CRM – The Tool for making better decisions

Today’s leading organizations are accelerating the pace and enhancing the effectiveness of decision-making with help from their information systems, resulting in improved bottom line performance and a redefinition of competitive landscapes across industries. CRM supports strategic and tactical decision making by providing not only an integrated, real-time view of customers, partners, and employees and their interactions across marketing, sales, and service functions, but also a deep, real-time insight into customer-focused operations.

CRM makes this current, relevant information and insight available to employees and partners throughout the organizational ecosystem, from the front line to the executive office. Increasingly, advanced CRM capabilities are also being extended to small and medium-sized businesses, through hosted offerings designed to enable rapid deployment to smaller user groups.

Strategic Questions, Information Requirements and Benefits

Some of the universally applicable questions in the business world

• What should be my strategy for managing customer relationships?
• How should I plan to deploy resources now and over the next several years to meet the changing needs of my customers?
• Where should I focus to help meet this quarter’s revenue, operational, and profit goals?
• How do I better align production levels with product demand?

Information Requirements

• Actionable insight into employee, customer, and channel performance data and long-term trends
• An accurate, real-time, organization-wide understanding of current goal and target attainment

Benefits of Valuable Decisions

• Increase selling time by upto X percent due to reduced forecasting administration
• Reduce inventory carrying costs by upto Y percent
• Improve forecast accuracy by upto Z percent
• Reduce the frequency and risk of bad decisions, whose consequences can prove to be catastrophic

The Cost of Bad Decisions

Recent business history provides many examples of the cost of bad business decisions. One of the more remarkable examples of this is the collapse of insurance and finance firm Conseco. Burdened by $6.5 billion in debt, resulting from an acquisition spree in the late 1990s, Conseco filed bankruptcy in December of 2002; the third largest bankruptcy in corporate history. Conseco’s failure was precipitated largely by acquisitions such as that of Green Tree Financial for $6.7 billion in 1998. Conseco’s acquisition strategy incorrectly estimated the risks associated with assuming such a large debt burden for a portfolio of high-risk loans, including those made to low-income trailer home owners.

Indeed, recent research suggests that about half of all business decisions end in failure, including a lack of implementation or later reversal. Vast sums of money are spent to make decisions that realize no ultimate value for the organization. Managers make the same mistakes over and over again as they make decisions.

CRM’s Role in Better Decision Making

Accepted CRM principles and best practices provide the clear understanding of current and past performance results, required to plan and manage business operations in support of an organization’s defined strategies. Managers require accurate, real-time quantitative information on actual performance versus targets and forecasts to know where to focus short-term selling activities, determining where and how much to invest in long-term production capacity, or giving guidance to the financial community,.

CRM offers the ability to track actual performance versus targets and assess root causes for variance over short- and long-term time periods. In the short term, for example, CRM allows managers to understand sales performance against forecasts by region, customer, product, channel, and other variables. In the long term, CRM enables decision makers to identify risk areas in time to implement action plans to address changing market conditions, customer preferences, competitive threats and widespread economic cycles.

Specifically, organizations can employ CRM to make more effective decisions in five primary areas:

• Strategy and planning — By facilitating the development and maintenance of a comprehensive CRM strategy and planning and managing overall business operations based on timely, accurate forecasts of true market demand and risk
• Customers — By identifying the most valuable customers and better understanding their wants, needs, and buying behavior
• Products and services — By evaluating and investing in new products and services based on a detailed understanding of customer preferences and behavior and improving the efficiency and consistency of product and service delivery
• Channels — By matching investments in channels with the needs and value of particular customer segments and managing interactions across all channels based on a shared, holistic view of customers and segments
• Employees — By aligning employee efforts with organizational goals and proactively managing employee skills, training, and support needs

Business Case

Honeywell Aerospace, the $10 billion aerospace division of Honeywell, was perceived by Customers as difficult and confusing to conduct business. Customers viewed Honeywell as 16 disconnected businesses. Unable to see a “customer scorecard” of sales, service, and satisfaction to drive improvements in operational processes; executive management struggled with a lack of insight and intelligence from customer data. Management analysis and reporting required significant manual processing, which not only demanded significant time and resources, but also produced decisions based on stale, often irrelevant data. To increase planning and decision-making effectiveness, Honeywell Aerospace embarked on a program to enhance its CRM system with comprehensive analytics capabilities. The eventual goal was to provide business intelligence to users at all levels in the organization—from executive management and sales personnel to field services engineers, program managers, development engineers, and call centers agents. An immediate benefit of the CRM analytics implementation was the availability of real-time information, allowing employees to formulate and share new short and long-term planning insights. Management was able not only to make long-term strategic decisions based on facts rather than anecdotal evidence and opinions, but also to respond rapidly to changing market conditions. For instance, if sales management saw they were getting a large percentage of wins on certain products with certain types of customers, they were able to identify these high-value opportunities, understand key win factors, and apply those techniques or best practices to customers in future sales. Analytics has also helped Honeywell Aerospace to realize measurable business benefits in other areas, including modeling prices to stay in line with competition, responding faster to customer issues, improving overall customer satisfaction, and improving product performance. As illustrated by Honeywell Aerospace, maximizing the value of CRM through robust analytics capabilities can not only help ensure effective long-term strategic planning, but also keep the entire organization focused on the pulse of the business to ensure the effective execution of those strategies.