CRM should challenge your business model

For over 30 years, we have digitised businesses’ internal processes, focusing on internal efficiency. But in 2016, digitisation requires us to streamline internal processes while focusing on the business creating value for its customers.

gbys_micropartner_web_blog_soeren_am_161208_vers1At some point, almost everyone who works with CRM has heard the claim that 9 out of 10 CRM projects have failed. This also applies to the 100 listeners who prioritised taking a morning out of their calendrers to attend MicroPartner’s seminar on digitisation and CRM, held on October 25, 2016.

The failed CRM projects come in all shapes and sizes, but most of them have a common denominator: the project has been approached as an IT project, which has simply been about powering internal processes such as sales management, pipeline management and account management.

CRM is much more than an IT project

But if you only view CRM as an IT project intended to streamline internal processes, you risk getting too narrow a focus, says Søren B. Sørensen, partner in Devoteam, who describe themselves as Digital Transformakers. Their 4,100 employees across 20 countries provide advice and consultancy within business digitisation, transformation projects and IT efficiency.

“If you want to work with CRM, you must work with the entire company’s value proposition to customers and thus work with your business model from a value model mindset, rather than an operating model mindset,” says Søren B. Sørensen; “CRM has traditionally focused on process digitisation. CRM should also play a greater role on the customer side and involve many more parts of the company’s value model.”

CRM begins with the customer

In plain terms, CRM is not so much about your own business as it is about your customers and their business. “Many people tend to only look within their own ranks in the sales department when they get started on CRM,” says Søren B. Sørensen and elaborates: “If you want the benefits of CRM, start with your value proposition to the customer. That way, digitisation will take place on the basis of your customers and your value proposition, which will then change your entire business model and hence your value model and your internal processes. If you rely only on your internal processes, without factoring customers into the equation, you will end up only changing your operating model.”

There is nothing wrong with digitising your operating model, but it rarely yields the benefits of CRM you hope for when starting the process – and then you are left with the experience of a failed CRM project, Søren B. Sørensen explains: “The company’s operating model is about how we do what we do most effectively and cheaply. The company’s value model is about how we satisfy our customers, so that they create value for us. That connection is interesting to examine when we look at the business, and it is in this intersection that we need to navigate when we work with CRM.”

Think more broadly than products and services

Søren has made a very conscious choice not to talk about the company’s products and services, but rather the company’s value proposition.

“When we think digitisation and CRM, I use the term ‘value proposition’ as it forces us to think beyond products and services. When we talk digitisation, we often see that a traditional product is substituted with other services. A combination of e.g. DriveNow and a rental car allows for a substitution of a car purchase with transport services. And in the value proposition, we involve our channels toward customers, both digital and analogue, in the form of e.g. marketing, sales, service and communication. On top of the channels, we build the processes where we are in contact with customers and use them to create our value proposition. ”

Give your organisation a boost from the outside

30 years of conventional thinking, using IT to simply streamline internal processes, is not something you just do away with overnight and wake up refreshed the next morning and beginning to think IT from a value model approach, Søren admits: “We have spent the last 30 years becoming really good at getting an effect from IT and digitisation based on a certain way of thinking founded on the company’s internal processes, efficiency and operating models. In the future, we must take a new approach which is not just about becoming more efficient, but about making customers happier.”

“We’re going to use it to generate value for our customers,” says Søren and concludes with a final piece of advice: “Most companies can work with their value proposition, but they are less able to translate it into value model-thinking and then energise it. As an organisation, you don’t just change 30 year-old thought patterns without someone pushing you in the new direction. It may be a digital task force with dedicated employees mixed with external specialists with deep knowledge of business development, digitisation and CRM.”