Business Tides -

Timely talk about Current Trends

CRM Applies CPR To Businesses in a Slow Economy !

You know the symptoms: Your business is running on empty. Leads have dried up. And there’s nothing in the pipeline.

Most likely diagnosis? You’ve entered, or are entering, a soft economy. How do you bring your business back to life in a weak

economic climate? Better customer relationship management can provide advantages to both you and your client.  

The practice of Customer Relationship Management – CRM - has been operational as a business tactic perhaps as early in history as when an Egyptian scribe chose to buy papyrus from one reed dealer instead of another. The terminology, however, is relatively new, having gained recognition in the middle of the 1990s.

Basically, CRM is not a product. It is not even a suite of products. It’s a business strategy in which you select and manage your most valuable customer relationships – in other words, the art and science of dealing with your clients. Analysts predict that CRM will become the largest application area of all time, with market growth predicted to reach $11 billion by 2003. And CRM consultants estimate that with CRM in place, it is five times more cost effective to grow sales from your existing customer base than it is to cultivate new customers. (Why make things tougher for your business in a tough economy?)

The most successful applications of CRM begin with the strategy; which then triggers revisions to Standard Operating Procedure; and, in turn, employs information technology. The strategy is one that you are probably familiar with: the importance of focusing on clients who offer the best potential for sales and profits, providing them with the quality of service that will keep them coming back for more. What has brought CRM front and center recently are the great strides in information technology that allow you to deal with customers on a one-to-one basis, even though you may have hundreds or thousands of them. At the same time there is a shift of power, from companies to customers. Driving this shift are three powerful forces: 1) the failure of enterprise resource planning systems (ERP) to establish lasting competitive advantages for companies – everyone is getting good at playing catch-up; 2) the product life cycle – from introduction to growth to maturity to decline – has shortened, creating a wealth of options for customers  and a declining window of opportunity for vendors; and 3) information technology has made it easier for customers to compare competing suppliers, allowing them to switch vendors at the click of a mouse.

In order to put together a CRM program that is functional in a customer-dominant environment, you must address three areas of client contact with your company: in pre-sale, during the marketing phase; the point that the sale takes place; and post-sale conditions, when customer service is operational. 

The area of service is probably the most critical when it comes to customer relationship management. Today, service goes beyond traditional telephone call centers. Telephone interaction must be coordinated with e-mail, fax, web and any other communication media your client prefers to use. Self-service is a fast growing requirement, as more and more customers are utilizing their browsers to look up their order status. Customer service may involve handling questions involving product concerns, information needs, order requests and fulfillment inquiries; as well as providing quality field service.

The fastest growing component of CRM, according to industry experts, is sales force automation. The interaction of the sales force with the prospect, turning the prospect into a client and then maintaining a loyal relationship, is a key business concern for a company’s success. Sales Force Automation is frequently expanded to include forecasting, contact and quote management, proposal generation, and win/loss analysis. And clients need to have in place the tools both to access up-to-date field information, and to provide this information to others.

Marketing activities are quickly evolving from traditional telemarketing to web and e-mail campaigns, which are giving prospects a better customer experience, allowing the relevant information to be retrieved by prospects on their own terms and in their own time. Today, initial mass mailing activities are often used for the first contact, and then are followed up by more focused campaigns that have been personalized to take into account the customer’s preferences and buying habits.  For maximum value, follow-up of these campaigns must be done in collaboration with the sales force to enable qualified leads and success/failure analysis. Management of marketing campaign costs as well as marketing events like trade shows and seminars can be valuable for future planning and ROI analysis.

If your CRM efforts are to succeed, it’s important to coordinate the back-office systems with the front office and e-commerce strategies. Clients want to receive high quality service, regardless of their channel of interaction.

And you want to be sure CRM is in place with your most profitable clients.

Do you know who they are? Here’s a rule-of-thumb that can help you identify them.

Begin by selecting a client. And project its expected revenues over time. Then project the expected costs to obtain those revenues. This will give you a cash flow over time. Discount the cash flow to get the net present value, and that is the value of your client. Don’t rush this process. Select your ten largest clients and track their revenue history and forecasts. Do it by hand – it will force you to understand what drives client revenues and profits. Then you can begin to project income flows from your client assets, client by client.

Basically, what you are looking for is the formula that allows you to make the most money for your company, while producing the most satisfaction and results for your client. Keep in mind that the business rule of thumb is: 80 percent of customer service costs are generated by 20 percent of your clients. If you can provide good service cheaply and efficiently, you can win client loyalty.

