Customer Centricity : Making CRM Magical : Using Outcomes

Michael Meltzer is the co founder and a managing partner of Active Management Techniques that specialises in improving organisations performance through applying the human aspects and benefits of relationship management in all its forms.

He is a hands on partner who has experience spanning general and IT management, financial services, public sector, telecommunications, education and retailing. He has specialised in applying the human aspect approach to support internal and external customer relationship management, change management, customer knowledge and organisational design where innovation and learning can flourish. 

He is a respected author, sought after speaker, educator, consultant and experienced business manager.

Check out Michael's website

There has been a simple mistake. The simple mistake has been to confuse inputs such as money, time, leadership, commitment, technology and re-engineered processes with outputs such as changes in behaviours, increased customer loyalty, retention, bigger sales pipeline and improved profitability. In this article I will discuss some of the ways these inputs have created the failures we read about and how new ways of attacking the opportunities are creating success.

People issues are still not easily addressed in a technology and process driven model of the world. For innovation to thrive and for an SFA solution to be of use the voice of the user must be heard. That it is then listened to carefully and acted upon. New customer facing tools and the convergence of analytical CRM and operational CRM will fail if the tacit knowledge the user has is not harnessed. There is still no silver bullet but if you can actually get some of it right – you have a chance – so read on.

After years of implementing, reading learned articles, books and papers plus heated discussions with vendors, consultants and pundits about the success or otherwise of Customer Relationship Management ( CRM ) solutions I am becoming convinced that real money has been wasted by a simple mistake. The simple mistake has been to confuse inputs such as money, time, leadership, commitment, technology and re-engineered processes with outputs such as changes in behaviours, increased customer loyalty, retention, bigger sales pipeline and improved profitability ( figure 1 ). The expectation that by merely going through the motions of input you will get the hoped for outputs maybe naïve and hope is not a strategy whilst garbage in is often equated with ‘garbage out’. Of course this all depends on your definition of ‘simple’ !

Now I don’t mean to say that these inputs are, or were, wrong but the way they get employed are not efficient, effective or sufficient. Figure 1 identifies a number of the areas where the inputs have not led to expected success and I will cover a number of these in this paper.

Figure 1 ( Matrix of Failed Imputs )

All the changes expected from the inputs are predicated on enabling and motivating people who have often not even been consulted or involved.

Voice of the Customer

An analogy that that might help make the point clearer comes from the world of innovation where for years the idea was accepted as gospel that you must include the voice of the customer in any new product or service you develop. Yet customers often don’t know what they don’t know. There is no one voice of the customer that identifies what they really want and this has led to all sorts of practical and academic arguments and difficulties of application. On a number of occasions the voice has not created the winning solution or product; instead it created a dud.

Outcome Driven

Lately the new gurus of innovation are questioning the accepted wisdom by identifying that there are different questions we should be asking and these are about what the customer is trying to do or get done. Asking customers what they want in its older guise is limiting as customers often cannot conceive of that breakthrough product or service. They are not in the position to appreciate what is really available in terms of packaging, technology or components so their desires are often limited by their perception of what could be. They run into two major psychological blocks ‘functional fixedness’ and ‘contradictory needs’( 1 ). Put simply the customer/user just doesn’t know ( See figure 1 ).

It’s the un-articulated needs that are the ones that will create the new innovation - so far from getting rid of the voice of the customer they are saying we should listen more carefully and with a discerning ear; the real focus should be on outcomes. What is the customer trying achieve through the use of the product or service. In this case the customer for a CRM/SFA has to be the people that actually use it not their bosses. Listen carefully to the right voices that help you isolate those required outcomes has to be the right way to go.

To attempt to put the idea of outcomes into perspective you need to take a holistic view but break the whole into two parts that make up CRM: analytical CRM and Operational CRM. I will start with analytical CRM as I see this as a feed into the more problematic arena of operational CRM where outcomes become the day to day reality of the frontline. If we first look at analytical CRM and how far it has come and its application we will get a picture of limited success but with continued huge potential.

Analytical CRM

The title Analytical CRM is often equated to business intelligence, customer knowledge and customer insight. These are then distilled down into more systems oriented view of the world as integrated quality data and segmentation rules. The foundation begins with CURARE ( 2 ) ( where the E stands for customer experience ) – where the experience part goes to the heart of Operational CRM ( outlined later ). What analytical CRM tries to do is get to grips with the underlying components that make up the value of creating ‘one-to-one’ relationships of the more real ‘segment of one’. 

