Strategically, Business is Risk

Address the challenges that jeopardise the execution

of your business growth strategy, with frequently asked
management questions... answered!
Executive summary

Contents

All too often, Customer Relationship Management

(CRM) implementation is seen through the eyes of
the sales or customer service teams and not from
the perspective of the management team. When a
companys top managers are in fact looking at the
benefits of CRM, they are often focused on very
direct challenges aecting sales, marketing and
customer service and not necessarily on the wider
strategic issues that aect the company overall.
CRM, however, can have a major bearing on many of
the critical strategic risks which aect these teams at
a boardroom level, instead of just daily user benefits.

Executive summary
How do we keep up with technological

innovations?
How can we adjust to changing consumer

behaviour?
How can we avoid being overwhelmed by

bigger competitors?
How can we prepare to absorb organic

growth and acquisitions?

How can we position themselves for a shift

in the market?

Strategic risks are those that aect the planning

and execution of a companys strategy and can
include actions by competitors, social changes,

How can we protect against shrinking

margins?

technological developments, regulatory initiatives

and capital availability. These risks are tied to wider
developments, that impact the business as a whole
rather than individual parts or units and they are
often driven by external events and trends.
In examining strategic objectives and the role that
CRM can play, the boardroom needs to keep a
bigger picture in mind. Also, less tangible arguments
such as makes it easier for sales to do their job or
helps us to better understand our customers might
not carry as much weight with top management

How can we ensure management forecasts

are realistic?
How can we meet regulatory requirements?
Conclusion.

as details on how a CRM solution helps proof the

business against specific strategic threats, many
of which are discussed in a recent research report
by Poole College of Management and business risk
consultant Protiviti.i
i.

Executive Perspectives on Top Risks for 2013, Poole School of Management (North
Carolina State University) and Protiviti Inc, 2013

Some of the specific strategic risks company leaders

need to consider, that are related to CRM, include:
technological innovation, changes in consumer
behaviour, bigger and better resourced competitors,
dealing with organic growth and acquisitions, the
introduction of strong new competitors, shrinking
margins in tight markets, accurate management
forecasts and new data security regulations.
Today, company boards are primarily concerned
with the big, overall question How do I work
smarter? and CRM provides an answer to many
specific strategic components of that larger
question. This paper breaks down the strategic risks,
engaging company leaders into specific questions,
and looks at how CRM answers each as well as
at what elements of CRM or type of CRM solution
companies need to mitigate the risk in question.

Strategic risks
Here are some of the essential questions relating to
strategic risks that members of management teams
are likely to be battling with and more importantly,
how CRM technology can assist.

How do we keep up with

technological innovations, when
it comes to interacting with
our customers, and maintain a
competitive advantage?
Keeping up with or rather being left behind by
technological innovation remains a concern for
many senior managers, particularly when it comes
to CRM. In cases cited by the Harvard Business
Review, sales increases due to advanced CRM

technology have ranged from 10% to more than

30%.ii
The lesson is clear: a company has to update its
CRM software regularly, utilising new functions and
features. For example, developments with mobile
technology in the last few years have highlighted the
need for companies to tap into this capability, as has
software that promotes integration with new social
media. Indeed, a 2012 study by Nucleus Research
found that companies experienced an average
increase in productivity of 14.6% from implementing
mobile CRM capabilities and 11.8% from social CRM
boosting output by more than a quarter in total.iii
Where IT costs remain a concern, subscription model
and hosted solutions reduce these costs and enable
constant updates such cloud-based platforms oer
the advantage of ensuring that your company is
always on the cusp of new technology, via automatic
updates.
Plus, by utilising new communication channels in
line with customer preferences and social media
monitoring, your company can respond eectively to
some of your more vocal and influential customers
CRM allows your business to stay plugged-in to
changing customer needs, attitudes and preferences
and to take action when new issues come up.
ii.
iii.

