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5/4/2009 - How to Use Metrics to Manage Customer Relationships - and Prosper
Reprinted from CRM Magazine
Metrics have always been essential to successful business management. And as the recession’s grip tightens, metrics now matter more than ever because they can help an organization improve its performance and efficiencies.
Simply put, you cannot manage what you don’t measure. Measuring data yields metrics that provide insight into a company’s core business functions and enables it to track—and analyze—customer relationships, sales leads, market data, and key performance indicators (KPIs).
That’s where an automated Business Analytics solution comes in. Analytic tools help companies mine and analyze customer and transactional data from myriad sources, then leverage that information to guide informed decisions that can boost performance and increase revenue.
There is no one-size-fits-all method to a Business Analytics tool. Each solution should be tailored to the needs of each individual company, with a sharp focus on the unique factors that drive the business.
There are, however, common elements that predict the success of an analytics tool. As a provider of front-office Business Analytics, Infinity Info Systems has helped a wide range of organizations improve their business performance. Here
are some of the best practices that we believe should be included in any Business Analytics implementation:
MAXIMIZE EXISTING TOOLS
First, take stock of what you already have. Chances are, your organization has tools that can deliver valuable reporting capabilities. For instance, Customer Relationship Management (CRM) systems have user-friendly reporting features that can show sales leads, pipelines, and revenue forecasts. They typically enable users to drill down and see data in very granular detail. Financial software like Peachtree or QuickBooks can generate customized reports on essential activities such as profitability by customer, time allocation per customer, or even staff or resource utilization. Leveraging Business Analytics with these existing reports can provide much deeper insight into the data, allowing you to more quickly identify trends that aren’t readily spotted in a standard report.
For example, while most financial applications have general ledger reports and break down spending by category, applying analytics can help a business further understand year-over-year results, or even which products combined in what particular order can provide maximum revenue. The use of analytics with existing reporting features is an easy first step toward deploying a Business Analytics strategy.
PLAN GOALS AND NEEDS BY DEPARTMENT
When planning to implement an analytic tool, it’s essential to review the organization’s overall goals. You’ll also need to consider the company’s unique business and marketing processes and, of course, ensure that a Business Analytics tool will mesh with overall goals and metrics. Take care to focus on the truly important factors, and avoid the urge to micromanage.
Also, remember to involve leaders of all business units in the planning process. You’ll need their buy-in to make the implementation a success, but you’ll also want their input on what data they have and how they use it (or would like to use it). Reach out to marketing, sales, human resources, and customer service, and involve department heads in the process.
You must also carefully consider the needs of each department. Sales, marketing, and customer service departments each have specific, yet important, information needs. The sales team requires accurate data on sales volume, product performance, customer preference, and the success of sales initiatives. The marketing department will need to know what campaigns are effective, whether leads convert to sales, and where customers come from (phone,Web, or direct inquiry). Customer service managers will want to know how long it takes to resolve issues, identify recurring problems, and
determine overall customer satisfaction and customer call frequency.
CAREFULLY ESTABLISH KPIS
When determining the types of metrics you want to measure, first gather examples of reports, measurements, and other tools that are used to run the business. Identify key metrics that are most important to success for the organization and make sure that all stakeholders are on the same page.
These KPIs, or more simply, metrics, will help determine what data to capture from your systems. There are typically ten or fewer KPIs that, if met, will ensure success. Areas that companies should analyze include productivity, margins, customer satisfaction, and lead generation.
Ensure that you put in place an implementation schedule that is realistic and well-documented. Set your priorities, then determine schedules and project timelines. Don’t forget to document any new processes, and make sure to communicate the initiative to all pertinent employees before you begin the process.
USE A DASHBOARD TO DRIVE THE BUSINESS
Dashboards are essential to understanding KPIs and managing data. Just as you wouldn’t drive a car without checking the information displayed on the dashboard, you shouldn’t try to drive a business without watching the dash.
