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By Bob Thompson, President, Front Line Solutions
Now is the time to examine your customer and partner relationships and focus on getting the best returns possible.
You know the economy is tough; just read the newspapers and magazines. But complaining about the economy is like whining about the weather. Unless you're planning to stay indoors, you'd better figure out how to deal with it. After all, it's the same situation for everyone and real leaders weather the economic storms that blow in from time to time.
In the IT industry, I feel there's been more talk than action about using Customer and Partner Relationship Management—CRM and PRM. For those who need a quick refresher on these buzzwords, CRM is a business strategy to get, grow, and keep the right customer relationships, for maximum long-term profitability. PRM is a derivative of CRM, focused on channel and strategic alliance partners, the intermediaries and influencers in supplier/customer relationships.
CRM and PRM are often associated with software solutions. Companies like Siebel Systems, PeopleSoft, Oracle, and Pivotal are big in CRM circles, while newer outfits like Channelwave, InfoNow, and Comergent focus on partner and channel relationships. The danger: Expecting the installation of software packages to actually result in effective CRM and PRM.
Think of CRM and PRM as never-ending journeys in search of loyal and profitable relationships. You'll never complete the journey, but you need to keep moving forward or your competitors will pass you by. The technology provides the transportation to get there faster, however without someone at the wheel, the CRM/PRM bus is going nowhere fast. Successful CRM/PRM projects are driven from top management, supported by the organization and key stakeholders, and enabled, not driven, by technology.
When times are good, it makes sense to focus on new customers and partners. Yet didn't we all acquire some just because they could "fog a mirror" and had some money to spend? The current slowdown offers an excellent opportunity to evaluate the quality of these relationships and focus on those that offer the best return. By focusing your resources, it should mean that your customers and partners get better value from you, which can translate into more loyalty and profits.
Don't we need expensive software to do all that? Maybe, maybe not. I'll bet your company is already loaded with software you're not using. And you've probably been so busy chasing new accounts that no one had time to analyze the base of customers and partners you've acquired. Take the time now. You'll almost certainly find that the Pareto Principle (80/20 rule) applies here—80% of your profits come from 20% of your relationships. You could also discover that some relationships are unprofitable when you factor in ongoing expenses (sales, service, and management time).
Armed with this insight, take action! Visit your "A" list customers and partners to understand their business issues and how you can help them. Remember that good relationships are built on listening and delivering value, so use this as a relationship-building opportunity, not a sales call. What value do they need to be successful in their business? Are you one of their strategic suppliers? If not, why not? Don't forget to use the latest technology—a telephone to schedule the call and a credit card to pick up the tab at lunch.
For less valuable relationships, you'll need to decide what strategy to take. Some relationships need nurturing to develop into something bigger long-term. Others need to be moved to lower-cost support mechanisms to keep them in the black. And still others may need to be terminated, tactfully of course. If you find this process difficult, consider the fate of dot-coms who discovered you really can't lose money on every sale and make it up on volume.
The great land grab may be over, but opportunities await those who can prosper in leaner times. Dataquest recently predicted that worldwide IT spending would double to $1.4 Trillion per year by 2005. If you want to be around to capture a chunk of that bounty, use CRM and PRM to do a better job managing the relationships you already have.
Front Line Solutions is a Silicon Valley-based independent consulting firm specializing in Partner Relationship Management (PRM). As the industry's leading consultant and evangelist for PRM, Bob Thompson is frequently quoted in industry publications, speaks regularly at industry conferences worldwide, and writes extensively for channel- and CRM-related publications. Bob is the founder of CRMGuru.com, the largest and fastest-growing interactive CRM web site in the world, with over 40,000 members worldwide. For more information, please visit www.frontlinehq.com or www.crmguru.com.
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