Data Integration

By integrating data from different sources both internal and external an organisation attempts to improve its data quality to the point where it can begin to ask a range of questions related to its current and desired customer base ( 3 ). The answers will enable it to begin to understand the value of it’s customers, the types of customers it should acquire, cross sell, up-sell, win back and or let go. This means that you must understand your customers’ needs, be able to profile them and begin to predict their behaviours. A lot has been written about the value of data-mining and how an organisation can find bountiful profits hidden in their data but the road is hard ( 4 ).

Often the whole basis of an analytical approach has been to use the insight gained to get closer to the customer ( customer intimacy ). The insight is then recycled to gain further understanding of what they really want and then use this to hone operational capabilities, the range of products and services and then as if by magic make more profits. To make a difference an organisation needs to collect data from across the enterprise, across all touch points, the entire transaction life-cycle and relationship data including the real customer experience. Yet practically no organisation has been able to do this as the task just may be too big, too difficult, too time consuming or too costly when equated to the benefits. Or maybe there are better ways of getting there and just what do we mean by experience anyway ?

One Customer View

To get a 360 degree view of the customer across the company could require in technology terms the application of the intergalactic data-warehouse ( 5 ) , coupled to sophisticated OLAP ( On-Line Analytical Processing ) tools applied to integrated communication channels. All of this so that the company can get the right message to the right person at the right times to elicit a positive relationship enhancing actions. To some extent this type set of CRM implementations has actually been quite successful even without that all singing all dancing fully integrated data warehouse. Many major industries have benefited at least in some part from using the power of partially integrated data. They have sophisticated analytics, segmented their customers, potential one-to-one offers and a wealth of knowledge that tells them that they can improve their sales effectiveness and their bottom line results. Yet they still fall at the last hurdle when they try to get the actual offer through to the customer. Without integration into the frontline customer interaction systems, educated and motivated staff plus the requisite knowledge, about the actual outcomes and experiences the customer wants –they fail every time. Humans are unpredictable whether they are customers or employees and the segmentation rules cannot make up for this shortcoming ( see figure 1 ). However closer attention to what customers and employees actually want from their relationships can help and often this is all about the actual experience. CRM is really a state of mind and philosophy not a suite of technologies. It’s all about the way the organisation is focused on the customer.

Customer Data to Customer Insight

Organisations can gather and store enormous amounts of data from transactions that may take into business/account/product affiliations/attributes and interests but this needs to be coupled with the tacit knowledge that comes from sales, service and the customers. Although this transaction and affiliation data provides enormous insight to many organisations it has now become apparent that it needs to be fine tuned to meet today’s needs. Many organisations now have actual and potential customers that use multiple channels and to transact business and to gain insight into their next purchase decision. The type of data collection activities depicted in figure 2 worked well during the 1990’s for organisations addressing the segment of one with direct marketing tools and mass customised solutions but many of these activities are now seen as tired and get ever decreasing results. The fragmentation of customers into smaller segments who now have access to in depth information, a wealth of alternatives, substitutes and choice means that for many of the consumer focused industries the one-to-one marketing relationship almost makes sense but customers still remain unpredictable.

In the B to B markets the tacit knowledge held by the services teams and sales becomes even more important and it is here over the last few years that the emphasis of CRM has been focused. This does not mean that they focused on the customer to improve relationships, customer experience and provide innovative value based products. They may have been outcomes but the real drive was customer acquisition. This acquisition activity manifests itself in many forms from unsolicited offers for yet more credit and store cards to special offers on PC’s and other direct entreaties based on any one or more of the characteristics that are shown in figure 2. Yet these characteristics used for segmentation purposes don‘t define the individual they are merely pointers. 

Figure 2

Operational CRM

Sales Force Automation or operational CRM as some would define it is really aimed at improving the win ratio of the sales teams and better manage strategic accounts or so we might believe. It is here however that the real problems of CRM implementations have faced their greatest hurdles.

If we accept that the technology is sound and the software does work then what can be the problem ? ( figure 1 ). It must be the people tasked with using the SFA. Who really wanted the SFA solution ? Was it the sales and service teams at the sharp end ? I don’t think so. Senior management faced with the tumultuous changes over the last decade have attempted to ensure higher profit margins in various ways: reengineering, downsizing, cutting costs, outsourcing, sweating assets and of course attempting to make their sales efforts more effective. The investment in the whole concept of CRM in the eyes of senior management is based on improving the bottom line and their own tenure. However in their rush to the edge of the cliff the lemmings forgot to find out what the outcomes should be. Overly compliant consultants hoping to implement multi-million dollar solutions from hungry software and hardware vendors don’t make for good advisers. The SFA implementations however were seen by many as a means of improving both the sales teams’ effectiveness and give oversight to their activities by senior management. Oversight might have been achieved but often at the cost of effectiveness.

