Increase Your Construction Company’s Profitability with Customer Relationship Management

What most construction business owners know about successful customer relationships can be summed up in the five word statement imprinted in all of our memory banks: “The Customer is Always Right.”

Look around you and you’ll see this simple statement just about everywhere-in company handbooks, within motivational-quote photography photos and on the sides of employee cubicles. It’s become the rallying-cry for businesses to think, act and behave like customer-centric businesses.

Unfortunately, this statement fails to scope the effort-which as we know in the construction industry, can make or break your project.  What the statement does not say is that “Every Customer is Always Right,” and this is what many businesses fail to incorporate into their business operations.

Enter Customer Relationship Management (CRM)-a combination of business strategy and information technology systems that delivers real-time customer intelligence to your employees and helps you boost sales, streamline service and optimize your marketing mix. Done right, CRM can help you develop the right relationships, and diminish the wrong ones to help your business be more profitable in today’s economy.

Here are five ways you can leverage CRM to help your business increase effectiveness in managing customer relationships:

1. Centralize customer information and envision the solution end-state to avoid pitfall

Start simple. Ask yourself a single question, “Where do I go to find the most up-to-date information about our customers?” If your answer begins with the phrase “It depends,” you are not alone.

It is not uncommon for businesses today to have customer information stored within ten, twenty or even thirty applications. From spreadsheets to contact databases to billing systems, customer data can be stored just about everywhere-and your first step to managing the right relationships, is to build a centralized view of the information.  CRM solutions are designed for unification of customer information but by themselves, they do not solve the problem.  This is where the business strategy component of CRM enters the fold.

Successful CRM deployment and adoption can be optimized by spending the necessary time upfront to identify everyday system use-cases and key system outputs. Think about the type of reports you would like to generate, but have been unable to create without a centralized view of information. This will help you envision and define the required data model for your organization. Once you have established and implemented this view, you can use the CRM system and develop data patterns and common traits of your existing customer base.

2. Divide your customers into factual and activity clusters

Clustering involves the creation of data patterns, or models, to be used across your CRM solution. These models will vary for each business, but the most common kind are factual data patterns about customers. Products owned, geographic location and relationship duration are commonly implemented models, but they don’t quite hit the mark in helping you to project a total relationship view of your customers. This is where CRM systems can help you establish additional insight by combining behavioral intelligence with factual data.

Consider the new customer who signs a large sales contract with your organization. Most sales teams celebrate the activity with a rather healthy bonus or other rewards.  This practice is so rewarding to the sales professional, they usually try to make a habit of the activity.

Now consider the impact of this same customer spending hundreds of hours on the phone with your customer support organization on a rather routine question.  Never happens, right? Was the revenue worth the headache?  Unfortunately, this simple case occurs more frequently than we like to admit –and without correction, your sales team will only continue to add to the problem.

With CRM, your team has the ability to overlay relationship activity information with transactional information and the results can be quite telling.  Common relationship activities (and costs) include:

• the number of phone calls required to reach a decision-maker
• the frequency of complaint calls made by customers
• the time it takes to win new business
• the cost of travel and entertainment expenses spent in building relationships

Be sure to develop a complete picture of your relationship costs before rushing to sign that next big contract.

3. Increase sales and service emphasis onto the high-value cluster

With CRM, you can leverage the underlying intelligence platform to enhance daily business operations.

In the case of sales operations, you can use CRM to score new sales leads that fit similar profiles of your top customers – ensuring sales professionals spend time with the right set of prospects.

In customer service, you can design and implement new service level agreements for high-value customers to provide high-quality and rapid-response and resolution options for your best customers.

CRM ultimately becomes the digital nervous system for your organization and ensures that each department is firing on all cylinders like a well-tuned machine.

4. Reduce operations costs to low-value relationships

Now let’s be pragmatic for a moment-in today’s economy, all business is good business. However, in order to stay in business, you need to make sure to drive the right balance of revenues and costs to achieve profitability.  In the case of your low-value relationships, I am not advocating the complete deletion of the business; rather, I want to stress the importance that CRM systems can play in helping you to reduce the cost of maintaining your relationships to achieve higher-degrees of profitability for your organization.

Many CRM solutions today offer great new capabilities for expanding your capabilities for online and web-based service opportunities. From self-service customer portals to online knowledge bases for routine service interactions, today’s online-aware CRM applications provide amazing opportunity for high-volume, low-cost transactions.

Interestingly, customers themselves are demanding more control of their service experience and what used to be perceived as an informal or low-valued online interaction actually is becoming the more-preferred way for customers to interact with their vendors and suppliers.  Take advantage of this new paradigm and reduce service operations costs to achieve higher profitability in the service discipline.

5. Equip sales and marketing teams to find more high-value customers

The key to business success today is the same as it was five years ago-do more of what you are good at and less of what you are not. With CRM as your backbone, you can amplify the impact of your sales and marketing operations by simply showing them what “good” looks like.

Enabling sales teams to spend time with the right type of customer and equipping marketing teams with a target prospect profile help streamline the focus and simplify the targeting exercise within each line of business.

The focus on waste-reduction and optimizing results with constrained resources has long been the key to economic recovery. With a solid CRM strategy, combining business design with information technology, you can make C+R+M the winning formula for your busi

Construction Business Owner, June 2010