CRM Strategy: How to Design an Effective Strategy for CRM Success

Discover the fundamentals for the creation of a comprehensive CRM strategy


Why CRM strategy is so important

When it comes to understanding the fundamentals of CRM strategy, the following quote is one that organisations of all sizes would do well to keep in mind:

“…the purpose of business is to create and keep a customer”.

The above is a quote from legendary management authority Peter F. Drucker. It was first referenced in Drucker’s seminal 1954 work, ‘The Practice of Management’. Nearly 70 years on, it still serves as a useful reminder about the ultimate objective of an organisation.

Today, in fact, customer experience has overtaken price as the determining factor for success. You only have to read the numerous marketing and customer experience reports available to know that customers today are willing to pay more for superior customer experiences.

To remain competitive today, organisations need to put customer experience at the heart of everything they do. They need to design comprehensive, customer-centric strategies that meet customer expectations. Those that succeed in this endeavour reap the benefits,  as becoming a customer experience lead business pays dividends.

The problem for many organisations, however, is that they don’t know where to begin. They are unsure of how to formulate a customer-centric strategy. The result is that some organisations then fall into a trap of believing that if they just invest in a CRM solution, then the technology alone will automatically cure their customer experience dilemma.

The reality, of course, is very different. Designing a successful CRM strategy requires considerable effort, time, and maybe some pain (you’ll need to undertake an honest assessment of the effectiveness of your existing customer engagement strategy).

In this article, we highlight six areas you need to consider when designing a CRM strategy:

What is CRM?

The first recognised use of the term Customer Relationship Management (CRM) appeared in 1995. Since then, CRM technology has rapidly evolved to become one of the fastest-growing software markets today. The importance of providing exceptional customer experience means that customer acquisition, nurture and retention have become ever more important to business success. In this customer-centric world, advanced CRM solutions such as Microsoft Dynamics 365, have become a valuable ally for organisations in both the B2C and B2B world.

As we’ll see, however, this ‘technology-only’ view of CRM is limited and leads to poor assumptions and uniformed decision making. It prevents both project leaders and relevant teams from seeing the bigger picture. Too often, the thought process is, ‘Once we have a CRM solution running’, this mistaken belief goes, ‘we’ll be fine’. ‘This CRM will do everything for us’.

This may appear too simplistic as a scenario, but it ultimately gets to the crux of why some organisations invest a considerable amount of money, time and resources in a CRM project, yet see little in the way of return. CRM projects move ahead with organisations putting the product before strategy. And when they don’t see the results they expect, they blame the CRM solution for not delivering the desired outcome. They never once think that it was the lack of strategy that was the cause of their problems.

Creating a true CRM strategy will take effort. It means aligning all business divisions with one customer-focused objective. The hard work is the only way you will see a return on your CRM investment.

Why CRM can fail to live up to expectations

Take a minute to run a quick internet search for the term ‘CRM failure’. You’ll find dozens of articles highlighting cases where organisations have moved ahead with a CRM project, only to find it didn’t deliver the benefits they were led to believe it would. Their CRM investment ‘failed to meet expectations’. There are numerous examples.

Gartner’s 2001 research indicated that half of all CRM implementations failed.  The Butler Group discovered the rate was even higher at 70% in 2002. And in 2007, The Economist Intelligence Unit uncovered CRM failure rates at 56%.

These were a while ago now of course so have CRM success rates increased? Well according to CIO Magazine, in 2017 the failure rate fell somewhere between 18% and 69% with the average CRM failure rate averaging 33%. There are other numerous studies that also present various CRM project failures. Overall then, it’s clear that some organisations are still failing to reap the potential benefits of their CRM investment.

This ‘failure to meet expectations’ is sometimes pinned on the CRM solution itself, but this is unfair. Even a brief investigation would show that in the vast majority of cases, the primary culprit of these failed expectations is a misunderstanding of the function of CRM.  The failure of organisations today is that they’re not putting in the required effort to align

This article will not be highlighting the many benefits of Microsoft Dynamics 365 however. In fact, this article deliberately avoids such matters. Why? Apart from the fact that we talk about the technical benefits of Microsoft Dynamics 365 elsewhere on this site, the primary reason is that some organisations see a CRM solution as a panacea for their sales, marketing and customer engagement issues.

