Study: Topnotch Customer Service Yields Strong Returns
Having a high level of confidence in the corporate CRM system is a best practice that divides average companies from top performers, noted Miller Heiman spokesperson Jennifer Vodehnal. "We have found that only a quarter of organizations can say that about their CRM systems -- but when they can, their performance is three times better than a company that cannot."
There is a significant performance gap between companies that fully apply best customer service practices and those that are inconsistent in their approach, according to a new report from the Miller Heiman Research Institute.
There was a gap of 13 percent between the two groups of companies in performance metrics such as account acquisition, customer retention, account billing and revenue growth, the report found.
When best practices in selling and sales management were thrown into the mix, the performance gap increased to 25 percent.
"What we seek to do with our studies is determine what are the best practices in customer service around CRM, and then establish how these practices are allowing companies to perform," Miller Heiman spokesperson Jennifer Vodehnal told CRM Buyer.
"The results speak for themselves -- you don't really need to make a case for best practices when you are talking about a performance gap of 25 percent," she said.
Analyzing the performance gap between companies that were average versus those that excelled is the next natural step for continuing research, added Vodehnal.
A Deep Dive Into Excellence
Miller Heiman's study delves deep into the practices the top companies use. For example, a top performing company has a formalized value proposition that is very compelling to its prospects. It has aligned sales and marketing around its customers' needs. It makes a point of understanding its customers' issues before proposing a solution. It reviews the results of proposed solutions with strategic accounts.
These steps may sound simple, but it takes discipline to put them in place and then follow through in every situation, Vodehnal noted.
However, "you can see results when you apply these practices," she added.
Confidence in CRM
Instilling strong confidence in the corporate CRM system is a best practice that divided the average companies from the top performers, Vodehnal noted.
"That is one of the best practices -- that the sales management team is highly confident in the data available from the CRM system," she observed. "We have found that only a quarter of organizations can say that about their CRM systems -- but when they can, their performance is three times better than a company that cannot."
Confidence in a CRM system can be a surprisingly tricky affair: Most systems can add and report numbers accurately. Executives rarely worry that when a system is asked if one plus one equals two, the answer might be wrong.
What they do worry about, though, is whether they have entered the best queries.
"When reviewing funnel values or forecast submissions, data confidence is not a function of the calculator -- it's a question of data input," the report states.
This is not an easy question to answer -- even for "World-Class Sales Organizations" -- Miller Heiman's term for top achievers.
Technology is one of the lowest-scoring categories this group when compared with their other attributes and behaviors, yet it also is an area where the research institute has seen the greatest improvement, "which suggests that World-Class Sales Organizations are breaking through the SFA-adoption challenge and have found their path to productivity powered by technology," notes the report.
Other best practices related to CRM include establishing specific criteria to define a strategic account, and having sales compensation policies aligned with business objectives. It's also vital to make sure that in an average week, the sales force spends sufficient time with customers.
DNA for Excellence
Many of these practices are common sense, David Johnson, principal of Strategic Vision, told CRM Buyer.
The issue is one of dedication, he said.
"For companies to achieve excellence in their pursuit of quality and top customer service, it has to be part of the corporate brand's DNA," he said. "It can't just be part of a human resource manual to be read once by employees and forgotten. It has to be part of the day-to-day operations."