Customer relationship management - CRM - has been widely prescribed as an antidote for diminishing market share and sluggish growth. What CRM is, though, remains a mystery for most community banks.
The most common perception is that CRM is a piece of technology for mining customer data. It does use the perceptive abilities of information technology to identify customers whose personal and business needs make them a potential source of profitable business, but that is only a part of the story.
In the fullest sense, CRM is a holistic concept that affects everything about a financial institution - technology, business processes, customer base, market, and people. It encompasses the totality of how financial institutions approach their business and their interactions with customers, not just a piece of new technology or a one-time initiative to improve service or sales.
Even though a true CRM strategy eludes many community financial institutions, it can be achieved if you break it down into a series of incremental steps.
Developing an Individualized CRM Strategy
Each community bank has a unique set of circumstances that puts it somewhere along the CRM continuum. In other words, few banks have to start completely from scratch.
An initial review will tell you where you stand and how much additional effort will be involved in developing a CRM strategy. The initial review looks both inside and outside the institution for clues about your market opportunities, organizational strengths and weaknesses, business processes, technology, and human resources.
Market opportunities. Subjective and anecdotal information collected through focus groups, combined with objective customer, competitor, and demographic data, provide a balanced perspective on the market expansion and customer retention opportunities in the bank's communities.
Organization and business processes. Internal action teams quickly hone in on the sources of waste, redundancy, administrative burdens, and other faults in the bank's organization and internal procedures. Organizational and administrative strengths can also be identified and preserved.
Technology status. A technology effectiveness review looks at the institution's present computer systems, software programs, and interfaces to determine whether they will support a CRM business strategy, whether the technologies are being used optimally, and whether unused capacity is available.
Human resources. The skills and attitude of the bank's people are instrumental in a CRM strategy. HR issues that come into play include training and hiring the right people, redirecting those who resist change, meaningful incentives and rewards to support sales efforts, and effective referral mechanisms.
Implementing Appropriate Technology
Technology is not the sum total of a CRM strategy, but it is a core component. The bank's operating system must be capable of supporting new types of product structures and fee arrangements. In addition, the telecommunications infrastructure must be able to support a variety of customer touchpoints, including electronic and telephone communications.
Through technology action planning, banks are bringing more rationality to their technology acquisitions, and through smart vendor selection strategies, they are saving money and making better decisions about technology partners.
A telecommunications review finds flaws in a bank's lines of communication with customers, such as systems that overlap or are incompatible or too expensive. Inadequate and costly communications channels, including poorly designed Web sites or busy phone signals, impede banks' efforts to attract and retain customers.
Building Sales Management Systems and Developing Sales Skills
A community bank's transformation to a sales organization starts by teaching the executive, branch, and line managers how to manage, track, and motivate sales.
Sales management training introduces bankers to the "attitude" and tools of selling - how to prospect, plan a sales call, orchestrate a solution, and close a deal - and the elements of effective sales management. The most effective sales management programs blend training techniques with on-the-job behavior modifications, new techniques and procedures, and self-evaluation.
Ideally, you should start with a blank piece of paper and hammer out specific sales goals and marketing plans for each manager as part of the sales management training process.
The other element of sales training - for customer-contact staff - is distinct from sales management training. Trainees should learn and be able to practice their roles in selling the institution's products and services, including listening, probing for customer needs, handling objections and complaints effectively, cross-selling, and making referrals.
Matching Products and Prices to Your Market
An integral part of a CRM strategy is using your institution's product structure to court high-value customers, increase noninterest income, and reflect the true cost of providing financial services.
A product audit is an excellent tool for measuring your current products and services against market demand and price sensitivity. Employing such tools as product benchmarking, price analysis, delivery channel evaluation, market penetration analysis, and profitability measurements, you can determine the product lines that will best meet your customers' current and future needs.
Optimizing Branch Performance
A bank's branch offices are where CRM actually meets the customers. Through the branches, products are sold, relationships are courted, and customers come to think of the bank as their primary financial services provider. The branches of a bank, though, are not identical entities. Each branch has its own micromarket, demographics, and transactional history.
Through branch optimization, banks can measure the market opportunity and financial performance of each branch. Transactional and competitive mapping allows you to understand how a particular branch's customers prefer to do business. With that information, you can facilitate customer interactions by enhancing selected delivery channels.
The branch optimization process allows you to base your business decisions on an objective assessment of the unique potential of each branch within its own market.
For a community bank to succeed in adopting a CRM philosophy, bank management must first understand CRM as a holistic concept that involves multiple, interlocking disciplines. With seasoned guidance and a good project plan - and by proceeding one step at a time - a community bank can redirect its resources toward a better understanding of its market and a more complete and profitable response to its customers' needs.
