EXECUTIVE SUMMARY
When a customer
relationship management (CRM) strategy
is integrated with a firm’s overall
strategic plan, it helps the firm perceive and
respond to business and economic trends.
CRM strategy starts with
an understanding of a firm’s
clients that is derived by collecting client
data and converting data to usable
intelligence about your clients, their
industries and the markets you have the
potential to serve.
A successful CRM strategy
requires a supportive
organizational infrastructure, a
client-centric culture and formalized business
processes. CRM implementation must be marketed
internally to ensure that all functional
personnel use and regularly update client
information.
The CRM strategy supports
the overall business objective by
building and leveraging client relationships
for a sustained competitive advantage.
A CRM initiative that is
supported from the top and has
implementation champions with power in the
trenches will result in improved revenue and
profitability and move your firm toward its
strategic vision.
Walfried M. Lassar , Ph.D.,
is Ryder Professor and chair, Marketing
Department, Sharon S. Lassar
, CPA, Ph.D., is director, School
of Accounting, and Nancy A. Rauseo
, Ph.D., is a marketing instructor,
all at Florida International University in
Miami. Please send comments to
lassarw@fiu.edu .
C
PA firms are witnessing firm-changing trends
like consolidation, globalization and
outsourcing, staff shortages, and the explosion
of niche practices that are contributing to the
need for effective customer relationship
management (CRM) systems. CRM is not simply a
software application for tracking client data
and activities. It is a strategic tool firms can
use to leverage proprietary information to
identify cross-selling opportunities, new
prospects, and potential conflicts of interest
or independence issues. By developing a deeper
understanding of your clients—their industries,
markets and relationships—through CRM, your firm
can gain a sustainable competitive advantage in
challenging times. This article
explains how a successful CRM approach builds on a
strategic vision that integrates people and
processes with technology to maximize a firm’s
investment. When companies design their business
processes to accomplish their strategic goals, and
identify how and where CRM technology will be used
to add value to the practice, employee buy-in is
more likely and CRM is viewed as more than just
another administrative task or software
application.
WHAT IS CRM?
CRM gained recognition in the mid-1990s as
an information technology tool used to collect and
share client information. However, success in
implementing CRM seemed to elude companies that
employed it solely for those purposes. According
to many CRM researchers, the main reason companies
failed to implement CRM was their inability to
develop and effectively implement a strategy for
relating to clients. A CRM initiative must provide
a firm with the decision-support tools needed to
be strategic—whether in identifying new clients,
more profitable existing clients, or new services.
Strategic CRM looks at what client
information means and how it can be useful for
developing a better business. It requires a
customer-focused culture that promotes customer
satisfaction, the sharing of customer information
and its conversion into useful knowledge.
Organizational Paradigm Shift
Studies show that successful CRM
improves both revenue and profitability. A
study of senior managers in 342 U.S. firms
found that organizational structure,
supplemented with incentives and
accountability, was the most important element
to achieving strong performance (“Creating a
Superior Customer-Relating Capability,”
MIT Sloan Management Review ,
Spring 2003, page 77) followed by an
organizational culture that is focused on
developing and sustaining customer
relationships. Another study showed
that effective CRM processes resulted in firms
developing and maintaining customer
relationships that improved performance (“The
Customer Relationship Management Process: Its
Measurement and Impact on Performance,”
Journal of Marketing Research ,
Aug. 2004, page 293). The CRM technology
itself did not affect performance. These
empirical results suggest a firm should start
with a strategic understanding of what CRM
should do for the firm and then integrate the
initiative with the firm’s organizational
infrastructure.
CRM IS STRATEGY, NOT JUST DATA
A key goal of CRM is to develop a view of
the client from all angles or areas of the
company. This means continually learning about
your clients. Data obtained from each client
interaction must be electronically stored so it
can be shared among employees within your firm.
