The acronym CRM, or customer relationship management, is easily thrown around as the latest buzzword, but can actually have a tremendous impact on a company's bottom line when implemented and managed correctly.

According to Gartner, there are three key steps that should be followed each time an organization implements CRM solutions through a CRM strategy: setting the destination; auditing the current situation; and mapping the journey to the destination.

"A CRM strategy cannot be developed in isolation. It must be relevant and linked to the overall corporate strategy, and it must build on existing sales or marketing strategies that are already in use," said Ed Thompson, vice president and distinguished analyst at Gartner (News - Alert), in a statement. "Following these three steps will provide a solid framework for CRM success."

Set the Destination

The CRM strategy should focus solely on reaching the intended destination, which is derived from the vision of the company and the goals derived from this vision. Interestingly enough, this vision is heavily dependent on the leadership of the company and on the selected CRM solutions.

"Ensure that the CRM vision is to articulate the future environment for the organization in terms of profitability and customer experience," said Thompson. "During the initial stages of the CRM initiative - while the CRM vision and strategy are being developed - the leadership and governance structure must be agreed upon and roles allocated before it is stressed by the impact of change management upon employees."

Audit the Current Situation

When assessing the starting point, all skills, resources, competitors, partners and customers need to be consulted. Organizations need to identify how mature their existing approach to CRM solutions is before beginning the CRM initiative. Most organizations have attempted some sort of CRM solutions in the past and even if the initiative was considered a failure, foundations can generally be identified within the past program that can be leveraged for value instead of ignored.

"Use the audit to evaluate the organization against equivalent organizations in the same or a similar industry," Thompson said. "A competitive benchmark is an excellent way to gauge how far behind or ahead the organization is in comparison. Along with these two approaches, there are many other types of audit. Ultimately, companies should use as many of these assessment types as possible to prepare for the development of the CRM strategy."

Map the Journey

Flexibility is important as the journey can take a number of years and can change en route. Establishing a plan before starting the process provides a roadmap to keep the project focused on the end goal.

An effective CRM strategy and selected CRM solutions will explain how an organization will achieve their CRM vision as it is the integrated blueprint for how the organization will achieve its sales, marketing and customer service goals.

The CRM strategy will answer such questions as: What is the ideal customer base? What products or services is it going to sell, to whom, at what price and through which channels?

The strategy must also be able to give subjective answers to more-holistic, organization-wide questions, including: What is the best way to build customer loyalty? How will the organization connect with a customer to create a positive "gut feel"? What will drive customers to recommend the organization, brand and products to others more often to the point that they are willing to pay a premium price?

"Setting the destination, auditing the current situation and mapping the journey is an iterative process that may require several revisions before a final CRM strategy is developed," Mr. Thompson said. "The challenge is to avoid rushing the development process, as the company may be committed to many years of change."

For more information on the report, "Three Steps to Create a CRM Strategy," visit the Gartner website for access to the entire report.