In a world filled with competitors it is important to understand customers quickly and accurately. Is your organization aware of their preferences, opinions and lifestyles?
The purpose of this document is to help organizations in understanding customer Lifecycle value for maximising profits.
Most large organizations today have some form of CRM implemented and many of them are planning for CRM remediation efforts. Organizations can conduct a self-audit to understand where they stand in the CRM maturity
curve and what needs to be done to move to the next level. For this, organizations must begin with analyzing their current processes and evolving them with the help of process score cards to avoid any single
In our experience, even the most competent CRM products cannot guarantee success without a well thought and grounded strategy. Often CRM initiatives rush to fix the technology and business-alignment issues, resulting
in temporary success for customer relationship management. Consider all aspects of this document before you attempt to pick your shots in the way the sales, customers and channels need to be managed.
Selling to existing customers is more cost effective than acquiring new customers. The organizations should make use of customer insights to identify cross-sell/up-sell opportunities.
Delivery of consistent customer experience across customer touch points including across departments is key to customer delight. The organizations can take immediate steps to put in place processes to
resolve customer service requirements within well defined turn around time (TAT) with accountability and measurement matrix.
Components of Customer Life-cycle Value
Customers are critical for any organization, hence it is not unusual for them to adapt various customer centric strategies to win trust and retain them, thereby maximizing profits. An organization hopes to create
a mutually profitable relationship with its customer and tries to secure their loyalty. It is therefore essential to understand the different stages of customer Lifecycle and create effective strategies.
Customer Lifecycle can broadly be categorized into the following three stages, each stage requires in depth focus and strategy.
Acquisition involves identifying the needs, making a successful sale and bringing the prospect on to the customer list. Realization includes servicing customer and working with them to minimize operational spending.
Lastly, maximizing profits by cross-selling and retaining the customer for an extended period.
The first stage of the Lifecycle focuses on making a successful sale and getting the customer on-board. Acquisition can further be divided into two parts, prospecting and on-boarding.
Prospecting: After identifying the prospect’s needs, a suitable product is carefully pitched, ensuring they realize that they have a requirement for the product. The sales
process involves multiple departments, each having a specific role to play.
Based on the organization's maturity it adopts one of the following processes:
Basic: A single person, usually the sales manager, is entrusted with the responsibility of tracking status of prospects and providing updates to the management.
Unified: All departments are accountable and are responsible to provide updates on the prospects they are working.
Optimized: One product may not have the same stages as another product. Hence, separate processes are formed for different products, each tuned for its needs.
On Boarding: Once a successful sale has been made, different departments work on their part to process the customer file and make necessary updates in their systems. Customers
are most receptive in the early days of the relationship; hence this is the best time to offer a great onboarding experience.
Welcome call: The details of the product/service offered are explained. All customer queries are addressed and the support options are shared.
Customer fulfilment: Organizations have to live up to the promises made during sales. All customer interactions should reinstate this confidence in the customers.
Based on the organization’s size and product lines, different service teams are set up to fulfil their customer commitments. They are responsible for providing resolutions to customer requests and complaints.
This stage can be divided into servicing and developing profitable habits to increase the organization’s bottom line.
Servicing: Processes are framed and a ticket management system is set-up to record requests and complaints. The service teams coordinate with other departments to provide
solutions to customers.
In sync: A single person, usually the sales manager, is entrusted with the responsibility of tracking status of prospects and providing updates to the management.
Information access availability: All departments are accountable and are responsible to provide updates on the prospects they are working.
Developing profitable habits: The service teams should also work with the organization's vision to increase the profit margin by reducing operating costs. This can be achieved
by educating customers about the different channels for services offered by the organization and requesting them to use the most relevant one each time.
The last stage of customer Lifecycle and perhaps the most important, Value Mining increases the top line by cross-selling products to existing customers and ensuring they remain loyal to the organization.
Cross-selling: To increase profits from their existing customers, organizations work on cross-sell strategies to profit from customer loyalty.
Customer Segmentation: Grouping similar customers on pre-defined parameters to send out new product offers which might suit their requirements and have a higher
probability of selling successfully.
Retention: It is essential for the organization to retain customers for an extended period of time to maximize profit levels. This can be achieved by being receptive to
a customer's behavior.
