What is the goal of www.crm-tech.world?
We aim to provide insights and tips on CRM strategies and the use of CRM software to address key challenges through our portal. We strive to fill it with high-quality content, including numerous tool profiles. We place great importance on both the CRM system landscape as a whole and specific CRM systems. This is our main focus. It is particularly important to us that users receive guidance on selecting, implementing, and utilizing a CRM system. By maintaining a holistic view, we help avoid poor decisions and dead ends. Additionally, managers and leaders gain insights into how Customer Relationship Management (CRM) and the implementation of CRM software can bring about significant changes. We exchange ideas and provide examples of best practices, illustrating how to improve processes, whether with or without CRM systems and tools. The combination of strategy, leadership management, process thinking, and CRM software perspectives rounds out our approach. This offers a significant advantage: decisions in marketing and sales, among other areas, are interdependent. Ultimately, the leadership team must be customer-oriented in their business operations.
Typical questions include:
- Why does implementing CRM software change so many aspects of a business, whether one wants it or not?
- How can investing in CRM software benefit users?
- What does customer-oriented leadership entail?
- How does a manager become a leader?
- What changes with the use of CRM systems or additional tools from the CRM and MarTech world?
- What advantages arise from making sustainable decisions?
Customer relationship management and customer retention are fundamentally strategic issues for leadership and their teams. Only after strategy and measures are defined do the CRM software and system requirements emerge. We find the general view of digital transformation to be too broad, forced, and insufficiently targeted. We prefer to examine everything from the perspective of the customer and the user. Tools must provide value to both. As a Vodafone manager once said, “Digitizing a lousy process doesn’t change anything in the business. It remains a lousy process.” Our core mission is to provide answers to both known and yet unasked questions.
What is Customer Relationship Management (CRM)?
CRM is a holistic approach to strategic and operational business management. Based on a CRM strategy, a company manages, integrates, and optimizes all customer-related processes across marketing, sales, service, customer support, product management/procurement, logistics, and research and product development. All measures, tasks, and decisions are based on target group and customer value analysis. Target groups and customer segments are defined, guiding the entire organization. This organization is then primarily structured not by functions but by customer groups, an organizational form known as customer management. Relationship management is supported by a suitable database or corresponding software landscape.
In summary, CRM pursues a few key goals: achieving the best possible customer satisfaction, high emotional customer loyalty, extending the relationship duration, and increasing its profitability or maximizing value extraction. In one sentence: CRM means creating added value in business relationships for both the customer and the company. Only when this balance is achieved will the relationship last and the company derive sustainable profits.
Why is a vision necessary for the implementation of a CRM system?
Helmut Schmidt, the former Chancellor and co-publisher of “Die ZEIT,” famously said, “Anyone who has visions should go to the doctor.” This catchy saying, while exaggerated, highlights the importance of asking “Why?” as Simon Sinek puts it, or “What are we doing this for?” Others call it “purpose,” a trendy term these days.
A forward-thinking idea is crucial because organizations without a vision may pursue annual goals, but they lack the “big picture.” A clearly defined vision helps pinpoint a goal on the horizon, from which planning objectives and resulting actions are derived.
As Antoine de Saint-Exupéry beautifully stated:
“If you want to build a ship, don’t drum up people to collect wood, assign tasks, and work, but rather teach them to long for the endless immensity of the sea.”
All employees need a customer-oriented manager or leader, a guiding idea, or a vision to follow. The “why” translates well to Simon Sinek’s concept. From the “why” comes the culture within the organization—how one interacts with customers, suppliers, and partners. A customer-oriented culture sets the stage for success and satisfaction. A company vision is the starting point for cascading down through various implementation levels: vision, mission, motivation, strategy, and action plan. If there is no manager/leader and no company vision for employees to follow, they will define their own vision, deriving their own motivation for using the CRM system. In practical terms, using a CRM system and entering data into it requires a visionary guiding idea promoted throughout the company.
A natural law suggests that about 10% of employees should follow the company’s vision and guiding idea. In natural studies, if about 10% of animals follow a leader, the rest of the herd will follow. If these 10% follow enthusiastically, the rest of the employees will also engage empathetically and committedly. This presents a significant advantage for a company. If not, as the Gallup study repeatedly shows, over 80% of employees are merely present but not engaged. The team lacks leaders, only managers and caretakers, missing out on opportunities and advantages.