View Sales Activity

Much of the investment in operational CRM has come in the form of better and more ways of looking at sales activity and too some extent tactics. There are numerous reports available and ways of looking at the sales funnel and its makeup. However seventy-five percent of field sales application projects are deemed not to have met expectations. Who believes they have failed ? The sales teams that have to use the applications ! ( 6 ) Most sales teams claim that the solution they are given is just another burden on them rather than an aide in selling. To be able to feed the admin heavy the SFA’s paperwork burden falls on the shoulders of sales, who often have to become the data input clerks. The top 20 percent of the sale teams that tend to produce as much as 80 percent of the sales are the first to find ways of not using the SFA. The next 60-70 percent that you believe will benefit from the new systems approach by helping them identify the right products for the right customer also finds the systems burdensome whilst failing to meet their real needs.

Talk to Sales Teams ?

In many cases the sales teams are not involved in the purchase, design, communications loop or testing of the all singing all dancing SFA. Their first reaction in being brought in for training on how to use ‘it’ ( read key in data ) is a burdensome administrative system designed for management with little in it for them. They ask questions like – “will it tell me who to call on and what will be the best offer, will it make me more commission and or improve my bonus, will it reduce the administrative overhead, can it write proposals for me, help me quote …….” The answer in most case is “no …sorry-..-now if you key in the name and address and … we can see…who you have called on and the pipeline” !

Failure a Gartner View

SFA is often seen by sales people as just another step towards big brother watching their every move ready with a big stick to hit them if they step out of line. Gartner has identified what it believes are the top ten reasons for 80 percent of the failed sales technology ( listed below ). Obviously the SFA is a failed solution as it is currently implemented. And of the top ten the top five that are printed in bold identify the failures that relate to sales effectiveness issues and the sales teams involvement. Often it is not technology that is required to improve the 60 -70 percent of the sales teams but a thorough grounding in adherence to a solid sales methodology where the processes are sound and workable ( 7 ) : 

  1. Projects initiated with unclear goals, metrics and expectations ( 25% )
  2. Lack of commitment from senior executives, sales management and channel partners ( 13 Percent )
  3. Poorly defined or flawed sales processes ( 15 Percent )
  4. Lack of strong end-used salesperson buy-in ( 12 Percent )
  5. Focusing on management needs, with not enough emphasis on sales people and customers ( 10 Percent )
  6. Making do with inadequate resources for development and deployment ( 8 Percent )
  7. Insufficient and Irrelevant Training ( 7 Percent )
  8. Making poor software vendor or ESP selections ( 5 Percent )
  9. Over standardizing ( 3 Percent )
  10. Overly besotted by features, functions or "Cool" technology ( 2% )

Further Evidence

The Miller Heiman Sales Effectiveness Study is an ongoing worldwide research effort that during 2005, surveyed over 3,400 sales professionals, in 28 industries, with 69% of the companies having 250 or more salespeople. Their findings showed that sales productivity improvements were mainly achieved through better training, particularly in developing the fundamental skills and methodologies necessary to access and win the approval of decision makers. Conversely, CRM/SFA technologies were not regarded as having helped sales organizations either to improve productivity, or to improve sales effectiveness.

Specific weaknesses were identified as follows :-

  • 50.6% of salespeople agree that CRM isn't helping make their sales efforts more effective
  • 73.0% of sales leaders aren’t convinced CRM is used effectively for helping move sales opportunities through the funnel
  • 78.8% of sales leaders believe CRM isn’t being used effectively to improve account strategy and planning
  • 78.6% of sales leaders aren’t convinced CRM does a good job of defining an effective sales process for their organisation

Figure 3

Sales Methodologies Grafted on to CRM/SFA

Some of the major methodologies that support sales cycle management are identified above in figure 3. They offer a structured methodology for identifying, analyzing and closing complex, multi-decision-maker, value-driven, competitive sales situations as solutions or transactions. The most exciting thing about these processes is that they are all being attached to new SFA solutions either by being fully integrated or as add-ons integrated through API’s. MS CRM incorporates a version of solution selling that is integrated into the latest release. 

The sales management process is at last being addressed through tool sets that enable the manager to coach, inspect and analyze standardized sales processes; recruit, hire and train salespeople and undertake performance assessments, career counselling and business reporting. These new tools allow the sales managers to become proactive and enable them to do their real job of supporting the sales teams to become more professional, successful and achieve the desired ROI rapidly.