An Action-Reaction-Feedback model can be used to engage customers throughout their relationship with the organization. Pro-active corrective action could be taken to streamline processes and the customer
can be updated
You know that your customer needs certain things done in a hurry. However, fulfilment often spans multiple departments, each with its own priorities and problems. Hence, valuable time is lost in chasing
various departments to ensure work is done within the expected time-frame. Worse, it is often impossible to get accurate status visibility across departmental walls, directly compromising the team's
A lot of time is spent chasing similar accounts across departments, building individual bridges, attending to duplicate leads or services requests across channels, etc. This drives up transaction costs and
inversely impacts team productivity.
Impact of attrition
With attrition companies often lose visibility into sales pipelines, contacts, prospects and deal navigation strategies. While some of it can be salvaged, in absence of a process, data is seldom available.
It is estimated that more than 81% of pipeline momentum is lost, as new account managers struggle to reclaim control.
In absence of CRM, there is no common platform to keep structured relationship information like interaction history, key contacts, account insights, preferences etc. Hence, years spent in building relationship
are either not leveraged by other departments or lost to attrition.
Due to a mix of excel reporting and various systems it is often impossible to correlate reports. Hence, visits can't be accounted for, claims can't be verified and false movement is hard to detect! This
directly impacts the ability of the management to do mid-course correction for strategies.
Grading process maturity
As organizations continue to embrace the new opportunities for growth, it's important to improve business processes in these challenging times and move forward from traditional focus on routine, predictable, sequential
processes towards broader, cross-boundary processes that include more unstructured work.
Whether your organization is mature or maturing, it's important to always assess and self-audit the processes involved.
How evolved are my processes?
An organization is a complex web of processes. For businesses to become adaptive, dynamic, flexible and agile, the business has to be managed from a process perspective. A business is driven not by a single
process but perhaps hundreds of processes. Some processes are mission-critical to the overall value chain whereas other processes operate in a supporting role.
Begin with discovering the processes involved. Once the processes have been discovered, documented and analyzed, they can be improved - executed at lower cost with higher quality, performance, visibility
Often, top line managers are required to step back and review current operations and develop process solutions designed to help you maximize resources, eliminate waste, achieve productivity and deliver improved
Here are few questions that you need to ask, before you begin:
How do our processes match up to the best-in-class companies?
Are we doing things as well or better than our competitors
Is our information as good as everyone else's?
What might we do to improve?
Businesses managed by processes can ensure that all sales, service and marketing initiatives proceed on a pre-defined, consistent path, leaving room for appropriate, relevant deviations according to their
needs and circumstances.
Understanding Process Scorecards
The Process Scorecard offers a way of evaluating a process or methodology by rating its impact on services, quality, costs and how effectively it is used and applied.
Begin with identifying the processes and evaluating each one of them. The process evaluation must describe:
Whether the process is accomplishing what it is expected to?
Does the process have a positive impact on quality of services and timelines?
Can the process be applied consistently for business situations?
How well the process integrates with other departments or it works in isolation?
Does the process maximize resources, eliminate wastage, achieve productivity and deliver improved results?
How the process can be improved?
Findings from the scorecard assessment are then translated into an actionable plan to close the gaps and reformulate the departmental and enterprise’s understanding about these processes.
A typical process score includes:
Core Business Process: The organization runs on a set of core business processes that must exist for the organization to function properly.
General Status: Determine the process for improvement.
Financial Impact: Make sure that you have everyone onboard and assess the impact for prioritizing the change.
Current Scenario: Identify current challenges with the processes.
Roadmap: With all of the elements in place you should now be able to define the roadmap. Items in roadmap are not a “just do it” quick fix. It is a discipline that requires patience, planning and
monitoring. It also is a continuous improvement.
Characteristics of a Successful Process:
The process is clearly defined for objectives, workflow and deliverables
The process is relevant to operational needs and requirements.
The process is sufficiently flexible to suit varying needs and circumstances. (Note: a process should provide a roadmap, not a roadblock).
Business processes can always be improved. With a culture of continuous improvement, your organization will always be on the cutting edge and in line with the needs of your customers.
Single process trap
Start-up organizations begin their business with a process. As they grow, it is required to analyze the existing process/processes across all departments. Their growth demands new processes to be implemented
and a re-engineering of the existing processes
Today, the efficient use of time is vital. The way leading companies manage time—in production, in new product development and introduction, in sales and distribution—represent the most powerful sources
of competitive advantage. The biggest disadvantage of following the initial single process is that it leads to an increase in the cycle time due to a lack of operational efficiency.
