People Innovation Excellence

When IT Happiness Doesn’t Extend To your customers

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ISE Magazine –Volume 48: Number 11
By Tarikere T. Niranjan and Gizem Arici

A qualitative case study at the headquarters of a global industrial consultancy firm found that different dimensions of customer relationship management (CRM) maturity affect customer satisfaction differently. In fact, managers who were the happiest with their CRM and used it the most diligently had the least satisfied customers. Obviously, managers should connect directly with their customers and use CRM merely as a facilitator.

Developing maturity

Warner Building Technologies (a pseudonym) is a world leader in energy efficiency solutions for building infrastructure. Its corporate headquarters in France wanted a model to assess CRM usage across Warner’s branches worldwide.

Warner administers customer satisfaction surveys worldwide through a third-party agency that asks questions like: How likely are you to recommend Warner to a business partner? Where could we improve? Who is Warner’s strongest competitor? How likely are you to recommend this competitor to a business partner? Where is this competitor better than Warner?

Four months of interviews at headquarters helped develop the CRM maturity construct. Interviewees included six experts working in CRM and sales support with an average of 15 years of experience. The resulting maturity framework, consisted of five dimensions: customer awareness, information management, handling diverse customers, CRM technology and CRM organization and culture.

Each dimension was assessed on a four-point scale, with four representing “best practice,” three “advanced,” two “standard” and one “basic.” The research team developed this rating scheme through discussions with senior headquarters managers. This framework assessed the CRM maturity at the branch level using the branch employees’ responses.

Let’s examine how the three German branches, Berlin, Düsseldorf and Frankfurt, scored on each dimension of the CRM maturity index.

Berlin

Berlin branch personnel emphasized that CRM is not a mere software tool. In fact, personnel should focus CRM on people, not its technical concepts. Because the nature of personal relationships differs in different regions, Berlin encourages CRM strategies and implementation to vary. However, the sales teams perceived CRM as generic software – a database that must be filled with customer information without returning commensurate benefits. It is used mainly for data analysis rather than relationship management and hence is seen as a controlling tool.

Düsseldorf

At Düsseldorf, the term CRM prompts an immediate reference to the tool, namely, OneCRM. CRM is perceived mostly as software that stores customer contact information. The main task of the employees is bringing in business, not managing a software tool.

Frankfurt

In Frankfurt, the priority is not control but rather aspects of the CRM software that enable the performance of daily business activities. Frankfurt has a high level of customer awareness, stemming mainly from improved capabilities in market and customer transparency.

Meanwhile, in Sweden

Sweden uses a single customer satisfaction survey given the small size of its market. Stockholm’s sales managers define CRM as a base where they start their daily work, a cockpit for the sales employees. CRM is, in fact, the basis of the entire business. The tool, CoreCRM, developed in house by Warner in Sweden, is described as a place where all the information regarding customers and projects is gathered and where calculations are made. Project management rules are integrated into the system, ensuring that the relevant processes are followed accurately with each bid. And remote access lets sales representatives find and update information from anywhere, and sales meetings can be held as teleconferences.

Maturity doesn’t equate to customer satisfaction

Having developed the CRM maturity index and investigated CRM maturity and customer satisfaction, we can examine how CRM maturity relates to customer satisfaction.

The following can be deduced by comparing the numerical results of the survey with the CRM maturity assessment. At first glance, these results show no direct correlation between average CRM maturity values and NPS values.

Notably, most of these criticisms came from promoters, suggesting that these deficiencies do not stop them from recommending Warner to business partners. The clear inference is that the quality of the company’s internal processes faintly affects customer satisfaction. Instead, clients focus on the results they see: the quality of products, service and customer care.

All five branches agreed that Warner’s competitive advantage stems from providing superior value to its customers, justifying higher prices. CRM is seen as a key strategic step to becoming more customer-oriented.

However, a closer examination reveals differences across the branches. The German branches’ level of using CRM was low. However, Sweden’s CRM maturity was high. Perhaps building the tool in house and clearly communicating its purpose are important for achieving success in CRM technology.

The Berlin and Frankfurt branches perform well in terms of customer awareness. They develop advanced knowledge of what the market needs and forecast future trends better. The two branches also perform better at handling diverse customers. They have mastered the various sales channels of the complex market of the building technologies business and can prepare better offerings. The NPS scores of these two branches are the highest among the five investigated, suggesting the stronger influence of these two dimensions.

When your happiness doesn’t extend to customers

First, our study finds evidence of blind spots, namely the service providers’ inability to interpret their customer relationships accurately. The branches whose employees perceived their CRM as most successful, the Swedish branches, had the least satisfied customers.

Previous research has shown that employees, particularly sales reps, should welcome IT because it boosts performance. But this study reveals how they should use technology to derive benefits. Implementing CRM processes and company performance are related positively during a relationship’s maintenance stage. Customer satisfaction, customer retention and sales growth are linked positively.

The Gothenburg branch, for example, focuses on developing relationships with existing customers. This corresponds to the maintenance stage, suggesting that CRM has the largest impact in this stage. The CRM maturity component most closely related to this phase is handling diverse customers, suggesting that the capability to manage customers is important for better performance; the performance link goes through customer satisfaction, customer retention and economic performance.

Technology does not have a significant effect on performance metrics; it is only an enabler. Many organizations view CRM as primarily an IT tool. Our results suggest that companies should focus on customer-facing actions instead of concentrating on keeping the CRM tool clean and up to date. High-level management must incorporate this understanding into corporate strategy and communicate it to sales teams. The study also suggests producing a CRM tool in house, one that evolves naturally and gains greater buy-in than a solution purchased from a vendor.

The comparison of CRM maturity and customer satisfaction levels at five branches of Warner produced some counterintuitive results. Branches that most diligently used and were happy with their CRM had the worst customer satisfaction. The lack of a positive link between overall CRM maturity and customer satisfaction suggests that different dimensions of the index have different impacts on the latter. Information management and CRM technology merely serve as enablers – they cannot replace employees’ hands-on knowledge and relationships with customers.


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