Don’t confuse CRM strategy with CRM tactics

There is still a belief amongst some that you can simply implement a CRM solution such as Microsoft Dynamics 365 and off you go, your customer relationship management strategy is sorted. This backwards thinking fundamentally misses the point of investing in CRM technology. A CRM solution, that is, the technology that is commonly referred to simply as CRM, is a tactic. It is a tool designed to help support and execute strategy. It is not in of itself a strategy.

CRM strategy, if approached correctly, should be designed as a holistic, all-encompassing objective focused on understanding the needs and behaviours of a customer so that the organisation can successfully acquire, nurture and retain them.

So whilst a CRM solution is a significant investment, it shouldn’t become a replacement for the strategy. It plays a role in broader, well-planned customer engagement strategy, but it is not a replacement for the strategy. Organisations today still fail to grasp this difference, leading to the ‘failed expectations’ still too commonly seen.

Know where you want to get to

What’s your objective?

Seems like an odd question perhaps, but even today, too many organisations fail to sufficiently plan their CRM objectives. They don’t really know where it is they’re trying to get to. They don’t take the time to analyse the effectiveness of their existing customer engagement strategy (if they have one at all). Worse, they don’t take the time to establish an objective. One of the easiest ways to throw money away is to embark on a CRM project without an end goal in mind.

Why does this happen?

There is still a mistaken belief that once a CRM solution is live, the leads will come flooding in. That CRM technology is so intelligent it knows your customer’s needs and desires and will do the work of your sales, marketing and customer services teams without too much input. It would be nice if it that was the case, but the reality is very different of course.

So before embarking on a CRM initiative, organisations need to know where it is they want to get to.

Clearly defining a set of objectives and translating these into broader goals is the bare minimum of what an organisation should do. Failure to do so will prevent a successful CRM strategy from ever being achieved.

CRM should support, not replace, customer engagement and marketing strategy

An effective CRM strategy should strongly align with a well-defined marketing and customer engagement strategy. When it comes to marketing strategy however, the problem for some organisations, even well-established ones, is that they are confusing marketing strategy with marketing tactics. To be clear, tactics are the tools by which you execute your strategy, they are not the strategy.

This confusion is sometimes where organisations go wrong when it comes to CRM strategy. They mistakenly believe that the creation of a clear, well-defined marketing strategy can all be taken care of by a modern CRM solution. That somehow, once a CRM solution such as Microsoft Dynamics 365 is up-and-running, they will reach their desired audience automatically. Again, a CRM technology is a tool, a tactic for the execution of your marketing and customer engagement strategies.

No CRM software is going to make up for a lack of marketing and customer engagement strategies. If you don’t have a marketing strategy in place before embarking on a CRM project, you are putting the cart before the horse.  Only then can you confidently devise a complementary CRM strategy that will enable you to hone your focus.

CRM is not just an IT issue

An often mistaken belief is that because CRM is a technology, it must be an IT issue.  This is a fundamental misunderstanding of the role of CRM. Since sales, marketing, customer service and other divisions all have a significant role to play in the customer journey, positioning the IT team as the sponsors of the project will see any hopes of a cohesive, organisation customer engagement strategy quickly dissolve.

Your CRM initiative, therefore, should not be the sole responsibility of the CIO and the IT team. Whilst there will, of course, be a need for technical expertise, the presumption that the project needs to be driven by the IT team is a mistake.

Viewing CRM as an ‘IT only’ issue and focusing on the mechanics and technology as the key drivers mean you’re viewing CRM from a ‘technology-first’ perspective. It means you are viewing CRM as another tech gimmick, not as a strategy that is aligned to your business, marketing and customer engagement strategies. Appointing IT to take charge your CRM project relegates end-users to the fringes of the project. When organisations insist on CRM lead projects with and exclude other important teams and individuals from early-stage involvement, it considerably lessens the chances of success.

Recognise the importance of culture when designing your CRM strategy

At the risk of over-emphasising Peter Drucker’s influence in this area, another famous (though likely misattributed) quote of his is, ‘culture eats strategy’.

What does this mean?