A single process makes it difficult to structure and implement mechanisms that ensure the coordination and integration of core processes and key functions across organizational boundaries. There is no single
way of managing different processes. Organizations running on single processes fail to create or sustain a long-term competitive advantage.
With maturity, the nature of processes in any organization become different and have separate traits. Also, it is not financially feasible to manage high and low value processes using the same process management
Often, merging multiple processes into one leads to an ultra complex process that leads to a complete failure in achieving desired results.
Here is what you can do:
A process can be divided into a finite set of processes with similar properties.
Several processes can be unified into a single process with similar properties.
A process can generate other processes without losing its essence.
CRM Maturity Model
Many organizations today have started customer relationship improvement programs. They have conducted assessments and followed by creating actions plans, only to hit the implementation barrier - “What should we
do next?” The CRM Maturity Model helps to address this implementation barrier, it can be applied to improve the way we handle overall customer experience management in several ways, they are described below:
Macro measure for an organization institutionalizing continuous improvement.
Normative model of organizational best practices at different maturity levels.
Basis for assessment and evaluations.
Strategy for improving customer relationship management.
Discovery approach for defining and to bring about these specifics changes in the ways they handle their customers.
Throughout the life of an organization, the management experiments with various thoughts and creates strategies. The strategy in the CRM Maturity Model involves maturing organizational customer centric processes
by building layers of process capability as described by the five level (layer) model.
This model prescribes an orderly and focused path for organizational process improvement and strategically recommends manageable ways to guide an organization to the next maturity level.
Based on the maturity of an organization, it is in one of the stages mentioned in the exhibit below. Most start-ups and small-size organizations are at stage 1 or 2. In these stages, organizations decide to make
improvement efforts for their core strengths, first informally and intuitively. Large or mid-size organizations are at stage 3, they begin their work on defining the organization’s wide single definition of
processes. Their aim is to shift to the next maturity level where execution is monitored to assess the impact on business. At stage 5, the organization is formally and continually examining the effectiveness
of its process performance and optimizing those processes, the 'learning organization' becomes a reality. Process owners estimate and then track the quantitative impact and effectiveness of change. Productivity
and quality is improved continuously and in a controlled manner.
Stage 0: Non Existent. No management processes apply the practice to produce the desired outcomes
Stage 1: Initial / Ad Hoc. No format management processes, but a few managers attempt to apply the practice informally to produce the outcomes
Stage 2: Repeatable but Intuitive. No formal management processes, but the idea is understood and informally applied to produce the desired outcomes
Stage 3: Defined Process. Management processes exist to apply the practice, but no companywide standards or environment.
Stage 4: Managed & Measurable. Management processes are standard practices, execution is monitored, outcomes affect the business
Stage 5: Optimized. Management processes that apply the practices are central to the company and continuously improved
Acquisition isn't about simply adding customers to the base. Not all customers are profitable. Customer acquisition models should be built by applying intelligence on existing data to identify the traits of profitable
customers and make greater efforts for these prospects, using relationship approaches.
Intelligent acquisition models should be built for screening prospects by using historical transactional data with the following objectives:
Identifying profitable customers.
Identifying those customers who are not profitable.
Identifying parameters which differentiate the above.
These models can then be executed on existing customers also for cross-departmental acquisition. Cross-departmental acquisition also requires:
Channel unification to record all interactions done with customers across any of the channels provided like email, text messaging, phone calls, etc. This information should be available
across departments to create cross-selling strategies.
Service to Sales desk should be set-up to try and cross-sell products to customers after successful resolution of their requests and queries. This team should have necessary
On-boarding experience for a successful sale; customers are most sensitive to the organization's attention towards them. This provides the organization with an opportunity to begin
a profitable and long lasting relationship with the customer.
A welcome call should be made at the customer's convenience, to explain all the features of the product/ service offered. All queries should be expertly addressed to avoid any grey areas.
The strategy makers should also work on making the systems integrated to the core, with the front end system (CRM) to provide a single version of the truth to the entire organization.
Pro-active process sharpening should be done across departments and product lines. Management should ensure the brand promise is embedded deep into each employee and that they are aware of the larger organizational
vision, thus arming them to offer a great customer experience.
