Part one in a three-part series on building effective customer relationship management.

At its core, customer relationship management (CRM) is a very simple yet powerful concept: If a financial institution organizes its business around customer needs and creates stronger relationships, it can increase customer loyalty and retention while optimizing its profitability and revenue. If CRM is so simple, why is it so difficult to execute? And why are results so elusive?

Financial institutions clearly understand that a dynamic CRM program can generate growth and increase the lifetime value of their customers. However, the transformation from being a product-focused organization to achieving success as a customer-centric one has yet to prove fruitful for many organizations.

If CRM initiatives are failing, the reason is usually quite plain—the program hasn’t been aligned with the institution’s business objectives.

In the rush to adopt CRM, many institutions have missed this crucial aspect of the equation. They’ve mistakenly viewed CRM as another technology solution. As such, they’ve built labyrinths of technologies based on the potential of CRM but not on its relevance to any direct business goals, and they’ve invested greatly, often without seeing much of a return.

CRM is not a suite of software products, nor is it merely technology implementation, although it often requires both. CRM is first and foremost a business strategy.

Keeping objectives in front of solutions
Every institution, whether just beginning its CRM journey or well on the road to implementation, should clearly define or review its overall corporate goals. Whatever the organization identifies as its main objectives—from improving profitability to increasing market share—must become the ultimate drivers behind any CRM initiative.

Keep in mind that CRM can mean different things to different organizations. That’s as it should be since CRM is defined by an institution’s particular corporate objectives. It’s also why there can be no one-size-fits-all CRM program.

Corporate objectives are also what determine an institution’s strategy for growth, the very purpose for adopting CRM in the first place. In fact, an institution’s “growth stack” consists of an entire lineup of factors that must all be identified and addressed before CRM solutions should even be considered.

Growth Stack: Creating a strategic compass for CRM
A growth stack gives an organization a clear picture of its strategic priorities. When every aspect is in alignment, an institution can more readily identify improvement opportunities and better realize performance results. That includes CRM.

Topping an institution’s growth stack is its corporate DNA. As a series of value, vision, and mission statements, it captures who the institution is and defines its purpose. Following this kind of cultural profile are corporate objectives. These goals clearly identify what the institution seeks to achieve.

A customer growth strategy is next in the operational arrangement. It specifies ways in which an institution will target growth (i.e., retain existing customers, acquire new ones, expand services, etc.).

An organization’s enablers make up the next level in the stack. These consist of people, processes, and technology, and they must be aligned to support opportunities as defined by the growth strategy and corporate objectives.

Only after the above components are established should business solutions, including CRM, come into play. These solutions will emerge with a clear purpose financial institutions need and be further supported by sensible infrastructure choices, the final level in an organization’s growth stack.

Turning it around
As mentioned, it’s not unusual to find that an organization has implemented CRM as a package of software starting with its infrastructure, the very bottom of a growth stack. It’s also not an irreversible misstep. Financial institutions can begin to reap the benefits of their CRM investments by reexamining and understanding their growth stack. From there, they can maintain a consensus on their strategic direction to develop a clear and tangible roadmap for more effective CRM solutions.