 The benefits of adopting CRM are significant. Industry statistics show that 68 percent of customers who walk away from a relationship with a vendor do so because of poor customer service. They also show that 80 percent of a company’s income is from its repeat customers.

 During economic recession, those are the sales that can give your business a shot in the arm.

CRM Q&A 

Q. What roles does the Web play in CRM?

A. The newest area of customer service revolves around data collection and analysis.  The Web has been the primary driver for this, allowing companies like Amazon to collect, sort, organize and analyze data for trends, demographics and cross-selling opportunities.

Q. What industries are putting CRM Strategy into practice? 

A. Today, retailers lead the field for CRM Strategy Development, but it’s expected that utilities will overtake them in two years. Surprisingly, banks and insurance companies are seen as having relatively poor CRM implementation levels, although that is expected to change by late 2002.

Q. Isn’t CRM just one more thing to do and one more number to ignore at the end of the month?

A. Not at all. One of the leading computer software companies has implemented incentive programs that tie employee compensation to the customer satisfaction of the group of customers serviced by them. The company reports high, and increasing rates of customer satisfaction.

AccountMate Software Performs Beautifully for renowned Swiss Music Box Manufacturer

 Swiss-based Reuge Music has been crafting some of the world’s finest music boxes since the company was founded in 1865 by Charles Reuge. 

Currently, these exquisite future heirlooms are distributed to a handful of high-end retailers, including Neiman Marcus and other fashionable department stores and music box boutiques, through the company’s US distribution division in Culver City, California.

 The challenge for a company whose livelihood depends on accurate delivery of these tiny and expensive treasures was to find an inventory and financial system that could track even the slightest warehouse activity.

 The US General Manager of Reuge, Sam Segal contacted an information technology firm in Los Angeles to upgrade the company’s DOS-based financial information and inventory system. “I knew we needed to look into purchasing new hardware and network equipment in order to fully optimize our staff’s potential,” he said.

 Customer Relationship Management played a key role in Segal’s decision to go with Visual AccountMate. The company had been using an older financial management application, AccountMate’s Premiere, for over five years. Despite the limitations of the old technology, Segal was very pleased with the product’s performance and its easily customized source code.

 The decision to install Microsoft Windows-based Visual AccountMate was a no-brainer. Reuge already loved the flexibility of being able to make simple, as well as complex modifications to the programs source code. And they were satisfied that they would have even greater flexibility with the new product.

 In addition to replicating the modifications made to Premiere, a modification that allowed sales commissions to be split among multiple salespeople was added. Cost efficiency in training was realized: “Visual AccountMate utilizes much of the same business logic as AccountMate Premiere,” explained Segal, “So it was incredibly easy to get our staff up and running on the new system. Not to mention they were so excited to be using a Microsoft Windows-based program they could easily jump in and out of as their needs dictated.”

 The upgrade has improved Reuge’s efficiency and ability to process orders quickly. “Visual AccountMate has drastically cut down on order taking time because we now have the ability to view multiple order forms simultaneously, because of the software’s graphical user interface. 

“Additionally, and perhaps more importantly, the new software is giving us much more sophisticated and accurate inventory tracking capability, allowing us to better anticipate shortages and quickly place orders with our Swiss offices.”

The new solution has also given Reuge a hand with customer service. “We needed this system to give our order-takers more pertinent inventory information quickly. We modified the inventory lookup function to display On Hand, Booked, Available, and On Order quantities, instead of Product Line, Class, and Unit of Measure – which are irrelevant to our order-taking environment.

“Order takers can now easily suggest to customers possible substitutes for similar items, as well as project ship dates more accurately. Visual AccountMate’s easy-to-modify source code was a great benefit to our company in this situation. 

“This modification has dramatically improved our customer service immediately and has been heralded by our customers. We are already saving time, money and resources because the system has made our employees more efficient. It all worked wonderfully.”

Reuge Music Boxes

Corporate Profile

 In 1865, a watchmaker named Charles Reuge settled in, Sainte-Croix, Switzerland to make musical pocket watches.  Twenty one years later, his Son Albert opened the first workshop of musical movements. And a tradition of elegant, handmade musical treasures was born.  Reuge Music Boxes are famous world wide for their fine Swiss musical movements and hand- inlaid boxes in which they are  housed.  Reuge mechanical musical items run the gamut, and include music boxes in crystal and glass; mother-of-pearl and abalone musical jewelry boxes; limited editions; collector’s pieces;  objets d’art, singing birds, dancing dolls,  musical pocket watches, and musical automata. The manufacture of each unique piece involves age-old craftsmanship dating back 200 years or more, while utilizing the latest technology