6.1 A rationale and methodology for CRM

6.1 A rationale and methodology for CRM

Corporations large and small, from Old Economy to New, have been confronted with the dire predictions of software companies and consultants pointing out that if their organizations did not jump on the CRM bandwagon, they would be ground into the dust by competitors who were more aggressive and open to new corporate practices. CRM, although a powerful tool in both the business-to-business and business-to-consumer environments, has been, however, both oversold and underutilized. In many cases, more has been promised from CRM than it could possibly deliver; and in other cases, companies have not properly planned or implemented CRM strategies and consequently have failed to achieve its benefits.

Some CRM vendors and consultants focus on CRM as a transorganizational strategy, one that must be rapidly implemented and that required immediate commitment throughout the organization. However, the CRM process is more readily accepted by organizations if the process is a gradual one that evolves from a series of data marts to an enterprisewide data warehouse and CRM solution. This type of CRM development process has proven much easier for organizations to manage and accept, and in the long run, it will pay dividends in enhanced customer relationships. When CRM is seen only as a corporate strategy that must permeate all aspects of an organization's activities immediately to be effective, there is a natural tendency to want to roll it out all at once in what has been called the "big bang" approach. Too often, the big bang turns out to be a big bust! Organizations confronted with more corporate changes than they can handle all at once may find the challenges faced by employees exceed the challenges faced by the software. Because of the complex nature of even a modest CRM program, successful CRM implementation requires above-average consulting services. Vendors tend to want to solve all the problems at once, and, although consultants can assist in analyzing a business and its processes, there are more issues to be considered, addressed, and resolved. It is important to devise a plan, implement it, and make it stick.

Planning

Companies should not be expending precious financial and human resources on particular communications channels and customer segments out of all proportion to their profitability and practicality. The key is to define a customer service strategy by determining investment priorities and then to select the best supportive technology. Making the proper choice of technologies is critical, but this can only be accomplished with a coherent, executable plan. Often, companies are expected to "go live" with salesforce automation, customer service, and marketing all at once. As noted, this approach has resulted in the failure of CRM strategies and, more importantly, a loss of confidence in CRM itself.

Rather than going with the "big bang," knowledgeable consultants advise going deep, not broad. Using a gradual approach, a company identifies the most important application of CRM and ensures that this implementation is successful before moving on to the next one. It is better to identify specific customer segments and communications channels for the initial execution and focus on doing this aspect well before tackling the next segments and channels. CRM tends to overwhelm organizations with its expanding variety of communication channels. Just because one lone customer wants to send a company a wireless e-mail from a data-equipped cell phone to order a replacement burner for a barbecue is no reason for an organization to be prepared to accommodate the order. This could be viewed as carrying customer relations to their illogical conclusion!

Making it work

The business processes must be mapped into the underlying technology. Customers are supported by the way organizations work; the technology provides that support. Technology itself should not be in the driver's seat. Companies frequently buy CRM technology in the name of customer service and then forget about the customer—implementing the application becomes an internal issue in which the main reason for the implementation in the first place gets lost in the process. The focus must be on the customer at all times.

Making it stick

For CRM to have long-term practicality and benefits, an organization has to believe in its underlying proposition of improving customer relations. It is more than software and digital switching systems, in the same way that these elements alone do not make a successful call center. A customer-focused mindset must take root in the organization, and this takes time. Ideally, the change in focus should begin well before the CRM technology is rolled out. Employees need to develop the skillsets to serve customers better; senior executives need to show the type of leadership that encourages a customer-centric culture. People need incentives to believe in CRM.

Customer service has to be more than a slogan; tangible benefits, whether from data mining that allows sales and marketing to hone their efforts or from measurable successes in repeat customers and overall satisfaction, have to be seen and appreciated. Advances in technology do tend to move at breakneck speed—it's often said that an Internet "year" lasts about four months—but the frantic pace of these advances doesn't mean that the development and implementation of CRM systems solutions should also be frantic. Just as CRM is about cultivating a long-term relationship with the customer by enhancing the value of a company's service, implementing CRM should be approached as a long-term strategy, based on a step-by-step progression.

Integration

Software-driven CRM systems integrate front-office activities such as sales, customer service, and technical support with back-office resources such as accounting and inventory management. Only a few years ago, many organizations considered CRM to be a call center with rows full of customer service representatives working telephones in front of computer monitors. An explosion in communication channels, particularly through the Internet, means that call centers have become multichannel components of CRM strategy with the capability to address and integrate telephones, Web presence, e-mail, real-time text chat, and wireless data. As product offerings for this new capability became more complex, they became more difficult to implement. In fact, CRM's scope has become so ambitious that there are serious doubts any one vendor can deliver a product that performs as promised. A single-vendor product may soon be within reach, but the most important factor in CRM success is not what is installed, but how.

Some organizations have invested millions of dollars and thousands of hours over long periods of time to deploy and integrate corporate applications—salesforce automation (SFA), help desk, enterprise resource planning (ERP), marketing automation, e-commerce, call/contact centers, and Web platforms—to implement and support CRM strategies that build customer loyalty through intelligent and trusted communication. Using innovative technologies to achieve this goal while containing costs is a fundamental challenge for every company that embraces CRM. For many organizations that adhered to the old ways of doing business, the move to a CRM strategy began with the realization that the customer, the market, and the competition had changed and would continue to change. Treating customers as "mass markets" is no longer a viable business strategy, and success in business in the 21st century requires a new vision, a vision that demands changes in the processes, people, and practices with which the customer is involved. The reason is that as businesses merged and grew, customer bases grew and the customer changed along the way. Armed with their newfound understanding of the levels of service that suppliers can and should provide, customers expect much more. And the power they wield in the marketplace can only increase with time. Organizations following the old ways of doing business have a greater challenge and will require a few years and major changes in corporate culture to evolve a successful CRM strategy. (see Figure 6.1) Other organizations that have continually examined and revised their methods of relating to customers, as well as adopted appropriate technologies along the way, have a relatively short route to follow in evolving a formal CRM strategy. Only a fine-tuning of existing processes, a refinement of current technologies, and additional training of staff may be required to ensure the transition to a complete CRM solution.

Figure 6.1: Sources of customer information.