To support the sales teams you must go beyond sales administration as outlined above. There has to be an account management processes that offers a set of consistent approaches to the development, growth and retention of long-term, customer-centric relationships with the key, major or mass-market accounts that the company has or wants. Contact management must be of a quality that enables the development of strategies for maintaining and enabling executive-level decision-making relationships. But the derived information should make as much use as possible of data that the company already has. The data will come from billing, service, warranty, direct mail files and any other system that is storing customer relevant data. The information must be in a form that allows senior managers to be successfully involved when necessary. The technology must be robust and available wherever the sales team needs it.

Where is The Real ROI ?

The sales application pyramid identifies the technologies that really add value to the business and they are to do with serving the customer and supporting the sales process. The base of the pyramid will save cost over time but its customer facing activities that generate revenue directly.

Figure 4

Building for Success

Many of the tools identified in figure 5 have been available for many years in various forms. Some of the most dynamic tools however have only been available since the turn of the millennium.

Figure 5

These newer tools make use of the web to deliver their unique benefits. Even the CRM/SFA that was in the past only available for in-house installations are now being offered on hosted services by organizations such as Netsuite, MySAP CRM 2000, Pivotal,, Salesnet and Siebel OnDemand. Each solution currently offers different levels of functionality and support for the sale teams. Some offer easy integration by third parties that enable the sales teams to really get the benefits that CRM SFA has been promising but not delivering. Some of the sales methodology vendors like Millar Heiman have started integrating their offering into the hosted solutions. This integration by Miller Heiman includes Strategic Selling, Conceptual Selling, and Large Account Management Process methodologies that enables the sales teams to strengthen their approach and improve their close rates. In addition these types of solutions can be used to introduce a consistent sales process throughout an organization. They also help in the identification of the strengths and weaknesses inherent in every sales force, and then they can help ensure the cultural imperatives are shared through a range of training programmes.

Sales Tools

The sales teams want tools that can speed up their ability to see and close more customers. Instead of tools to close sales their management gave them administrative overhead. Instead of using customer analytics to identify opportunities they used them to measure success or failure and then not very effectively. Newer tools available in-house or more often today hosted can make all the difference. These tools are integrated with the SFA systems to offer functionality and benefits that we can see at the pinnacle of the pyramid in figure 4. A particular offering we have come across recently that adds considerable value in both the face to face sale and in a web environment has been from Webcom that identifies with layer 4 and 5 in figure 5: Sales configuration, quote management, proposal generation, order management and interactive selling.

Let Me Close a Sale

An aspect of a good SFA that always delight sales teams is to receive that piece of insightful information that helps them close sales more quickly. Many SFA’s include analytics of some kind most of which help management but there are elements of guided sales analytics creeping in that really can help sales be more effective. Through the analysis of what has worked and what did not the sales process can be honed but with insight gleaned from the enterprise customer knowledge infrastructure the one call sale is very possible.

Outcome Driven at Last

We have carried out a number of projects that are based on the outcome approach including manufacturing, higher education, telecommunications and financial services. In one of our projects at one of the largest banks in the UK we helped initiate a CRM programme for their Corporate and Wholesale bank where we identified the outcomes the relationship managers needed to be successful. This bank has over 500,000 customers in the corporate sector ranging from tens of millions of pounds sterling turnover to many billions across the whole spectrum of business types. They needed to replace their legacy admin heavy SFA with a solution that could improve sales effectiveness and reduce the admin overhead.

Relationship Managers

Relationship managers may have one customer to support or up to 80 depending on customer size, industry and or specialized needs. The major requirement of all bankers is to know what products and services the customers use, where, how, why and how much revenue and profit do they make or could they make. This bank was no different; so we helped them identify seven major outcomes ( identifiable job benefits that would create success ) the teams wanted from their CRM/SFA solution. We applied our specialist’s knowledge to this customer to also understand the driving need for a clear analytical focus on particular customers that could drive revenue creation and the unique drivers of that customer value. Who are those customers and what do they look like and do they have a need for a particular product and/or service ? The idea is to identify the next product/service needed by using existing data to model the customer base. An initial mining exercise identifies the customers’ current product set and compares them against those purchased by other similar businesses. To answer the types of questions stated above and to provide the right answers you need good quality data from many sources.