This can be a challenge when there are high
numbers of clients or industries, the business is
seasonal, and/or many employees access the same
records. Before considering CRM technology,
accounting firms should identify the client
information they need and how it will be used to
manage customer-related activities. The
simplest form of client data is contact data. This
includes full names and addresses, as well as each
person’s position and role in the decision-making
process within the client’s business, such as
buyer, influencer, approver or gatekeeper. Contact
data may prove important as clients’ employees
advance in their careers and their influence over
company decisions increases. Knowledge of clients’
employees will help embed trust in the
relationship and give firms the ability to
anticipate client concerns, needs and preferences,
even when there is personnel turnover at the
accounting firm. Demographic data describe
the characteristics and attributes of each client,
such as industry, form of entity, fiscal year-end,
geographic dispersion of client offices,
regulatory requirements, size, operating styles,
propensity to switch, and the client’s value to
the firm. This data can be used to develop client
profiles and benchmark them against industry
trends as well as profitability targets within the
firm. Jennifer DenOuden, marketing
director for Beene Garter LLP, an accounting firm
in Grand Rapids, Mich., and a member firm in Moore
Stephens North America, says demographic data
helped her firm identify market opportunities.
“The analysis of demographics for our client base
in the health care industry compared to the
overall demographic census for the industry
identified a service gap for us in the Eastern
Michigan market,” she said. “We were able to
identify prospects in a geographic area that we
had not previously considered.”
Transactional data focus on historical events
and describe the relationship with the client.
This information includes client activity outcomes
such as how and through what areas/departments
your firm interacted with the client, what
services the client has purchased, and which sales
pitches did not result in client engagements. It
also includes the client’s payment history and the
value of the overall account, and information on
how frequently the client contacts your company
for services and their latest engagement. Properly
processing these transactions will help
effectively manage the client relationship. This
type of behavioral data will help you understand
your clients’ personalities, preferences, needs,
motivations and expectations. Finally,
your firm must collect relationship data.
Relationship data identifies interdependencies and
potential conflict issues. A critical source of
client intelligence is what you know about the
relationships in your firm’s network. Relationship
intelligence is an asset that generates ongoing
sources of referrals and leads. Analyzing
and interpreting client demographic data can help
you uncover relationships among stakeholders,
proposal histories, or new business referrals that
can be helpful for developing fact-based
strategies to gain a competitive advantage over
other accounting firms. Distributing this
intelligence throughout your firm will improve
decision making regarding potential markets,
clients to pursue, and services to promote.
Relationship mapping enhances the firm’s ability
to uncover business opportunities and best
referral paths. Identifying a client’s banker,
lawyer, board members, or any other relationship
in the client’s network can lead to cross-selling
opportunities as well as cross-ownership of
entities and potential conflicts of interest.
Firms frequently and mistakenly equate customer
data, or objective facts about events, business or
people, with client intelligence. Client
intelligence is the compilation of data,
information and knowledge about a client.
Developing client intelligence begins with a
general assessment of your current firm-client
situation and is based on a collaborative and
cross-functional team effort. Your assessment team
should be able to answer these questions:
What do we currently know
about our client(s)?
What don’t we currently know
about our client(s)?
What do we think we need to
know about our client(s)? Client
intelligence is the core of successful CRM
implementation with its foundation—client
data—being one of the biggest challenges for CRM
success. “Client information is only as good as
the integrity of the underlying data,” says
Hortensia Sampedro Hacker, director of marketing
at Morrison, Brown, Argiz & Farra LLP, a large
regional accounting firm based in Miami.
“Attention needs to be paid to the input in order
for users to trust the client intelligence.”
To overcome the client intelligence barrier,
some firms have found privilege controls and peer
pressure are effective tools for encouraging users
to collect and record client data. A privilege
control might include establishing billing codes
only upon updated CRM entry of all contact and
lead information. Peer influences can be exerted
through management meetings in which discussions
on continuing engagements and leads are restricted
to those clients or prospects for whom data have
been updated. Managers may be more likely to
comply with firm standards and processes when
noncompliance is revealed to colleagues.
CRM information can create value only when
client databases are current. The process of
ensuring that new client information is updated
immediately in the CRM database is particularly
challenging in busy season. One solution may be
the adaptation of best practice in other
industries—sharing of certain files and asking
clients to update their own records. Firms should
collect only useful information. Track the level
of use for each data field and evaluate the
relevance of what information is collected. Audit
subsets of the files each year and consider
purging inactive records. CRM visionary
Martha Rogers of the Peppers and Rogers Group once
said in an interview: “ The real competitive
advantage now is using the information we have
about each customer to build customer value by
changing our own behavior to deliver value to
that customer .” Client intelligence is a
critical part of successful CRM implementation.
The integration of people and business processes,
with an organizational and strategic commitment to
customer relationships, makes it possible to
devote the right services (including money and
time) to the right customers.
