Leveraging CRM Data for Profits

Watching the Charming Charlie comeback

Charming Charlie is reviving. Social media has been activated. The new store locations have been announced. A new web site collects together all the positive press that founder Charlie Chanaratsopon has had in the past, but the e-commerce web site is not available yet. The projected launch date for both physical retail and online sales is early 2020. 

A few months ago, Chanaratsopon did an interview with the Houston Chronicle after he was approved to buy the intellectual property and customer database at the bankruptcy auction. He stated that online sales will be more important, and physical storefronts will be fewer and half the size of the old ones. They may also create 'pop-up,' or temporary stores. 

Chanaratsopon is banking on customer loyalty and data to drive the reboot. 

Houston Chronicle: Founder plans to resurrect Charming Charlie after trademark sale, 2019-Sep-16 by Paul Takahashi

“Charming Charlie has over 10 million passionate and brand-loyal customers,” Chanaratsopon said. “In this age of retail, we still see an opportunity for the brand to thrive in the online ecosystem.”


Sustainable scaling: the growth pattern for the rest of us

The idea that profits fund growth did not used to be so unusual. At its heart, sustainable growth in based on a deep understanding of customers and how to help them succeed. Successful customers invest in the suppliers who got them there. 

Quartz: The fundamental problem with Silicon Valley’s favorite growth strategy, 2019-Feb-5 by Tim O'Reilly

Indie.vc’s search for profit-seeking rather than exit-seeking companies has also led to a far more diverse venture portfolio, with more than half of the companies led by women and 20% by people of color. (This is in stark contrast to traditional venture capital, where 98% of venture dollars go to men.) Many are from outside the Bay Area or other traditional venture hotbeds.The 2019 Indie.vc tour, in which Roberts looks for startups to join the program, hosts stops in Kansas City, Boise, Detroit, Denver, and Salt Lake City, as well as the obligatory San Francisco, Seattle, New York, and Boston.

Where conventional startup wisdom would suggest that aiming for profits, not rounds of funding, will lead to plodding growth, many of our Indie.vc companies are growing just as fast as those from the early-stage portfolios in our previous OATV funds.

Nice Healthcare is a good example. Its founder, Thompson Aderinkomi, had been down the traditional blitzscaling path with his prior venture, and wanted to take a decidedly different approach to funding and scaling his new business. Seven months post-investment by Indie.vc, Nice was able to achieve 400% revenue growth, over $1 million in annual recurring revenue, and is now profitable. All while being run by a black founder in Minneapolis. Now that’s a real unicorn! Some of the other fast-growing companies in the Indie.VC portfolio include The Shade Room, Fohr, Storq, re:3d, and Chopshop.

OATV has invested in its share of companies that have gone on to raise massive amounts of capital—Foursquare, Planet, Fastly, Acquia, Signal Sciences, Figma, and Devoted Health for example—but we’ve also funded companies that were geared toward steady growth, profitability, and positive cash flow from operations, like Instructables, SeeClickFix, PeerJ, and OpenSignal. In our earlier funds, though, we were trying to shoehorn these companies into a traditional venture model when what we really needed was a new approach to financing. So many VCs throw companies like these away when they discover they aren’t going to hit the hockey stick. But Roberts kept working on the problem, and now his approach to venture capital is turning into a movement. 


Quantifying loyalty goals and profits isn't easy but the ROI is phenomenal

If our business goal is to sell as much as possible without paying any attention to profit margin or operational expense, we will soon be out of business. IStock_000020168756XSmallIdentifying our best customers, figuring out how to nurture their business, and training our people to maintain the relationships, those are the strategies that make our business sustainable. Loyalty is a simple idea that is hard to practice. 

Harvard Business Review: Building Loyalty in Business Markets, 2005-Sept by Das Narayandas

The $40 million software firm Unitech Systems ... drew up a list of customers that together accounted for 80% of its annual revenues. After analyzing several years of data, the firm found a three-rung loyalty ladder in its markets: making repurchases, providing word-of-mouth recommendations, and paying premium prices. Unitech asked sales managers for information on the three parameters and used the data to place each customer on the loyalty ladder. The firm then calculated the average revenue from customers on each rung to evaluate that rung’s revenue potential and asked marketers to estimate the costs of moving customers up one or more rungs. The information allowed Unitech to classify its customers into four types, ...and to decide whether it wanted to keep them on the rungs they occupied, move them up, or reduce the time and money it spent and force some customers to move down the ladder.... 

