Applying Performance Management to CRM and Vice Versa

Analytics is a natural extension for CRM when you want to get more insight and make more informed decisions. Using business intelligence (BI) tools as part of an overall CRM solution is commonplace today. However, what about the capabilities more typically associated with performance management. I realize this is a gray area – at what point have we moved from BI to performance management – but how, for example, can strategy management applications be applied to CRM? In a couple of ways:

CRM solutions use analytics to provide executive insight into a myriad of sales performance, pipeline, and customer demographic questions
Executives, in particular, need quick and easy answers to their questions – while the user experience has improved over the years, CRM applications, in general, are plagued with a reputation for poor usability

performance management

Sales Strategies and Performance Management

An effective sales strategy doesn’t focus solely on financial performance (e.g. revenue, profitability, and margins). Long-term, steady growth requires us to:

Focus on other objectives, such as delivering sustained customer value
Establish measures of success, like account penetration, number of customers, number of references, and user adoption, etc.
Capture and reinforce – best practices, thereby raising standards across the board
Build and maintain the best sales force possible, and provide ample account coverage and proper training – both in process and product
Scorecards provide an overview of how the sales organization is doing. Particularly valuable is the ability to drill down from top-level objectives into KPIs and compare performance across a variety of dimensions, such as sales territories, industries, and products. Furthermore, side-by-side comparisons of business units and evaluating performance across a common set of KPIs by regions, industries, and products are incredibly valuable.

For example, sales organizations are often divided into regions and territories and then further grouped by industries or product groups, so we could investigate why sales might be good overall but slow in the central region. By drilling down, an executive might notice that the reason for this sales disparity is because within consumer goods, a certain product group (one that was projected to grow strongly) isn’t selling. Armed with this information, the executive can take action, perhaps sending a note to her direct reports to investigate further and recommend a course of action.

Effective sales organizations must align around common goals. They define action plans for specific programs and events at the business-unit level. Prioritization and resource allocation towards key initiatives is critical, given internal competition for limited resources and the need to focus on the most likely opportunities. The more the organization builds synergy between the respective groups that are involved in driving sales (from awareness to demand, sale, and service), the more effective they’ll be. Sales organizations are good at rewarding the behavior they want and can serve as a model for the rest of the company.

Performance management tools coupled with CRM provide a better overall solution for executives, allowing them to more easily manage the sales strategy, even within specific business units.

What Can CRM Teach Us about Better Performance Management Strategic Execution?

Effective execution of any program or function requires constant performance monitoring and reporting. Sales provides one of the best examples how this should be done across the organization to ensure optimal results:

Generally, at the beginning of a quarter, account planning transforms into detailed opportunity updates that become more and more frequent as the quarter closes.
Detailed strategic and operational reviews access the overall performance of the various product groups in a portfolio.
The sales organization also participates in detailed modelling and examines different scenarios as part of the annual review of the overall strategy. Based on that analysis, it helps define product roadmaps, new territory assignments, campaigns, and sales plays.
I’m not suggesting performance management tools replace CRM, and, of course, sales representatives will continue to use CRM. Instead, we should think about two things:

Employing performance management, CRM, and BI for more detailed analytics in a complementary fashion
Using sales as the model for more effective strategic execution in other business functions