HOW CRM CAN CHANGE PROCESSES
Most CRM applications require firms to be
process-oriented. In other words, firms need to
see their business in terms of documented and
customer-focused work processes, organize tasks
around processes rather than job functions,
structure teams around these processes, and
measure process performance. Process orientation
enables automated workflow and tracking features
that make CRM more effective. It is at this point
in a CRM initiative that many firms realize that
they don’t have the well-defined processes needed
to implement CRM technology. Firms are at
different levels of formalizing their business
processes. Differences in process orientation may
even exist among a firm’s various services and
functions. For example, variations in process
orientation often exist in sales functions.
Veteran partners with established books of
business and practices may resist process change
and standardization, but other firm members may
benefit from a standardized set of processes for
lead generation, proposal development and
engagement commitment. A firm, therefore, can have
formal processes in place for sales but adapt
these for veteran rainmakers. Flexible processes
with specific requirements are crucial because
they allow executives to perform using processes
that have worked for them in the past and help
newcomers get up to speed faster.
Formalizing the sales process helps manage
client relationships, revenue goals and staff
scheduling. A relationship manager can be assigned
to each prospect, and each stage of the sales
process should be recorded. A record of a signed
commitment can be integrated with staff
scheduling. Longer-term revenues can be predicted
with information on prospects, the stage of the
sales process for each and win ratios (the ratio
of signed engagements to total proposals).
Variations in win ratios can be investigated to
determine whether pricing, expertise or breadth of
service resulted in closing or losing deals.
Relationship managers can be debriefed to identify
additional information or processes the firm
should capture with its CRM system. A key
challenge in implementing CRM technology is
end-user adoption. Companies that have
successfully implemented CRM encourage end-user
adoption by designing their business processes
first ; then they identify how and
where the technology will be used to
facilitate the redesigned, value-added business
processes. This allows the company to train
employees on process rather than technology
, so they understand their specific roles in
the redesigned process. The business processes are
what create value. CRM technology enables the
delivery of the business process.
INTEGRATE CRM WITH YOUR FIRM'S PEOPLE AND
PROCESSES
Strategic CRM creates client intelligence
and aligns business processes. Successful CRM
implementation, however, requires the commitment
of the firm’s partners and executive staff to CRM
and client-focused leadership. Successful CRM
needs:
Purse strings or financial support
. Leaders must be willing to invest
in technology and hire or reallocate personnel to
implement the CRM strategy.
Passion . Leaders must
display a high level of advocacy and enthusiasm
for CRM. How excited do they get when they talk
about CRM? Leaders must be heavily involved in the
design of the CRM vision and strategies.
Practice . Leaders need to
be involved in the CRM implementation process.
Firm employees will adopt CRM when they see
partners’ commitment. This means using the system:
entering information and sharing knowledge.
Patience . Leaders cannot
expect CRM to be built in a day. It takes time,
practice and learning.
Persistence . Leaders must
stay focused on CRM every day and keep CRM
processes current, regardless of how busy the
season. Jessica Levin, manager of
communications and member services for Moore
Stephens North America (MSNA), says even the best
leaders lose enthusiasm for CRM when limited
resources are spread thin. “For a firm to be
successful, resources are required such as a
database that consolidates all existing pockets of
information and makes it available for everyone in
the organization,” she says. “Dedicated resources
should include a CRM manager. Whether it’s a
full-time or part-time employee, or an intern, at
least one individual needs to be assigned to focus
on the project and become intimately involved with
the data.” A CRM manager is critical to
the program’s success, Levin says. “This person
needs management’s support so that when data is
requested from partners, everyone understands this
is a firm priority.” Clearly, an
organizational infrastructure is needed to
maximize the return on your CRM investment.