A sea of change is upon us and the broad outcomes are already visible. Businesses need to realize the customer's value to be competitive in this decade. Though, CRM strategy is all about creating effective customer
relationship, however, once a customer is on board; they should have high satisfaction levels and be profitable for the organization. With the above goal in mind, strategy planners should work on setting-up
and streamlining processes for customer service desks, which are the first interaction point post sales. Companies are now capturing tremendous value from their support businesses by taking a more careful, fact-based
approach to designing their service processes and pricing them appropriately. Customers can be segmented according to their service needs rather than their size, industry or type of equipment.
Also, to transform new customers into loyal ones, organizations need to maximize the value they derive from every customer interaction. Customer service and quality of product/service offered helps in shaping customer's
perception about the organization.
CRM solutions are a strategic imperative for forward-looking enterprises and provide a competitive advantage. When implemented correctly with alignment to the business strategy and with proper user adoption, it
provides accurate business intelligence. An important objective of top management is to determine whether profitability will increase or decline and often disagree that short term ROI does not necessarily translate
to lasting value.
At the organizational level, CRM is a strategic focus on customer behavior and related interactions. Technologically, it uses data mining to identify customer preferences and behavior. For business processes, it
improves efficiencies and effectiveness of all departments.
The most valuable application of CRM data is for systems and processes that identify and assist in leveraging relationships with the most valuable customers which also includes increasing 'wallet share'. To achieve
this, integration is required between data generating applications and business processes and also between data mining applications and the CRM solution.
An effective CRM solution drives customer satisfaction and stakeholder satisfaction simultaneously. It facilitates applying costeffective resources to provide a seamless, highquality experience for a company's most
valuable customers and pinpoints the least desirable ones. Managing stored consolidated relational data through data warehousing and sorting and searching it using data mining tools to identify patterns, delivers
great value for a CRM implementation. Filtering and analyzing raw data generates actionable information and subsequently competitive intelligence.
CRMnext optimizes the value from lead and customer data by identifying trends and opportunities to improve the overall performance of pre-sales, sales and post-sales across departments. Using the data generated
through mining, organizations can redesign strategies to personalize offers, reward loyalty and improve customer experience for greater returns from longterm profitable customers.
Joseph M. Juran, a business management consultant suggested the Pareto Principle (also called the 80-20 rule) that in terms of customer value translates to - approximately 20% of an organization's customers generate
80% of its profit. This principle has similar implications in regards to customer support and marketing.
Ideally, based on the Pareto Principle, an organization's strategy should be to focus on the 20% of its customers that contribute the most to its bottom line. Tracking and improving products, services and the overall
customer experience based on the individual needs of this segment will ensure higher ROI.
The Pareto Principle also makes us perceive that 80% of our productivity is generated from 20% of our activities. A business leader would like to spend his time and money on the activities that provide the highest
Capitalize on customer relationships by strengthening them and using untapped opportunities to increase profits. This is facilitated using a CRM solution which is accessible aroundthe-clock from any web-enabled
device and displays real-time information from across geographies related to interactions, activities and the company's pipeline.
Getting more from your customer data store
Customers are critical for any organization, hence it is not unusual for organizations to adapt various customer centric strategies to win trust and retain them thereby maximizing profits.
Processes are enabled to take advantage of customer loyalty by increasing retention, and making them advocates of the organization. Not all the customers are profitable; hence models need to be built which uses
the customer transactions and interactions with the organization as inputs to output the list of profitable customers.
In today's digital era, organizations have captured trillions of bytes of data about customers, suppliers and operations. They can embed data models to gather set of information that can be translated into frontline
actions. The ability to make decisions across marketing groups, brand management groups and sales groups gets improved with this integrated valuable insight.
Marketing teams can target high-potential customer segments or channels, and allocate advertising and promotional investments.
Products teams can identify new products opportunities
Services teams can fix poor products and services
Data mining techniques can help in exploring this data to cite common patterns. This involves following the steps:
Data Exploration - involves data preparation.
Model building and Validation - involves choosing the models that are best suited.
Deployment - involves using the chosen data to proceed with the generation of the outcome.
These techniques can be applied for
Market segmentation - Identify the common characteristics of customers who buy the same products.
Customer churn - Predict which customers are likely to leave and go to a competitor.
