Closing the Loop-March 2009
Ask three different people to define closed loop customer relationship management—or closed loop CRM—and you’ll get three different answers. But what they’ll all have in common is the notion that a company’s interactions with customers and potential customers should be based on the most complete picture possible. Traditional CRM systems provide a database of customer information that can be used to, among other things, ensure customers are contacted with appropriate product updates, analyze marketing campaigns, and plan routes for sales calls. Closed loop CRM provides a more complete picture by drawing data from multiple internal or external systems, including a company’s Web page, and using that data to continually refine best practices for virtually any customer interaction.
“Closed loop CRM is about establishing a 360-degree view of the customer, regardless of the point of interaction,” explains Kent Whitworth, CRM practice leader for Minneapolis-based Ambient Consulting. “The knowledge gained at any point of interaction can be leveraged across the enterprise.”
Integrating customer data received through a company’s Web page with traditional CRM can be especially powerful, says Matthew Meents, CEO of Reside, a Web services and interactive firm in Minneapolis. “Closed loop CRM is about growth through the Web,” he says. “It’s about more transactions, more customers, and higher average transactions, and measuring how people are tracking to your brand. It’s about sales through lead generation and increasing sales on line.”
Meents cites the results of a survey from Boston-based technology research firm Aberdeen Group that demonstrates the power of closed loop CRM. Companies that integrated CRM with their Web marketing saw a 36 percent increase year-over-year in revenues, and 26 percent of those companies saw an average increase in return on marketing during the same period.
A Twin Cities–area high-tech manufacturer enlisted Einsof, a software developer based in Plymouth, to implement a sales portal and e-mail marketing engine based on the concepts of closed loop CRM. As a result, the client attained its best revenue quarter in its 10-year history.
As Einsof CEO Kim Albee explains, the client sells its product through partners and wanted to be closer to end users. “One of the issues was that partners were working deals, and it’s hard to forecast when you don’t know the deal flow,” Albee says.
The manufacturer put together an incentive program to encourage salespeople at partner organizations to enter data about sales prospects into the manufacturer’s Web page. “The first salesperson to identify a sales opportunity got discounted pricing and got the focused resources of the company to help close the deal,” Albee says. “Other people could work on the same deal but didn’t get the focused resources or the discount.”
To qualify for the incentive, salespeople were required to use a quote generator built into the manufacturer’s site. “They could build out the quote and send it off, and it gave [our] client huge visibility on deals,” Albee says. The key to the program’s success, Albee says, is that it “provided relevance to the partners and created compelling ways for partners to increase the money they made.”
Einsof also has helped clients use CRM to maximize lead generation programs where, as Albee notes, “the problem has always been a disconnect between marketing and sales.” Traditionally, nearly 80 percent of leads are never followed up on because sales generally finds most to be poor quality, Albee says. But if a company’s marketing department can pre-qualify leads and only forward good prospects to sales, Albee says the company may see a lift as high as 50 percent in the conversion of leads.
To pre-qualify leads, companies increasingly are using what Albee calls “lead scoring,” a process that tracks a prospect’s interactions with the company—particularly its interaction through the company’s Web site—and assigns points based on each interaction. Interactions might include responding to a promotional e-mail or downloading a white paper. When a prospect has accumulated a pre-established number of points, a specific action—such as a call from a salesperson—can be triggered.
If sales determines that the person is interested but not yet ready to buy, the salesperson can enter that information into the system so that the prospect stays in what Albee calls a “lead nurturing” campaign and is not lost. This approach also helps a company avoid spending extra money to capture the same lead twice.
Lead nurturing programs also are often supported by what Albee calls “drip marketing” programs based on highly targeted e-mail campaigns. If a targeted company has five market segments, each segment would receive different e-mail messages and only those messages, which helps to ensure that customers will find the material relevant. Which segment prospects belong to often can be determined by which portions of a company’s Web site they visit or what search words they use.
Another Twin Cities–area business that has benefited from closed loop CRM is Minneapolis-based software developer Fair Isaac Corporation. The company enlisted Reside to create an online community on its Web page, which, as with Einsof’s client, provides a valuable interaction with sales prospects and feeds a lead qualification program. Another benefit was a reduction in marketing and support costs, as clients now can find answers on line that previously would have required staff resources.
“There are three things every organization should have in place to close the loop,” Meents says, “a public Web site with visitor tracking enabled, a CRM database, and an e-mail platform. The idea is that if you can get people to the site and make it relevant, people want more information, which goes into your database. The follow up is done through e-mail marketing with relevant content.”
If properly implemented, Meents says, “you can see if someone is at your site, if they’re reading your e-mail, and where they are in your sales process.” Ultimately, he says, companies can increase sales by having a more valuable engagement with prospects and shortening the sales cycle.
Establishing a 360-degree view of the customer is the goal of many CRM initiatives, Whitworth says, but he estimates that only about 20 percent of organizations that use CRM have implemented it in a manner that truly closes the loop.
Closing the loop may involve integrating CRM software with online applications or sales forecasting and help desk functions. And the customer and potential customer information the system provides is only as good as the data put into it. Sabin Ephrem, CEO of Horizontal Integration, an interactive marketing firm based in Edina, emphasizes the critical data points in a CRM database, including sales and order activity, estimates and bids, and marketing campaign details, such as which regions were targeted and which had the best returns or click-through rates. To determine profitability, he says, the CRM system should also tie into the company’s financial system.
But the biggest challenges to successful closed loop CRM may be political rather than technical. “You have to have a champion,” Ephrem says. That person, he says, could be the CEO or could be in sales, marketing, or IT.
Ephrem advises companies to appoint a gatekeeper, at least initially, to ensure that salespeople are entering all of the customer information that the company has asked for. “Salespeople view contacts as theirs,” he says. “They don’t want to share that information. That’s where most of the challenge is.”
Ensuring that activity triggers, promotional messages, and other parameters are adjusted to reflect the most current information is also critical. “CRM is a tool, not the end in and of itself,” says Michael Thyne, marketing manager for Apex IT, an Oracle systems integrator and consulting firm based in Eagan. “What it does is automate business processes, but you must have clearly defined processes and map those to the capabilities of the CRM.”
Even something as simple as an e-mail subject line can make a big difference in how customers respond to an online campaign—and companies need to track and refine their approach to those details. “You need to constantly use analysis and the data you’re collecting to improve the effectiveness of marketing campaigns and the questions you’re using to qualify prospective customers,” Thyne says. “You’re building a knowledge base, and an important aspect is to continually apply the lessons learned.”