Implementation should be managed carefully with
clearly defined, step-by-step deliverables and
objectives that encourage employees to collaborate
in building and using the client intelligence
gained through CRM. Some firms develop an
internal marketing campaign to “sell” CRM within
the firm. Start by identifying and understanding
the needs of those you need buy-in from (such as
management, IT staff, different users or
departments). Then determine how each group can
potentially benefit from CRM, both
organizationally and personally, and identify
people who can influence users. Finally, develop
incentive programs to motivate use of CRM-related
processes. DenOuden of Beene Garter
designed an internal campaign to clean client data
in the firm’s CRM system. “Teams were assigned
‘homework’ on client records and the software
tracked who entered updates,” she said. “The
contest mirrored components of the Olympics and
was called ‘Go for the Gold’ to tie into the
software name, GoldMine. At the closing ceremony,
the best-performing teams received ‘gold’ medals
and gift cards.” The success was remarkable; the
database was cleaned relatively quickly. More
importantly, users’ attitudes toward the system
changed from anxiety associated with entering
data, to familiarity with CRM that spawned
adoption and continuous use. To achieve
success with your CRM initiative, communicate the
goals to everyone involved and keep them up to
date about the initiative plans, who’s affected,
and when and how changes will occur. Ongoing
training can facilitate communication.
Some firms use weekly workshops to help
employees become comfortable with the CRM
initiative. At Beene Garter, employees are trained
during the summer on new standards, such as
developing and using new client data that will be
crucial for entering a new niche market.
“Employees are trained [to recognize] why each new
piece of client information is important and how
it will be used to pursue new business
opportunities,” DenOuden says. “As clients or
industries change, so does terminology and
business practices.” The firm provides periodic
“refresher” training sessions so that new data
needs or terms can be described and shared.
CONCLUSION— THE CRM PAYBACK
CRM starts with a business strategy,
develops a 360-degree understanding of the client,
and enables effective and efficient business
processes integrating people and technology,
continual learning and dynamic application of
customer intelligence to further the business.
Overcoming the challenges in successfully adopting
CRM begins with embracing CRM as a prerequisite
for realizing your firm’s vision, not just as a
technology solution. “At the end of the day, it
does not matter how sophisticated your tools are
to collect the necessary information,” notes
MSNA’s Levin. “It all starts with buy-in from firm
leadership. If you don’t get its ongoing support
to use CRM as a means for opportunities and
continued growth, a firm will lose its competitive
advantage regardless of how sophisticated its
technology is.”
Is CRM Worthwhile? Research in
other industries suggests a payback of up to
400% over the full life cycle of a carefully
planned and consistently implemented CRM
initiative (“CRM Systems: Necessary but not
sufficient. REAP the benefits of customer
management,” Journal of Database Marketing
, March 2002, page 267). Changes in the
accounting marketplace may make it necessary
to develop CRM strategies to face
sophisticated consolidated competitors, to
stay close to clients in the face of
outsourcing and employee turnover, and to
develop new cross-selling or niche service
offerings to grow the firm. The exercise of
developing CRM strategies and processes for
externally understanding the market and
internally structuring the business workflow
will contribute to your firm’s success.
Assess Your Customer Relationship
Management Readiness
4 = This statement is
Very Descriptive of our
firm environment
3 = This statement is
Largely Descriptive of our
firm environment
2 = This statement is
Partially Descriptive of
our firm environment
1 = This statement is
Not at All Descriptive of
our firm environment
Strategy and Organizational
Alignment |
1. My company has a clear
view of the customers it wishes to
serve and not serve. |
1 2 3 4 |
2. My company works together in
cross-functional teams to better serve
our customers. | 1
2 3 4 |
Customer Intelligence
| 3. We
can differentiate our customers based
on their value to our company.
| 1 2 3 4
| 4. My company is
clear on what we know and don’t know
about our customers. |
1 2 3 4 |
Processes
| 5. My
company has business processes in
place to provide relevant, accurate
and up-to-date customer data and
information to all appropriate staff.
| 1 2 3 4
| 6. Process
outcomes are formally measured and
communicated regularly. |
1 2 3 4 |
Technology
| 7. My
company has eliminated duplicate
systems entry and re-key of customer
data. | 1 2 3 4
| 8. My company
has the technical competence to
assimilate the information needed for
our CRM strategies. |
1 2 3 4 |
Metrics
| 9.
Customer-centric performance measures
are used to gauge employee performance
and compensation. |
1 2 3 4 |
10. Accountability and
responsibility for tracking key
customer metrics are clear and
well-known by all employees. |
1 2 3 4 |
Your Firm’s Readiness Score
|
| If your
score is below 32 points or if you are
interested in learning more about your firm’s
CRM capabilities, we suggest you fill out the
complete online questionnaire, and we will
provide you with an analysis that benchmarks
your firm against others in the accounting
industry. The complete questionnaire can be
found at http://rydercenter.fiu.edu/survey/crm/accountingcrm.htm
. |