CRM Maturity Model

Your Customer Relationship Management (CRM) strategy is not always easy to maintain much less nurture. In the beginning, there are high expectations; then there is unexpected resistance and an unsettling reality; then, you surrender to some compromises; and eventually, you may use and rely on your CRM less over time. This is disillusionment — and is something you need to work at avoiding with your CRM software from the start.

There is a lot of disruptive technology in our lives today — social media and greater mobility — customers are now more connected and informed than any other time in the world of business. This is a trend that will only increase as opposed to abating. Customer expectations are also increased and barriers to switching suppliers are actually on the decline.

What this means is that customers are evolving with business and if your CRM strategy is not keeping up, then your investments, ROIs, and CRM objectives will nearly certainly erode — just like your customer base. This is seriously bad for business. Think about this: 52 percent of Fortune 500 companies are now gone, merged, or bankrupt since 2000.

One important aspect of CRMs is to acknowledge that it is a journey — CRM software is not a one-and-done technology. Below is a CRM maturity model that was developed by Chuck Shaeffer — it should help you with your planning, implementation, customer objectives, and assist you in getting the most from your investment in your CRM software.

Level 1 — Activity-Based CRM

More often than not, CRM software deployments don’t go according to plan. Technology implementation either doesn’t support or accompany a CRM strategy or adopters believe that the software itself is a substitute for an employer-driven CRM strategy.

Analysts have found that this mistake alone contributes to anywhere from 30 percent to 50 percent of all CRM deployment failures — and objectives fail outright. Most deployments also focus mainly on customer facing activities that are performed by employees — calls made by the sales team, how cases were resolved by the service team — while these are important activities, there is no definitive business strategy here.

Activities without SMART (Specific, Measurable, Achievable, Realistic, and Time-bound) objectives tend to be something you wish to see in retrospect. In the activity-based CRM phase, marketing can view campaigns and customer service can receive reports. However, the lack of foresight with measurable objectives that are supported with specific business processes generally have means that the pipeline is padded with useless dead wood, the marketing campaigns show no direct revenue contribution, the forecast is overstated, and the service volume is a retrospect view without root cause analysis to prevent customer issues from occurring in the first place. While some companies will respond to these challenges one at a time, others will seek to understand what problems have similar problems and respond more strategically — we suggest you prepare by committing to the latter of the two.

Level 2 — Tactical CRM

The Tactical CRM phase advances CRM software from a customer data management platform to one that includes the pursuit of tactical objectives. As a customer relationship management adopter, you must recognize that a holistic customer view cannot work within departmental confines — sales, marketing and service must become more integrated. Workflow processes, customer / client data, and information analysis are designed to cross departmental boundaries and share information seamlessly in order to support customer relationships and allow them to thrive.

CRM tactics change the focus often from completing software activities to truly yielding productivity goals. Let’s take an example: a poorly designed sales processes will result in an approximate 65 percent of a sales person’s time spent on non-customer-facing activities. If your focus changes from how quickly one enters activities to how to automate those activities with repeatable sales processes, then your sales team can spend much more time selling.

The Tactical CRM also considers how CRM integrates with other business applications to support use cases, which span front-to-back office and thereby enhance business process automation, enable closed loop reporting, and reduce cycle times. There are a ton of information that both sales teams and customers need — invoices, orders, RMAs, credit availability, payments, credit memos, and so forth. When CRM software is tightly integrated with ERP applications and other third-party software, the staff of customer-facing activities are given richer data experiences and support.

Level 3 — Strategic CRM

The Strategic CRM phase is most often characterized by a cultural shift to move on from a product-centric company to a more customer-centric company. This requires a change in your customer strategy and most notably — a change in perspective. It is apparent that in order to grow mutually rewarding relationships with customers and clients, that you must include outside-in perspectives and understand how your customers define a successful relationship.

This change in thinking will have a great impact in how you interact with your customer base. In this phase, smart CRMs will be supplemented with CX (Customer Experience) strategies. In addition, your technology will continue to morph with other business applications in this phase, so that customer-facing employees, knowledge workers, and line managers will all have access to real-time data and on-demand information, business intelligence, and reports regardless of where the data resides.

In order to get to the strategic phase, businesses must perform Voice of the Customer analysis so they can understand what their customers really want from their relationships — customer strategy will also include what is most important to customers, KPIs will be linked to the company’s most important revenue objectives, and customer segments will be defined by behavioral personas.

This customer view will advance a company from a mindset of departmental to an enterprise-wide view.

Level 4 — Business Critical CRM

In the level four phase, the CRM software transcends from a mix of effective departmental programs to a central enterprise-wide strategy — CRM software becomes the primary technology enabler in the company’s quest for revenue growth and customer growth.

This phase is all about linking up CRM strategy to revenue performance realization. As an example, CRMs can automate up-sell, cross-sell, and NBO (Next Best Offer) techniques using database  profiling for product recommendations and combinations.

Marketers will develop customer segmentation / algorithms in order to identify customers based on the Pareto principle — that is, identify which 20 percent of the customers are delivering 80 percent of the profits. This type of predictive behavior is very powerful when creating marketing campaigns.

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When you begin to understand how customer relationships in business mature from deployment to a long-lasting relationship, you can proactively respond in a way that caters to customers — this will end up being excellent for business because your customers will be happy, and in turn, your reputation and repeat customers will grow.

The reason why so few businesses tap into this capability and why software automation is required is because customers don’t stand still — they change their preferences, they evolve, and they move from one segment to another. Understanding, and even more complicated — predicting customer behaviors, is a fluid process and is quite dynamic.

Increase your CLV (customer lifetime value), grow customer share, influence spend behavior, engage your customers, and keep your customers longer by understanding, facilitating, and predicting customer evolution.

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