Perfecting Service Management

Issue #8 Tuesday, December 17, 2003

Welcome!

topical index

Welcome to this edition of the Customer Centricity newsletter, where we explore ways you can improve the performance of your service organization.

In this issue we provide the third article in the series on avoiding the common pitfalls of CRM. Additionally, Suzanne Paling, one of our affiliates, provides a case-study example of the importance of Sales and Service organizations teaming for results. Thank you Suzanne, for this enlightening article!
 

In this issue:

Customer Centricity Delivering A Customer Service Workshop

Customer Centricity is again scheduled to present "A Customer Service Workshop" at Rivier College, in Nashua, NH. This event will take place on Thursday, March 20, from 5:45-7:45pm. This program is sponsored by the New Hampshire Small Business Development Center.

We will discuss how customer service can positively impact the bottom line for any size organization. We will also address what companies can do now, in these tough economic times, to improve customer satisfaction and loyalty.

This program is designed for any business that has significant customer contact, whether it is business-to-business or business-to-consumer. The program is a hands-on workshop designed to help companies improve the performance of their service organization.

The program will be held in Rivier College’s Education Center, Room 313, located at 420 Main Street in Nashua, NH. Admission is $25 and registration is required. A reduced admission of $15 is available for additional attendees from the same company. To register contact Rosemary Macmillan at Rivier College at 603-897-8587 or via email at rmcmillan@rivier.edu.

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Avoiding CRM's Common Pitfalls - Part 3

(parts 1 & 2 of this series can be found in Issues #6 & #5 linked below)

Our series on avoiding the common pitfalls of CRM covers 6 key areas:

  1. Viewed as a technical, not a business, problem
  2. Driven from the top down
  3. Lack of senior management involvement
  4. Not targeting the areas of highest adoption
  5. Driven by the IT organization vs. business leaders accountable for the numbers
  6. Trying to do too much at once

This article will review the fourth pitfall of CRM: Not targeting the area of highest adoption.

Let’s face it, companies want revenue. And, where do you get revenue? The answer: sales. How do you improve sales effectiveness? CRM is (again, sold as) the answer to this.

With that said, let us consider the typical areas that CRM impacts: Sales, Marketing and Service. CRM initiatives “tend” to address these functions in the order listed. However, consider the “characteristics” of each group.

  • Sales people are typically not process oriented. They are relationship builders. They tend to demand much flexibility in the way they work, which includes the “systems” they use.
  • Marketing teams tend to be “more” process oriented, while at the same time they need to be creative (read flexible) in terms of approaches to develop and pitch a company’s value proposition to the marketplace.
  • Service personnel are highly process oriented and their management structure is typically focused on measures to continuously improve “operational efficiencies” and religiously follow process and procedures.

What we have found, in addition to the other advice provided in this series, is that targeting service functions first, in a CRM initiative, provides for the highest adoption rates. Once a service team has converted to the system there is immediate payback in operational efficiencies, and increases in customer satisfaction soon follows. And, by virtue of managing the service function from the system, customer information is being accumulated. Information is now available to other organizations including:

  • Customer inquiries (questions on use of the product / service)
  • Customer calls to report a problem
  • Number and type of calls by product/service type

Marketing and product management can leverage the above information to consider evolving the products/services offered by your company. And, Sales can leverage this information to spot up-sell / cross-sell opportunities. In summary, interest is generated for access to and use of the system. By addressing service and subsequently marketing, you have “greased the skids” in preparation for implementing CRM for your Sales force. By the time you reach Sales, there will inherent value in the system, making it much easier for Sales to get the 3 units of benefit from the system, for each unit of benefit they put in (discussed in the previous article).

STRATEGY: Target your service functions first, then marketing, then sales. The momentum and value created, in the system, helps to ensure a successful adoption rate by your Sales professionals.

Our next article in this series will address the 5th pitfall of CRM. You can review previous articles, in this series, by clicking the links below.

Previous Issues in this series:

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Importance of Sales and Service Teaming

By Suzanne Paling

In companies with a strong communications model, customer service and sales interact on a regular basis. The benefits that result from frequent communications between the two groups include a more unified presence to the customer and added sales opportunities. When this model does not exist, however, lost revenue and customer dissatisfaction can ensue.

One of my clients was a software company that required the purchase of a one year maintenance contract for first time customers. The maintenance contract included instructor led training, free software upgrades and unlimited customer service calls. The cost of a maintenance contract started at $500 and was capped at $5,000. The average was $1,100.

One month before a customer’s annual maintenance contract was up for renewal, they would receive a letter from the company’s customer service department. Two weeks later, if they had not yet renewed, they would receive an e-mail reminder. Two weeks after their maintenance contract expired, a Customer Service Representative would contact them. If they chose not to renew after that, they would not be contacted again.