Points to Ponder about Lead Management CRM Quotes, Masterdigm.com

Social CRM and Mobile Capabilities Boost Productivity by 26.4 Percent, Nucleus
Research Finds, Nucleusresearch.com, March 6, 2012

In the digital age, consumer

purchasing behaviour has changed
dramatically how can my company
adjust?
Consumer behaviour has changed, not just in terms
of buying online, but in the whole approach to
purchasing especially for bigger, more expensive
purchases, where research now begins on the
internet rather than with a call to a salesperson. In
other words, prospects are now using the power of
the web to build their understanding of companies
and their products or services.
Inbound marketing addresses this need eectively,
changing the model: companies harness the
power of online communications and social media,
combining them with traditional communications,
and then intelligently automating their prospect
contact to nurture leads until prospective purchasers
are ready to talk to sales and to buy.
The result is better leads, improved communication
and co-operation between sales and marketing,
delivering a stronger business intelligence
foundation, underpinned by information from
dierent parts of the organisation. Thus, the
company is much better prepared to deal with the
modern buyer an approach less about the hard sell
and more about the information and guidance the
prospective customer is seeking.

We are a small business: how do we

avoid being overwhelmed by bigger,
better resourced competitors
that can aord huge information
i.

infrastructure and CRM technology?

When it comes to CRM, any small firm can enjoy the
advantages of cutting edge technology that meets
their needs, is aordable and keeps pace with new
developments. Software as a Service (SaaS) a
subscription-based, hosted model allows virtually
any company to hold its own with the big boys,
giving it access to the features and functions they
need, without the heavy costs of ownership and
upfront investment that comes with many fullyowned, on-premise solutions.
SaaS CRM provides a solution that will meet the
needs of an SME without unnecessary investment
and payment for functionality not required by their
business, while providing easy to use tools and
security that allow the business to demonstrate to
clients that it is every bit as informed and eective in
its dealings with customers and prospects as bigger,
more deep-pocketed competitors.

How can we position ourselves to

ensure that we are geared to absorb
organic growth and acquisitions
and, if necessary, retrenchment?
The subscription-based cloud model provides
a scalability that ensures any business will not
be caught out by sudden growth, an opportune
acquisition or even a temporary decline in fortunes
and downsizing.
Scalability was identified as the second most
significant benefit of cloud-based CRM in a 2012
Maximizer survey, with close to half of the SMEs that
responded citing it as an advantage.iv For a small
iv.

Getting your Head in the Cloud, Maximizer.com, March 2013

or medium organisation in particular, being able

to scale up or down the number of users may be
critical to maintaining profitability or even increasing
it.
The quick and easy scalability of a cloud solution
enables companies to respond to growth or belttightening in their business quickly, at a minimal
additional cost the subscriber company simply
increases or decreases the number of licences it
holds on a monthly basis, so that more or fewer
people can tap into its CRM platform via the cloud.
The ability to scale up and down, with few lingering
costs if things do not work out, gives a company the
flexibility to risk ramping up operations and respond
to opportunities in the marketplace when they arise.
This is especially crucial for SMEs, playing to what
is sometimes their main advantage against larger
more cumbersome competitors: agility!

How do we make sure we are

positioned for a shift in the market,
such as the introduction of a
powerful new competitor?
In todays business environment, information and
power in the marketplace remain inextricably linked,
so a robust CRM platform is essential for a company
to weather the entry of a strong rival. Knowing your
market, your customers and even your own business
better than a hopeful new entrant is fundamental to
maintaining a competitive edge and market share.
A powerful new entrant may also have CRM, but they
wont have your historical data and relationships
the key is to make full use of these and leverage

them to maintain your position. It is not just

having CRM that is important, but what you put
into it and what you take out of it leverage the
data to better understand, target and service your
existing customers. That is how to keep ahead of an
ambitious entrant to your marketplace.

Tight competition has forced us to

shrink margins how do we protect
and grow these?
A key way to boost margins is to increase
productivity and CRM can play a central role in doing
that, having a wide-ranging impact across all the
customer-facing teams within your organisation.
Immediate access to customer data for all
employees, the overall streamlining of operations
and the comprehensive view of the business, that
the management team can acquire using CRM, are
critical for companies aiming to raise productivity
and, in turn, profitability.
A comprehensive CRM system enables businesses
to ensure that their existing customers are satisfied,
while freeing up more time for sales and marketing
personnel to spend upselling and cross-selling to
these happy clients, while all the time attracting
new prospects. Research from Marketing Metrics
indicates that the probability of selling to an existing
customer is 60-70% compared to 5-20% for a new
prospect. v
Maintaining customer loyalty has a big impact
on profitability: figures from global management
consultancy Bain and Company show that a
5% increase in customer retention can boost
profitability by up to 100%.vi
v.
vi.

