Efficiency vs. Effectiveness: Getting the Right Things Done
Efficiency vs. Effectiveness: Getting the Right Things Done
I’ve spent 35 years working with more than 1000 companies on their CRM journeys. I’ve seen just about everything, but even after all that time, I’m surprised to see that the justification for investments still focuses extensively, if not exclusively, on improvements in efficiency rather than effectiveness, which I believe has far greater upside.
The evaluation process for CRM technology is typically based on potential productivity gains: doing the same things faster or in greater volume, suggesting that this will lead to more business. Can we make more sales calls, take more service calls, or make/take the same calls with fewer resources?
It’s a natural approach to problem solving. But if you’re laser focused on productivity, you might lose sight of the much bigger goal and upside of improving effectiveness.
The premise of CRM investments hasn’t changed, but in my experience, I’ve observed that these initial objectives are hard to achieve, for good reason. The fact is that many CRM projects fail to live up to efficiency targets. Frankly, I’ve seen paper-based systems work as efficiently as many CRM deployments. The value of CRM is to make more data available at the time of interaction, which may adversely affect the volume but facilitate more impactful interactions. The key is to recognize that value and take full advantage of it.
The promise of improved productivity is easy to measure on the front end before projects start based on the metrics stated above, but in the long run, it doesn’t do much to move the needle. Instead, I believe the better approach for CRM purchases, and more importantly, the projects themselves, is to focus on business effectiveness.
Efficiency on the Surface
In cases where you do see productivity gains, you’re likely saving time – you can make more calls, visit more clients, etc. The information is right at your fingertips, so you don’t have to spend as much time researching before a call or a visit. But is your call going to be effective? Are you going to get a better result?
The same is true in service departments. Because they’re expensive, organizations squeeze as much efficiency as they can out of customer service and call centers, even to the point of eliminating call centers altogether.
I used a very popular e-reader a while back. I had a problem and couldn’t find a way to get in touch with support. I finally got someone on the phone to resolve the issue, and then I got a bill for $80. It turns out the company didn’t have a call center at all, so I was getting help from a third party. It left a bad taste in my mouth, and to this day, I don’t use this device, nor would I buy any new version of it.
If you’re focused on business effectiveness, you may spend more time planning for a call. You would review what you talked about last time or notice that this particular customer has increased or decreased their spending with you, something you can easily dive into when you talk to them.
When your CRM solution is properly integrated with your ERP solution and you deploy an embedded analytical tool, the system can direct you to call the right customers with the right offers for the right products at the right time. And when that happens, it’s worth taking more time to have a meaningful conversation. You may be calling fewer customers, but the calls you’re making are far more effective.
Likewise, KPIs for call centers are almost always based on efficiency – how many calls can I take, how many first call resolutions can I get, etc. They work so hard to wring every possible efficiency out of their systems that they may be overlooking opportunities.
Let’s say a customer is calling in about a product failing and you need to send out a technician. Your system could show that you’ve already sent a technician, so the product likely just needs to be replaced. Better yet, once again by integrating CRM with ERP and viewing previous service history, you can proactively call the right customers to upgrade to the newest product or sell the right maintenance agreement before products fail.
Rather than wrapping up the call efficiently and closing as many calls as possible, you’re turning your call center into a profit center. It may look like you’re doing less volume, but you’re making a far bigger business impact in the long run.
So Why Aren’t More People Doing This?
In my experience, companies don’t focus on effectiveness because they’ve never had a complete, end-to-end system. They often don’t know what’s possible, so they’re basing business decisions on preconceived notions of what a CRM system is supposed to do.
In the past, especially the early days of CRM and again in the early days of cloud-based CRM, it was often implemented as a standalone solution, purchased by the business without much IT support. It may have slightly boosted productivity, but it wasn’t guiding you in terms of which customers to call, what to talk about, how to redirect resources, etc.
Now that cloud solutions have matured and IT is embracing and often owning the applications, the potential to leverage CRM capabilities to truly improve effectiveness, even at the expense of efficiency, has expanded exponentially. If you haven’t had a solution like this before or looked beyond your early your aspirations, you’re going to be amazed at the possibilities.
Don’t Lose Sight of Business Value
Efficiency will always be important, but from where I stand, effectiveness should be a much larger goal.
Efficiency will always be easier to quantify, especially ahead of your project start. You might calculate that this software will make your reps 20% more efficient or will increase call resolution by 30%. The numbers are easy to wrap your head around, so they’re used to justify the purchase.
It’s more difficult to predict gains in effectiveness on the front end of the project, but when considering software purchases, you’ll have much greater success when the ambitions of your project are linked to business imperatives rather than business cases. In fact, business imperatives should always take precedence over business cases. You are more likely to identify opportunities to improve effectiveness on that basis.
For example, your company may want to improve wallet share from their existing customers. The best way to approach this is to use prior sales history and similar customer profiles to identify the right products to offer to each customer.
You may sacrifice some efficiency for larger effectiveness gains, but in my 35 years in the industry, getting more things done doesn’t matter if you’re not getting the right things done.
Customertimes delivers true business transformation with the implementation of timely and practical CRM solutions. To find out how to get more from your CRM investments and drive business effectiveness at your organization, reach out to firstname.lastname@example.org
Jim is the Chief Customer Officer at Customertimes. He has more than 30 years of experience in the enterprise software industry, having worked with both software and professional services companies ranging from venture backed start-ups to some of the largest software companies in the world. Jim has held management roles across Sales, Marketing, Product Management, Product Marketing, Professional Services, and Corporate Strategy, and he has personally helped 500+ clients across the globe leverage technology to improve customer-focused operations.