7 Truths of CRM in Manufacturing

Tagging onto the previous blog post by our CEO called “A Really Bad CRM Design and Two Good Ones,” I wanted to continue our thought leadership series concerning CRM Optimization and CRM Best Practices.

As I pondered what comprised a good CRM design vs. a bad one, I started thinking about how ERP systems typically provide bad CRM functionality because the CRM capabilities are so limited. I thought about how this affects the organizations that rely on ERP systems for customer relationship management. This led me to think about manufacturing, and I realized there are 7 basic truths for today’s manufacturers when it comes to CRM.

Let’s start with a critical fact: Timing, precision and accuracy reign supreme in the manufacturing world. 

From the dawn of the industrial age and the birth of using predefined processes to create and deliver products, manufacturers have worked tirelessly to make their processes highly efficient and extremely accurate. In the digital age, the majority of investments by manufacturing and distribution firms targeted more advanced manufacturing, warehousing, and financial systems. These investments focused on reducing costs by improving efficiency and reducing waste to increase profitability and fuel growth. In tandem, many of these organizations invested significant resources to define and apply quality measures like Six Sigma and ISO-9002 to the various processes involved with engineering and delivering quality products to their customers.

IMAGE 1: Woman Filling Customer Order in Warehouse Using Mobile Device

IMAGE 1: Woman Filling Customer Order in Warehouse Using Mobile Device

Unfortunately, manufacturers have invested far less time and resources to optimize their demand generation and forecasting processes. Today, both are critical to enable the organization deliver an exceptional customer experience throughout the entire customer lifecycle.

Truth #1: Few, if any, ERP systems are designed to deliver end-to-end customer experiences in a flexible, adaptable, user-friendly way. This is why CRM systems exist and continue to flourish.

With pressure on prices and profits from global competition, new products, rising material and labor costs, and several other factors, manufacturers must improve their ability to predict future events, revenues, and profit more accurately. To be competitive, manufacturers now must assist their potential customers throughout the buyer journey to develop trust and cultivate a strong relationship before the zero moment of truth arrives. The zero moment of truth is that critical moment when the customer decides what to purchase and where to buy it.

Truth #2: Availability of technology and access to information has forever changed the market. It has changed the way customers shop and how they buy. It has changed what people expect from our organizations if we are to “earn their business” and “keep their business.”

Customers have always possessed the ultimate power in the relationship because they make the purchase decision. Today, however, the amount of information customers can instantly access gives them even more leverage throughout the entire customer lifecycle. Your competitor is only one mouse click away, and your customer knows it. This has changed the way organizations must deliver value to their customers. It has also changed the expectations of customers regarding the value they obtain from you and the timing of when they expect to receive it.

Compared to other types of businesses, manufacturers generally enjoy longer-term relationships with their customers. For manufacturing, distribution, and logistics companies, the bulk of a customer’s lifetime revenue is not earned from a one-time sale. Instead, it is accumulated from multiple transactions that occur over a span of years and perhaps even decades.

Truth #3: Manufacturers rely on process efficiency, quality, customer loyalty, and long-term customer relationships to survive.

Given this, it is easy to understand why satisfying existing customers is a high priority that takes precedence over nearly every other activity. It takes years to build the level of trust that serves as the basis of a solid business relationship. Today, unfortunately, customers can disappear in an instant to become your competitor’s customer. Events like this erase years of invested effort and established goodwill in that same instant.

Truth #4: Accurate sales forecasting is important for all organizations, but it is especially critical for manufacturing companies.  

As we described in our Sales Forecasting for Manufacturing and the Role of CRM white paper, it is the basis for all planning, scheduling, ordering, and purchasing activities essential in a successful manufacturing operation.

IMAGE 2: Automated Sales Forecast Report with Graphics

IMAGE 2: Automated Sales Forecast Report with Graphics

An approach many organizations use is to add some percentage of growth to historical sales data to drive their planning. The big problem with this approach is that it is missing the feedback from the street view of the reps and managers.

Let me put it to you in the form of a question: would you be willing to bet your next 100 paychecks on the accuracy of this type of sales forecast? Before you answer, consider what happened to the sales forecasts based on historical data during the financial collapse in 2008-2009. What happened when the “tech bubble” popped in 2000-2001? What was the aftermath of the terrorist attacks in New York on September 11, 2001?

Truth #5: The past does not predict the future with a high degree of reliability.

Another point to consider is what is the current state of relationship selling in your organization? Many companies do not have a system in place to give sales reps and managers the information and the tools they need to produce more accurate sales forecasts. The good news is that a well designed, properly implemented CRM system that integrates your sales, marketing, and service processes with your ERP system can help you change that. Here’s how.

A well-designed CRM system gives you visibility into your pipeline – past, present, and future transactions – for the complete 360-degree view of the customer’s buying behaviors over the customer’s entire lifecycle. It gives you greater power to control revenue. A modern CRM system can automatically generate forecasts and provide single-page access to your entire teams forecast. It is also a place to quickly store and easily access customer information and activity. This all works together. It enables your organization to deliver superior service and a better overall experience to customers. That helps to create loyalty.

Truth #6: Integrating customer-facing, “Demand Chain” processes with internally-facing “Supply Chain” and “Operational” processes is necessary to efficiently deliver exceptional customer experiences and develop a 360 degree view of the lifetime customer journey.

A solid CRM solution for manufacturing allows you to put aside your educated guesses and clearly see trends and patterns. This enables you to accurately forecast sales, which drives the timing of production processes and supply chain purchases. When properly orchestrated with your business processes and existing ERP systems, a CRM system helps you run a more efficient, less wasteful, and more profitable operation.

A key advantage of using of an optimized CRM system in any organization is that it gives critical hours back to your sales team, which they can use to close more deals and engage new prospects. A well-designed CRM system arms marketing, sales, and service teams with the information and insight they need to navigate through buying cycles, issues, obstacles, and assist customers throughout the lifetime of the relationship. And, just as the machinery, tools and equipment in your production facilities and warehouses increase the efficiency of your operation, the automation and flexibility of CRM systems helps your sales, marketing, and service teams enhance productivity and improve performance.

Truth #7: Strategic alignment, powered by one vision and one version of the truth is just as critical to profitability and success as is process efficiency, market timing, and product quality.

Another critical advantage of using a well-designed, optimized CRM system is that it helps drive higher levels of CRM adoption and customer-focused behavior throughout the organization. It helps keep everyone on the same page and marching to the same beat of the same drum. It offers the same version of the same truth for every customer. It produces one version of truth regarding the key performance metrics that describe the health of your customer relationships and your organization.

You see, running an organization can be a lot like trying to push a car up a hill. It’s hard enough with everyone pushing at the same time in the same direction. But what happens if everyone is pushing at different times and/or in different directions? Will you get the car to the top of the hill? Can you even hold it in place to keep from losing ground? Or, does it just run over you due to the lack of a coordinated team effort? It’s something to think about.