Direct marketing - Identify which prospects should be included in a mailing list to obtain the highest response rate.
Market basket analysis - Understand what products or services are commonly purchased together
Trend analysis - Reveal the difference between typical customers this month and last.
We believe, these techniques can contribute significantly to the overall profitability of businesses.
When should I move to unification?
As organization's evolve they are often met with roadblocks to hamper progressive growth and their desired goal. These factors have a cascading effect on the performance and profitability in the short and long term.
It is important to understand what these factors are and work towards avoiding them.
Lack of a business process and well defined strategies: multiple processes running within an organization without proper alignment reduce efficiency and causes loopholes in
its operations. A selfish business strategy that focuses on purely products and profitability will lead to customer churn and poor lead conversions
Inconsistent information: lack of a centralized database for internal documents and customer information leads to several hindrances in the smooth running of an organization.
This becomes most apparent when employees attrite and their information related to products, leads, customers or solutions specifically they were handling is lost.
Best practices not unified: streamlining best practices which are specifically for independent departments cause breaks in company-wide business operations and alignment.
Cascading rework: lack of an accurately implemented system to streamline tasks and activities with related alerts will lead to miscommunication and time consuming rework for
internal and external tasks.
Inconsistent procedures for similar tasks: if automated processes are not implemented for repetitive daily tasks like generating reports, emails, printing document etc. the
time for productive work is reduced greatly and affects the overall productivity.
Unmanaged commitments: lack of clarity on information and timelines for tasks and activities that are dependent on multiple departments or teams, leads to false commitments,
breaks in coordination and unhappy customers.
Work overload: a lot of the factors above will create an unhealthy work environment and attrition. Filling in for people who have left, dearth of centralized information, limited
access to customer interactions will will result in an overload of work in terms of creating reports, documentation and meeting customer commitments.
The above points make it clear that an organization's business strategy needs to be dependent on customer and internal 'needs' for achieving success - it's vital to transition from being product-centric to customer-centric.
For organizations to optimize customer lifecycle value in a sustainable and progressive fashion, the following path to unification explains the different stages in development:
Year 1: The organization's management is inconsistent in this stage, characterized chiefly by a lack of structure and uniform practices. Individuals follow a unique process
and applies standards independently. To move to the next level, the organization usually needs to build cooperation among individual communicators.
Year 2: The organization is in the process of putting their structures and standards in place. A group of information developers collaborates to introduce establish style standards
and institute uniform practices. Managers and staff begin to institute quality assurance practices. To move to the next level, the organization and its leadership must make a firm commitment to following
the processes and standards put into place.
Year 3: The majority of the staff support and are committed to following uniform processes, templates, and standards. Sound planning and quality assurance activities are incorporated
into every project. Staff begin to find opportunities for improvement, including redesign of legacy information, customer studies and benchmarking with other organizations. To move to the next level
requires a firm commitment to following high quality practices and commitment to project planning, estimating and scheduling.
Year 4: The organization's leadership may change without a loss of commitment to planning, quality assurance, hiring and training plus budgetary controls. Organizations here,
become increasingly sophisticated in handling customer studies, assessing and meeting customer needs and managing return on investment. To move to the next level, the leadership needs to increase
their business understanding. They need to strengthen their commitment to increasing productivity, controlling and reducing costs, focusing on customer satisfaction and aligning strategically with
overall business goals and objectives.
Year 5: The organization is characterized by a level of sustaining innovation beyond the commitment to mature practices. An optimizing organization continually questions its
own practices and standards by continually seeking ways of meeting customer needs more effectively and costefficiently. We see an organization with a special focus on customer needs. Employees are
knowledgeable about customers and continually seek collaborations to improve quality and measure the success of their innovations.
To cultivate continued, profitable business among the best customers - an organization needs to know how to reward them. But, to predict the future we need to accurately analyze historical data. Pinpointing which
customers will be best over the long haul reliably, leads to heightened cost-efficiency and more profitable relationships. It is also important to understand which segments of customers are dormant and will
come back later.
CRM solutions provide this transparency for customer information in an organized and efficient way, this make analysis quicker and more accurate. Escalations, enforcement rules and alerts ensure alignment with business
strategy and an ongoing process to remain updated on customer details and specific needs.
This decade's business strategy should be collaborative products and services, thereby ensuring longer lasting and more mutually profitable relationships between enterprises and their customers.