Gearing Up for Second-Wave CRM: 3 Principles for Building the Right Foundation

Customer relationship management (CRM) technology may be booming in terms of sales and its "shiny" new capabilities, but its business impact is less definitive. According to a late 2013 report by Econsultancy, only 28 percent of companies are satisfied with their conversion rates.

What can we glean from this? For one thing, before organizations set their sights on second-wave CRM developments such as using data from mobile and social channels to improve their customer view, they first must master the CRM basics. If companies are still finding their balance with existing CRM functionality, they may struggle to realize the full benefits of new data streams and technology.

Here are three guiding principles for making sure that your business can successfully ride — not drown in — CRM's second wave:

1. Size up your audience. As you should do with any major marketing decision, start with a thorough understanding of where your customers are and, more insightfully, where they're going. Look past what other industries or your competitors are adopting and focus on the audience you want to convert. If your customer base isn't doing business with you on smartphones and tablets, then why focus limited resources on linking mobile activity to CRM?

For example, we're not at a point yet where people are refinancing their mortgages on their smartphones while standing in line at a movie theater, so there probably isn't a strong need for launching a mobile mortgage refinancing app and uniting it with a CRM application.

2. Make goal-oriented growth plans. Once you've confirmed that a new customer-facing channel would give your current CRM solution a valuable boost, be prepared to properly integrate the requisite data. Work backwards from the desired outcome (e.g., whether it's putting a mobile strategy in place that focuses on collecting data from smartphone customers rather than both smartphone and tablet users) and decide what kind of data your business needs to make sound decisions.

Regardless of what plan you pursue, keep it simple. Build onto your CRM solution only after proving (or disproving) the value of a given data stream. For example, after sufficiently tracking customer actions in Facebook for an extended period of time, it may be wise to consider incorporating LinkedIn or Twitter data too. From here, outline the best practice for harvesting this data and merging it with information from other sources.

3. Don't sacrifice strategy for a fad. Plenty of businesses get caught up in the latest customer trends. Social and mobile CRM integration is just one of those "shiny new objects" catching executives’ eyes. Any business trying to stay competitive may believe it needs to go to great lengths to acquire the latest tool or accessory in customer management technology. The wiser route? Be picky and spend plenty of time researching whether a new program will still provide value one year, three years or fives years down the line.

Devise a strategy for how you'll manage a new CRM program and keep customer information fresh in the long term. Even more critically, know the adoption risks of any new system. Bringing a channel as massive as social media into the fold means being able to cope with its "always on" essence. Decide in advance if you have a team in place that can handle the business and legal implications of monitoring social media, or that can appropriately maintain these platforms.

In today's world, a decision as specific as whether to expand market-facing channels (and, in effect, your CRM) is one that requires buy-in from the C-suite, front and back offices.

Getting Closer to a Smarter Tomorrow
Innovations in CRM advancements mean nothing without the strategy and substance to support them. Your best efforts to bring on new social and mobile channels will fall flat if simple data management is still a minor detail.

Developing a CRM program built on what's trendy is like a fancy convertible with a busted engine — nice to look at, but still unusable. Don't let your CRM be a lemon; make sure everything works under the hood before picking out a vanity plate.

Scott Kostojohn is a director in West Monroe Partners' Customer Technology practice. Mazen Ghalayini is a director and the firm's practice lead for customer relationship management.