Data integration and the One-Call-Sale

To run the needed models and mine the data made it clear that they needed to integrate data across the bank to input into the new system that Siebel and IBM would implement. Luckily the bank had invested in that almost intergalactic data warehouse technology for retail bank marketing. They had successfully used their warehouse technology to save and make money for many years. The data warehouse and its data marts had collected lots of data that were highly relevant to the corporate bank and its sales teams especially as it related to cross- functional services and products that both retail and wholesale customers used. By quickly prototyping a model of what might be, we clearly demonstrated to the sales teams the value of analytic CRM. When coupled with a delivery mechanism that could get the information to the right sales person with time enough to take action it was a winner. The proof of the solutions value came when customers were identified as having similar purchase patterns within a particular industry and region. Sales were directed to offer a particular product or set of services that met that group’s needs. This led to a number of fast sales cycles. A few teams noted that for the first time in their lives in the banking environment had they achieved the ‘one-call-sale’. To the sales teams this proved the value of guided selling that integrated analytics with a user’s perspective ( tacit knowledge ). The outcome approach works and enabled this particular bank to make a success of their implementation.

The Long Tail

The customer modeling approach also enables the sales teams to take advantage of the long-tail concept ( 8 ) . Banks sell many different types of products and services that in a wholesale bank can number with variations more than a hundred. The offerings may be leasing or discounting, factoring or letters of credit, life or re-insurance the list is indeed very long. Many of these potential offerings may be unknown to the customers that take the core set of anchor products such as loans, active business accounts, payment cards and currency. Yet the other products and services that make up the long tail are of great value to the unaware customer and to the bank that has not spotted the connection and or need. By use of the power law of distribution we can get a picture of the potential. There are a small number of popular products that are used by most customers and a long tail of less well known products that to many niche requirement customers will be of high value. By using the data and tools they currently have they can explore these niches for the customers; get the sales teams to offer solutions at the right time, place, price that are tailored to customer needs. This creates a powerful method for increasing value driven sales and reduce sales cycle times. Bit by bit these niche offerings could provide greater value/margin than the popular core products that everyone offers. It also creates the opportunity for the first mover to build niche differentiators that competitors just cannot match.

Other Elements

There is a lot more to making the new CRM/SFA solutions a success. I have written in the past about the need to manage the change ( dragon ), communications, motivations and technical aspects many times but so often the message is forgotten. Figure 6 brings out many of the ideas embodied in the articles I have penned but comes at it from the very human approach that you would expect from Mercer HRC.

Figure 6

Mercer Human Resource Consulting

They emphasise the human element that is implicit in figure 1 and shows how many inputs to the success to CRM are mechanical and lack human depth or understanding. Figure 6 places the technology firmly in the bottom left whilst the rest of the business appears to be focused on making it all happen. Yet to enable the whole to achieve its desired outcome’s technology needs to permeate the structure from forecasting through to segmentation. The technology is part of the fabric of any business but it is the outcome at the end of the day that must drive the choice of technologies and the success or otherwise of the business. Today we are seeing a convergence between the outcomes the sales teams want and the needs of the business.

Process Driven

This convergence will see that the sales element in business becomes ever more process driven and technologically based. Yet the peak performers will still add that little magic that everyone wants a part of and management will strive to understand and apply. By bringing CRM analytics to the sharp end coupled with new sales tools and outcome driven CRM/SFA’s we may not get the peak performers magic but we will raise that sales bar a couple of notches. And at last that promise that CRM offers may finally be seen to be real.

© Copyright Michael Meltzer, 2005

AMT Consulting focuses on customer lifecycle management that touches both internal and external relationships. We only employ experienced team players that have real world experience. Our consultants, managers, and leaders have all held senior positions that carried P & L responsibility. Innovative thinkers and doers they offer exceptional support to organisations that wish to be successful today and tomorrow. By specialising in enabling organisations to get value out of their information we work with content, BI and data warehousing. This translates into combining the right people, processes, services, and partners required for successful assignments. We help to successfully build the right business case, identify the right approach, support the implementation of your solutions and then support you in realising the benefits of your investments.


( 1 ) Turn Customer Input Into Innovation’ - HBR Jan 2002 and ‘The Innovator’s Solution’ by Christensen & Raynor - HBS Press 2003

( 2 )CURARE – It Could Happen To You – Michael Meltzer

( 3 ) Getting Started With CRM and Getting Started Building a Customer Information Infrastructure – Michael Meltzer

( 4 ) Data Mining Myth and Magic Version ’2’– Michael Meltzer

( 5 ) The Intergalactic Data Warehouse Here Today Gone…… - Michael Meltzer

( 6 ) Ed Thompson VP Research Director – Technology Powered Sales Productivity - Barcelona

( 7 ) Ed Thompson VP Research Director – Technology Powered Sales Productivity - Barcelona

( 8 ) The Long Tail – Chris Andersen – Wired Magazine – October 2004

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