James Digby, 50 Facts about Customer Experience, ReturnOnBehaviour.com, October

26, 2010
Frederick Reichheld, The Loyalty Eect: The Hidden Force Behind Growth, Profits and
Lasting Value, 1996

How can we ensure our

management forecasts are more in
line with reality and better placed
to ensure appropriate future
investment in the business?
First of all, management has a better, more
complete and up-to-date view of what is going on
with customers and with the various departments
when it is using CRM technology. This means
that strategic decision-making is based on quality
information, most of which is available through realtime reporting across the business.
Sales pipeline, customer value, customer churn,
team activities, the eect of integrated activities
such as marketing, impact of changes to business
processes and other key performance indicators
within the business are all more visible and better
understood. Management can generate specific
reports, with metrics for analysis and strategic
planning, studying previous campaigns and adapting
them.

How can we ensure we meet

our regulatory requirements with
regards to data security?
Financial and transactional data is often the
primary concern of a company when it comes to
data protection, but consumer data protection
is increasingly becoming the focus of regulators
and companies need to be ready to demonstrate
their soundness in this area. Privacy, consent and
compliance are all issues that companies need to
be aware of as European Union (EU) data directives

become regulations.
Every company has to be a data controller and its
eective stewardship of the data is essential, should
an issue arise with regulatory authorities. Having
customer data properly organised, managed and
secured, with permissions and protocols for its use
firmly in place is vital to ensuring security within any
organisation and an up-to-date, comprehensive,
centralised CRM database is an indispensable tool
for this. CRM enables companies to maintain, clean
and update customer data, Do Not Solicit (DNS)
scripts and preferences to ensure compliance.
While many large companies have the necessary onpremise security infrastructure to ensure that their
systems, including their CRM, are constantly updated
and adhere to any changes in data regulations
not to mention internal personnel charged with
overseeing data compliance and protection others
are not as thoroughly covered.
For most companies that dont have the resources
to meet the growing regulatory requirements with
respect to customer data, particularly SMEs, a
cloud CRM and data storage solution ensures that
data security and data protection meet regulatory
standards. Any major vendor in this area must
meet these requirements and in many cases, they

exceed them by keeping abreast of changes and

new regulatory developments. The result is that the
companies using them are protected, as are their
customers.

Conclusion
Clearly, CRM can play a big role in a companys
eorts to protect itself against strategic risks
particularly where customer-facing elements of
the business are concerned and boardrooms
need to understand the salient factors at work.
Companies dont just need a CRM with pipeline and
case management, but a CRM solution that oers
real-time reporting and dashboards for a view of the
big-picture risks.

Next steps
Hopefully the Q&A within this guide has provided
an insight into how senior management can also
gain from the functionality and business intelligence
available from a CRM solution.
If you would like to know more about realtime reporting and dashboards measuring key
performance indicators, why not try Maximizer
CRM for FREE. Or if youd like to discuss your
requirements, call our friendly team of CRM experts
on +44 (0)845 555 99 55 or email info@max.co.uk.

Management teams indeed seem to be taking note

of the value of CRM. Gartner figures show that the
worldwide CRM market grew by 13.7% in 2013 to
$20.4 billion, with 41% of all systems sold being
SaaS-based. Western Europe was the fastest growing
market, with a 15.2% increase in spending on CRM

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last year.vii

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And as this paper shows, CRM is an essential and

growing means of managing and utilising customer
information. For many firms, especially SMEs, SaaS
CRM is the best way to ensure that strategic risks,
such as compliance with beefed up regulations,
competition from bigger, better-resourced firms and
sudden growth or retrenchment, are minimised.
Overall, the management teams of both SMEs and
larger companies need to look at what their biggest
strategic risks are and which CRM implementation
and functions would serve their business best in
tackling the strategic risks that could impact the
profitability of your business.
vii.

Louis Columbus, Gartner CRM Market Share Update, Forbes, May 5, 2014

About Maximizer Software

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Easily configurable for organisations in any industry, Maximizer CRM optimises sales processes, enhances
marketing initiatives and improves customer service to ultimately boost productivity and revenue.
With headquarters in Canada and oces and business partners worldwide, Maximizer Software has sold over
one million licences to more than 120,000 customers since 1987.

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