Business Analytics tools pull information from a variety of sources and organize it into a dashboard that provides visual summaries of key data. The power of the dashboard lies in its ability to connect to live data from systems such as CRM, manufacturing, marketing, human resources, and financials—and then display enterprise-wide KPIs. Not only does realtime data deliver an accurate snapshot of how the organization is performing against its goals, but it also creates a single version of the truth that enables business-unit leaders and executives to see the same performance data. This empowers leaders to make more informed business decisions, calculate sales projections, spot trends, and manage the overall health of the organization.
Dashboards have traditionally been the purview of senior management, primarily due to cost constraints. But as technology becomes more affordable and easy to use, companies are making dashboards available to employees in the field. That gives personnel insight on how they are performing against goals, as well as motivation to improve performance. It is essential that you communicate metrics both up and down the organization.
EASILY COLLECT AND CLEAN DATA
A Business Analytics tool enables an organization to simplify and automate collection of data—and do away with timeconsuming spreadsheets. For example, a company might spend six days a month manually collecting data for reporting before implementing an analytic tool. After data collection is automated, the firm may spend only half a day—and that’s time spent analyzing information, rather than simply collecting and reporting.
A good analytic tool can also help normalize and consolidate data. Remember that a Business Analytics tool is only as accurate as the data that is fed into it. If your data is inconsistent or incorrect, the solution will generate similarly inaccurate, incomplete reports.We worked with a company that spelled a city name three ways in a sales report and, consequently, the data was not consolidated under the one correct city name. Cleaning data when you implement a Business Analytics tool will ensure that you achieve optimal results.
CUT THROUGH THE COMPLEXITY
After cleaning data, companies must also tackle the issue of complexity in order to maximize their investment in Business Analytics. CRM data is complex, in part because it is more fluid and subjective than other standard analytic disciplines like accounting.
Dates, times, and results of contacts with customers can quickly multiply into many thousands of records. Managing this data and relationships can be very complex, but ultimately very rewarding.
For instance, customer data might include a lead perspective, collateral, dates of contact, and type of contact (phone calls, lunches, or a round of golf ). After a lead becomes a customer, you should track further contacts, products, and services associated with the customer. That amount of data can quickly become very complex to manage and make sense of. The mining and analytical capabilities of Business Analytics tools can help manage the relationship and create a tighter bond with the customer. And no one needs to remind you that customer retention is an imperative during a recession.
MEASURE RELATIONSHIPS TO MANAGE BUSINESS
Beyond the everyday complexity, you can use Business Analytics to broaden your analysis and even measure the immeasurable.We recently worked with a large bank that operates on a relationship oriented philosophy based on customer outreach. It’s difficult to measure an intangible entity like a relationship, but it can be done with Business Analytics.
We helped the bank categorize activities that define the relationship and put these relationship-oriented data into “buckets.” For instance, all interactions with customers—lunches,Webinars, entertainment—were captured and analyzed. Once employees could measure these quantified activities, they were better able to manage their contact and relationships with customers. Simply put, quantifying customer contact made it easier to manage the relationship.
USE ANALYTICS TO PREDICT SUCCESS
You can also use Business Analytics to ensure success of sales and marketing campaigns. Many analytic tools include Business Activity Monitoring (BAM) functionality that connects to live data in a marketing system. For example, BAM
enables a company to monitor marketing initiatives such as lead generation and organic growth. In doing so, the organization can determine if the forecasted number and level of leads are being generated while a campaign is in progress. If the campaign is not meeting expectations, the company can make adjustments to help meet goals. The beauty of BAM is that it monitors these activities in real time and presents the information and results to stakeholders
via a dashboard.
GET FAST ROI
Given the state of the tattered economy, it’s a good idea to implement a Business Analytics tool quickly. Cash-strapped companies are seeking rapid return on investment, and you should find a solution that can be quickly and easily put in place in a matter of weeks. Depending on the scope of the installation, you should expect to see return on investment approximately 60 days after the system goes live.
About the Author:
Founded in 1987, Infinity Info Systems provides Business Analytics and Customer Relationship Management (CRM) systems to help our clients increase productivity and profit margins. Infinity Info Systems provides technology solutions, implementation services, training and support to help organizations become more profitable by improving sales and marketing effectiveness. Visit www.infinityinfo.com or call (800) 354-4228 to learn more about Infinity Info Systems.
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How to Use Metrics to Manage Customer Relationships - and Prosper