hardly recognisable 10 years ago (in much the same way as the modern mobile phone would be unrecognisable to someone purchasing their first mobile phone – laptop size – phone 10 years ago.

The real relationship builders today are the trusted advisors - the Service organisation – who undertake the promotion of customer relationship building and develop the long term relationships to ensure renewal and recommendation. This emerging role of service requires information to be fed to the service representative, as well as captured from them, which is a very different requirement from the data available through the majority of existing service management tools.

One fundamental often overlooked when considering the concept of Customer Relationship Management (and not the IT tool) is that there are customer relationships which need to be managed, but the biggest challenge for many companies is establishing valuable relationships in the first place.

To achieve these relationships most effectively, a business has to place the customer at the core of its operation, and accept the growing importance and influence of customers on its success or failure. The winner in the competition to gain and keep customers will be the business that works with the customer to add value, and understand their needs, having a total, fully-rounded view of the customer, while providing the customer with a consistent view of the operation. In other words, the businesses which appear most successful put the customer at the heart of their business.

The new role of service now encompasses marketing service products and solutions, and requires a much broader range of skills and different ways of working, as well as different measures of performance, using different tool sets.

Recognising these innovations and capturing them are two very different capabilities. In many businesses the information from service has been collected to a separate database and dismissed as irrelevant to the customer relationship equation. In reality, such information on the customer provides insights and knowledge unobtainable from anywhere else in the business.

All this is not really surprising, as most Service Management System (SMS) packages in place, or being sold today, were designed primarily to support the break/fix environment, while the CRM IT packages were devised to automate sales and marketing, and at best support salesmen through complex sales. The original software design was very different from that now required to support an extended sales cycle of a service-based solution into a business; the decision makers and their roles have broadened and significantly changed.

The thought of services replacing products to generate the bulk of any revenue and profit in a product-based business is a concept not generally considered or accepted. The assumption is that service, at best, can become more efficient and thereby save money and reduce costs. Applying the concept of Customer Relationship Management allows the possibility of a designed for profit, revenue-generating services organisation to be created, and to be considered as a feasible possibility and even an orientation that comes to be essential to the very survival of the business.

A sales force unable to sell service solutions either because of a lack of training, a lack of incentive or lack of demand, can be turned around by establishing sales teams focused on selling service solutions and product where applicable, thus raising the understanding of the value of service within the total solution for the customer. The aim of CRM is to develop customer relationships, and the service organisation is potentially the best equipped to spearhead and manage a long term relationship with the customer.

The value of integrating service fully into the business is a concept that appears to have escaped some boardrooms, as the focus has been on sales revenue and profitability. In addition many businesses have either not understood the value of service or seen it as an add-on to the real business of selling product. Many have believed service can be dealt with at a later stage, certainly after sales and marketing

The result has been businesses whose commitment to service has been at best piecemeal and at worst merely lip service. Although not condoned in the past, this attitude was allowed to perpetuate, but as the pressure from customers’ increases, businesses are finding that the situation and business attitudes must change. A service operation that was considered an afterthought has proved to be extremely inefficient and expensive, and the tools and method must be found that will provide service as a central part of the offering, leading sales initiatives more and more often.

Satisfying and keeping customers for life is now seen as the most cost effective way of reducing sales costs. Understanding that the relationship really starts when the customer is merely a prospect and not just when the product is sold is when the value of an effective CRM IT tool becomes recognised. When the tool is used to continually add value to the relationship during the lifetime of the customer, the promises should be binding so the relationship will have the potential to grow through performance. Without a strategy capable of recognising that this transition must be seamless, businesses will start the service process on the back foot. Balancing the concept and attitudes of customer relationship management with the application of an effective CRM IT tool has proved much harder than many imagined.

Loyal suppliers will communicate fully with their customers to alert them to potential problems before they occur, as well as fine-tuning expectations to ensure that they will be consistent with what can be reliably delivered. Loyal customers will also give suppliers the opportunity to resolve problems before they escalate and it is critical that early warning signs are not ignored but used to the advantage of both the supplier and the loyal customers to reinforce the relationship. Loyal suppliers will also understand the value, and emphasise the importance of meeting customer commitments regardless of cost, if at all possible. It is this point of loyalty to the customer that most companies find hard to understand and come to terms with, but it lies at the heart of effective and usable Customer Relationship Management.

Most businesses do not understand the full value of their loyal customers and unnecessarily limit their ability to retain customers, and reduce the value of their customers from the very beginning of the relationship, by not utilising information available through their service, sales and marketing teams; the existing solutions cannot capture the information required to take the necessary action. Really customer centric businesses thrive through their effective customer relationships and manage them in terms of the value they provide through a powerful combination of service and product to their customers and the value the customer brings to them; the most valuable customers not only re-buy, but recommend as well.