Why is CRM primarily a leadership topic rather than a CRM system topic?
Many agree, as confirmed by Muuuh Group’s study, that CRM is primarily a strategic issue rather than a software issue. However, few leaders in a company live by this creed in practice. The Muuuh Group study shows that respondents recognize significant discrepancies between “this topic is important” and “this is our reality.” Leadership is crucial, as highlighted in further readings.
One of our mottos is: Employee retention is customer retention.
Why is this so important? Today’s companies that merely manage employees and don’t delegate responsibility will struggle with ongoing changes. Leadership extends far beyond better personnel management; it involves aligning the company with customer groups, requiring not just good managers but a leadership team that are “good leaders.” Effective employee management is critical even when implementing software. Most CRM solutions are underutilized, resulting in failed investments. This can be avoided. With our expertise in CRM software implementation, we ensure these investments succeed.
Why should the “product focus” now give way to the “customer focus”? – The loyalty flywheel as an explanatory approach
The term “loyalty flywheel” might be new to many and thus requires explanation. Loyalty suggests consistency, while a flywheel evokes dynamic associations. The concept involves imbuing loyalty, built through long-term customer relationship maintenance, with new dynamism. This works by strategically expanding the service and product portfolio.
The rule of thumb, “Winning a new customer is five times more expensive than retaining an existing one,” is not new information but…
…is a widely accepted principle among managers. They aim to build a sustainable business model based on long-term customer relationships and increasing the profitability of these relationships. This enhances the value of customers and the company. This shift from an outdated mindset, “I have a product/service idea. Who can I sell it to?” to a new perspective, “I have good customer relationships. What else can I sell them?” signifies a crucial paradigm shift: Product management is dead! Long live customer management.
One of the most famous examples of a loyalty flywheel strategy is Amazon.
Looking back a few years to Amazon’s early days, the company initially aimed to build customer relationships through a high-frequency item (books, known for their broad appeal). From these relationships and the vast amount of customer information, Amazon grew into a comprehensive e-commerce provider through intelligent assortment expansion and cross-up-selling. Today, many customers are so loyal to the “Amazon” brand that they buy almost anything from the company, even groceries.
The growth of Haufe is unparalleled in the publishing industry.
Haufe, a provider of professional information, recognized in the 1990s that relying solely on loose-leaf collections in the face of increasing digitization would not ensure survival. The software house Lexware joined the rebranded Haufe Group. By realigning its goals, tasks, and processes toward defined customer groups, the company gradually expanded its product portfolio (including through targeted acquisitions) and benefited from its customers’ loyalty and attractiveness. Today, 95% of Haufe’s revenue comes from digital products like online services or apps. In 1990, the Haufe Group reported a turnover of 50 million euros; today, it is nearly 300 million euros.
Tchibo also turned a necessity into a virtue.
In the late 1990s, a price war in the coffee segment ensued. Buying its fiercest competitor, Eduscho, did not solve the problem. The world market price for coffee fell, making a sustainable business model difficult. In 1999, Dr. Thomas Vollmöller became Tchibo’s CEO and led a remarkable transformation. His strategic approach: “Every day, at least every week, millions of people visit Tchibo stores. What else can we sell them?” Analysts at Tchibo identified what other products their customers might be interested in buying. This led to the motto “A new world every week,” where Tchibo offers various consumer goods to its customers weekly. Strategically turning a pressured business model into a successful future based on existing customer relationships is a strategic masterstroke.
What are other examples of customer retention through the loyalty flywheel principle?
Other successful examples include the ADAC, which evolved from a club to a business enterprise, Glöckle Lotterie selling electricity through the E.Vita brand, and an electrical tool manufacturer now selling jewelry and cosmetics to its craftsmen’s wives. An exceptional approach is that of a plastics industry company, which, if a customer wants a product it cannot currently deliver, buys the product from competitors or dealers and sells it to its customer, maintaining the customer relationship. These experiences can be abstracted into a loyalty flywheel strategy (see illustration). At the core is the existing customer relationship.