Few companies try to build relationships with individual customers, because that approach differs entirely from current practice and, more important, requires considerable discipline in planning and execution.... State-of-the-art customer relationship management systems focus entirely on companies’ interactions with customers; that is a step toward managing customers, but it is only a small beginning. Companies still have a long way to go before they can say they manage individual customers in business markets. The silver lining is that this approach requires neither big ad budgets nor software programs; all it demands is a return to the basics of marketing.


Why lead generation is hopeless, but good business is not.

When I explain to business people that I build marketing databases, they usually respond by asking, "Can you give my any tips for generating leads?" Actually, I have quit framing my work that way, but I still encounter so many people asking "can you help me find new customers?" IStock_000019856923XSmall I have started to reply that, "I can help you value the customers and contacts you already have."

Nick Bird said it more elegantly than I can (emphasis added):

Traditional businesses ask - "How can we define the group of prospects who are most likely to want product X?" From this flows others such as "How can we increase the leads for X?"

The CRM business asks a different type of question. "Given our skills and resources, who can we build the most profitable long term relationships with?"

Nick's comment was made inside the LinkedIn Group for CRM Experts, which you could join... https://www.linkedin.com/groups/43621/43621-6059678651115462659, or you could find more excellent advice by visiting his profile: https://uk.linkedin.com/in/nickbirdcrmadvocate

Relative importance of CRM as a marketing technology

CRM technology is a given at most large companies these days, and it's often used as a data repository instead of a marketing tool, so no return on investment is expected. 

Good SEO and content marketing will bring in new customers, leading to increased revenue. Understanding and using the data in our CRM tools will help us improve our share of existing customers' activities, leading to increased profits and revenue. Why settle for revenue when we can have higher profits as well? How are our competitors handling this issue? 

eMarketer: What Technologies Are Most Important to Marketers?, 2015-Oct-1


On the other hand, CRM's relatively low ROI expectations (23%) when compared to its overall marketing technology importance according to US B2B marketers suggests that, while ROI is obviously important to marketers, it's not the whole story.

To add new loyal customers, make sure your web site's personas are fresh

We know our web sites are most effective when they are regularly updated, but we may overlook an important reason to update: a new category of customer. While we may find a few exceptions, we generally want to expand our market to new categories. And the easiest way is to keep an eye out for new customers who don't fit our existing personas. At the same time, we need to be sure our existing personas still fit.  IStock_000028882264XSmall

Kissmetrics: 5 Ways to Align Data and Storytelling for Business Growth, 2015-Sep-24 by Shayla Price

To target the most influential consumers, data identifies which buyer personas have the most impact on lead generation. Teams then can create focused messaging to grab the customers’ attention.

Plus, research shows that by adopting marketing personas websites are two to five times more effective and easier to use.

For personas to be helpful, the data must be accurate.

Comparing CRM software and platforms

For many of us owning and operating enterprises, the process of selecting and maintaining a customer relationship management system is full of anxiety. We have hundreds of software products and platforms available. Figuring out which system is the 'best' is like buying a home for your family. Except that picking the wrong CRM can damage our businesses and livelihood.  IStock_000020463309XSmall

We owe it to ourselves to understand the playing field on which these CRM platforms operate. Not to be an expert, but to help us make common sense distinctions. Gartner is a research company that tracks and compares software vendors, and Leon Tribe uses their data to explain how the major players differ. These types of comparison help many of us narrow the field of solutions to consider. 

Leon's CRM Musings: Gartner Trajectories for Sales Force Automation 2013-2015, 2015-Sep-12 by Leon Tribe

The product to chase, Salesforce has remained in the top spot for the last three years. While others are getting closer, there is no doubt that for sales force automation, Salesforce is the tool of choice. Despite being firmly in the Dynamics CRM camp, I can understand this position. Salesforce was built to manage sales pipelines and sales opportunities and there is no reason to believe it does not do the job. However, for ... customer interactions outside of a traditional sale scenario, my belief is Dynamics CRM does a better job.... 

Since 2013, the Sales Force Automation landscape has changed from being dominated by four vendors to just two, Salesforce and Microsoft. SAP and Oracle are seeking to return with their cloud offerings and only time will tell if they have come to the party too late to make their mark. SAP [is] certainly making progress but Oracle [is] still struggling to make significant gains.

As for the leaders, Salesforce still holds the top position but Dynamics CRM Online is rising fast...