This process was problematic for several reasons. The CSR’s spoke with those customers who were experiencing problems directly, such as systems administrators and end users, not decision makers. If the customer was not renewing, for whatever reason, the CSR was being put in the position of having to contact the decision maker and “sell” them on the idea of renewing. Most had no prior contact with the decision makers and were not comfortable calling them. Secondly, the sales representatives, always looking for legitimate reasons to keep in touch with their customers, were being excluded from a great opportunity to call them. Having an established relationship with the decision maker, familiar with the pains that prompted the account to purchase the software initially and comfortable asking for business, the salesperson was the most appropriate party to make the call. Finally, the loss of a maintenance contract renewal was a loss of revenue. Yet no one at the company was tracking which customers were not renewing their maintenance contracts, why they were choosing not to, and how much business was being lost because of it.

After reviewing the current process and developing an alternative with the company’s management, I presented a new plan to the sales representatives. The CSR’s would continue to contact the customer by letter, e-mail and a phone call as usual, but would now e-mail the sales representative when they began the notification process. If the customer did not renew their maintenance contract two weeks after the CSR’s phone call, the account would be turned over to the sales representative. If they were able to convince the customer to renew their contract, they would receive a commission on the maintenance renewal.

Though excited about this new opportunity, the sales representatives were unfamiliar with the dialog surrounding the renewals and needed a strategy to make these calls as productive as possible. To accomplish this, I arranged for the sales representatives to monitor the CSR’s renewal calls so they could experience them firsthand. I also facilitated several meetings, with both groups in attendance, so the sales representatives could ask questions of the CSR’s.

From these meetings, I put together a list of objections the CSR’s heard on a regular basis from customers that were not interested in renewing their maintenance agreement. Those included, “We don’t need any more training on the product and aren’t planning to upgrade so spending $500 doesn’t make sense,” “The person who used the software left and the new person we hired is trained on another software package and has asked us to purchase it,” “We didn’t experience any problems with the software.”

Compiling this list of objections helped us understand why some customers were not renewing their maintenance contracts. A query of the database identified which customers were choosing not to renew. The larger customers generally renewed their contracts annually. It was the single user customers who were not renewing. Only 28% of the single user customers signed up as compared with 90% of the larger customers. The single users represented half of my client’s customer base.

Initial renewal calls by the sales representative showed that if the single user customers hadn’t renewed by 90 days after their contract expired, they wouldn’t be renewing at all. Those few customers that did renew after their contract expired (10%) chose to do so largely because the sales representative was able to match their desire to perform certain functions on the software with comparable new features that would be in the upgrade. Unlimited access to customer service was not an enticement for the single user customer to renew their maintenance contract.

Because of what was learned when we added the sales representative to the renewal process, both customer service and sales make a more consistent effort to call the single user customers on a regular basis and keep close track of any personnel changes that take place. If a user leaves a firm, they make it a point to introduce themselves to the replacement and answer any questions they may have about the product. They no longer assume that this person will simply start using the software. The sales representatives make a greater effort to find out where the previous user went and contact them at their new place of employment, knowing this could be a potential sales opportunity.

Though not yet finalized, my client is working on offering the single user customer a less expensive maintenance package that would include upgrades and a limited number of customer service calls.

This joint effort between customer service and sales specifically identified the importance of the single user customer to my client and how tenuous that customer’s business could be. The single user customer is now more fully considered in sales and customer service initiatives. More importantly, the collaboration between the two groups underscored the necessity of actively looking for gaps in the communication process and closing the loop between sales and customer service.

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More About Customer Centricity, Inc.

Customer Centricity is a business consulting firm that partners with companies to improve the performance of their service organizations. We leverage our real-world experience to help our clients manage their customer relationships in more effective and satisfying ways.

Customer Centricity delivers on this promise by optimizing the interaction between people, process and technology to achieve higher levels of customer satisfaction and increased operational efficiencies. We provide:

  1. Comprehensive assessments to identify the actions that will yield the greatest return;
  2. Skills Training to enable customer-facing personnel to deliver exceptional levels of customer service;
  3. Design and Implementation of business process techniques to serve the customer in efficient, effective and consistent manners; and
  4. Identification of the appropriate business processes to automate, enabling companies to get the most from their investments in technology.

In addition to our core practices, we also maintain a network of strategic partnerships to provide end-to-end consulting across your organization with a commitment to seamless execution.

Click on the following link to see what our customers have to say.

To learn more about Customer Centricity:

call: 603.491.7948

send e-mail to: info@customercentricity.biz 

or visit our web-site: www.customercentricity.biz

In Closing

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Copyright (c) 2002 by Customer Centricity, Inc. All rights reserved.