Research note on internal CRM
November 1999
Defining the “C” in CRM
The CEO has one eye on the bottom line and the other on the future so who is keeping their eye the customer?
With many corporations eagerly embracing the CRM initiative as the panacea to all sales maladies, those who start relationship management ‘at home’ will have the edge on those who focus all of their efforts outwards.
CRM, in its simplest definition, is the mapping and meeting of customer expectations. By keeping a memory of the client we are better equipped to map and meet that expectation. Sales organisations that fail to map and meet the expectations of their internal clients will be plagued by staff retention issues in a resource poor market. CRM initiatives that support internal client retention and internal customer satisfaction will have a significant ripple out effect that will support external CRM initiatives.
Xerox pioneered and utilised a methodology for mapping and maximising the internal customer relationship. This methodology was the central initiative responsible for the turn around of that corporation’s fortunes. Richard Branson, Founder and CEO of Virgin, espouses the maxim of “people, people, people” as the critical success factor. Yet, despite the simplicity of the message, corporations large and small continue to ignore the importance of starting CRM ‘at home’.
Mapping the skills, strengths, weaknesses, expectations and personal drivers of each individual within the sales organisation is essential if the organisation is to benefit from the resident skill mix, utilise the collective strengths, salve the weaknesses and leverage what each individual personally values as a performance driver. Those who do not manage the expectation gap of their internal clients run the risk of encountering an irreparable disconnect of vision and values. Just as we value suppliers having a memory of us, so employees value the corporation having a memory of them.
The populace of the sales organisation is the key driver of any external CRM initiative. Addressing the internal expectation gap and using personal values as performance drivers provide a sound basis for ‘trickle out’ effect of external CRM strategies. Organisations that do not make internal CRM investments significantly jeopardize external CRM initiatives.
Benefits
Benefits of implementing an internal CRM initiative occur in three areas – hard, soft and intangible. Avoiding the hard and soft costs of staff replacement and imbuing the intangible cultural benefits of a visible focus on the importance of relationships will deliver direct and indirect benefits to the corporation’s bottom line.
Hard costs of staff replacement and the soft costs of loss of knowledge, training and lost relationships may amount to 50 percent to 75 percent of the new employee’s first year salary. (see Note 1)
Note I
Costs of Staff Replacement
Hard Costs
Advertising
Training costs for new employee
Interview costs
Relocation fees or temporary housing
Cost of medical examinations
Soft Costs
Interview time
Training costs for departing employee
Training/orientation time for new employee
Employee morale
50 percent productivity loss for three to six months
Loss of team or project momentum
Loss of intellectual property
Interruption to normal service
Public relations or perception of customers
The cultural benefits of a visible focus on internal CRM imbues a cultural framework of relationship management, and the recognition of relationship worth, that has far reaching implications outside of the internal environment. Field sales are the window to the client and their values will be framed internally and reflected externally. Healthy internal relationships, almost certainly, will be reflected in healthy external relationships.
CRM is a synonym for ‘retention’ from a corporation’s perspective and a synonym for ‘loyalty’ from a clients’ perspective. Companies must win and retain loyalty from each of their active stakeholders - shareholders, customers, employees and suppliers - to profit from the benefits of retention. Stakeholders in our economic system are being actively wooed all of the time by competitors and creating stakeholder value and managing all stakeholder relationships through tailored CRM strategies is not so much an objective as it is an economic constraint on a company’s actions.
The “C”s in CRM are the corporations stakeholders. Seeing all stakeholders as customers of the Corporation and creating relevant CRM strategies to monitor and support each of those relationships is the key to reaping the hard, soft and intangible benefits of retention. Starting your CRM strategy internally will provide experienced infantry to conduct the external CRM campaign.