If you’re not careful, even the most well-designed CRM strategy will fail if you do not take into consideration the prevalent company culture. As we’ve mentioned, this isn’t an IT only concern, so many teams and individuals will be involved. But if they aren’t 100% bought into the idea, if they don’t believe in the strategy, it will be throttled and your CRM strategy will never be fully realised.

CRM strategy is only effective if everyone in the company understands what the objective is. They too need to know the goal, what their specific role is with regards to the bigger picture, and how they can pull together as a team to execute it.

Organisations must also be aware that the introduction of a new strategy will likely upset at least some of the existing cultural practices. Introducing a new strategy can be painful at times. It requires significant focus from the project manager and key stakeholders to see it through. Failure to account for these changes will result in individuals and teams reverting back to old objectives and processes; the ones they are more familiar with. This, in turn, inhibits the adoption of new strategies and processes. Overcoming this is essential if the CRM strategy is to succeed.

Account for changes to organisational structures and employee hierarchy so you can mitigate against any potential internal backlash.

Successful CRM strategy requires ownership

Once a successful business case has been made, a CRM project must successfully deliver against the objectives. And though clear, well-defined objectives should help mitigate against scope creep, you still need someone to drive the project. You need an executive sponsor who will take responsibility for the success of your CRM strategy.

Why is this necessary?

Because sometimes, even the most well-designed projects can stray off-piste. If this happens, you need a project leader that will take ownership and ensure the project gets back on track.

Appointing a project sponsor is a critical part of the CRM planning and ongoing strategy. Without a project leader, CRM success is not guaranteed as no-one takes ownership for when things go wrong. As highlighted, accounting for company culture is important. If things go wrong, there may be accusations and arguments amongst teams and individuals, further exacerbating an already difficult situation. You need someone to drive the adoption of the CRM strategy from board-level down.  A CRM leader will help ensure your strategy doesn’t deviate from your planned path.

Technical competency: don’t do too much, too soon

As we’ve explored, the effectiveness of a CRM strategy is as much about mindset and cultural understanding as it is about technical ability.

That said, there are practical aspects of CRM that need to be taken into consideration. Though sales executives are often the main users of a CRM solution, if your customer engagement strategy is to succeed, multiple end-users, from marketing and customer relations to finance and HR, will be expected to engage the CRM platform.

Be wary of becoming so carried away with the theoretical aspects of CRM strategy that you neglect technical training. Remember that the ‘buy-in’ you need from your teams is as much about the application of technical CRM know-how. Ultimately, if teams don’t know how to use a CRM solution effectively, they won’t be able to achieve the objectives.

To prevent loss of enthusiasm during the early stages of a CRM initiative, resist throwing too much technical information at users too soon. If you do this, and you’ll lose people early on in the project since rather than being enthused, they’ll simply switch off. They won’t know where to begin, and they will revert back to using the solutions and platforms that they are already accustomed to. And that breakdown of the silos and sharing of data that provides a unified view of the customer will never be achieved.
To see results from your CRM strategy, start small and gradually build technical competence as employee experience and enthusiasm grows.

Recognise that a successful CRM strategy is an ongoing journey

Whilst it’s tempting to be seduced by the admittedly considerable benefits of Microsoft Dynamics 365, Xpedition is the first to caution against focusing solely on the technical aspects of a CRM solution at the expense of considering the broader, strategic business implications. Running headfirst into a CRM project without first knowing where you want to get to very rarely ends well. CRM success relies on knowing the current health of your customer relationships. It relies on knowing where you’d like them to be, and how you intend to get there.

Just as your customer relationships grow and mature, so too should your CRM strategy. And even if you have a comprehensive CRM strategy in place, it should not remain static. A strategy is a continuous journey. It should be an ongoing process of evaluation and refinement. When your CRM strategy aligns with business, marketing and customer engagement strategies, will you become a truly customer-centric organisation.

Ultimately, organisations that take the time to create a comprehensive CRM strategy that will reap the most benefits.

Next steps

Through the creation of a comprehensive CRM strategy, we help organisations realise the full potential of their CRM investment. We’d be delighted to help you too.

Now that you know more about CRM strategy, you’re ready to choose a CRM solution. Read our expert guide to on how to choose a CRM system to learn the key questions to ask.

Whether you have yet to embark on a CRM journey, or if you have invested in a CRM solution but your strategy is not delivering the results you expected, contact us today.

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