CRM pitfalls to avoid

MyCustomer.com
10

In these editorials over the last few weeks, we've demonstrated the value of customer knowledge; we've given case studies of companies delivering spectacular improvements in the effectiveness of their communications, and we've shown how customer contact systems can deliver real bottom-line value. So why is it that so many CRM implementation projects seem to be adrift and in danger of not delivering the bottom-line benefits?

Of course there are many reasons why projects get into this state, but I want to highlight three key pitfalls which seem to crop up frequently:
- Poor CRM business strategy
- Inappropriate project management techniques
- Failure to deliver the benefits, short-term and long-term

Let's look at each of these in more detail.

1. Poor CRM business strategy

Too often the implementation of a CRM system is seen as an end in itself. The CRM strategy is simplistically defined as 'Let's implement a CRM system', or 'Before we can do CRM, we need to have the infrastructure in place'.

It is surely clear by now that most CRM systems are enabling systems, and they only deliver value when they are used to implement CRM programmes. This means that every CRM implementation project which has business benefit as an objective needs to have a set of CRM programmes associated with it which are designed to make money for the company.

This needs a clear CRM business strategy defining where the business benefits will come from, and how we will deliver those benefits, and most importantly, which ones come first.

We need to think through which areas of the customer relationship we need to deal with first. Should we address customer retention issues, or is customer service the most pressing problem? Are we failing to attract new customers, or do we need to address the large numbers of unprofitable customers we have through value maximisation programmes? Of course in theory it would be nice to be able to do everything, and we need the whole system to do everything well, but businesses have priorities. They have pressing problems and less urgent issues. We have to start somewhere, so let's go with the problems where we can have the most impact (both financial and political) immediately. A CRM-Forum presentation, Customer Relationship Management Implementation Strategies, outlines a framework for identifying which areas to focus on, as well as an outline plan for any one implementation stage.

So we need to go through a process of defining which areas of our customer relationships most need to be addressed, and which offer the most benefit. Once we've identified those then we can start to build the programmes which try to address those problems.

Although many projects are far more focused on IT system delivery than the CRM programmes, don't make the mistake of swinging to the opposite extreme. CRM programmes without the IT infrastructure to support them are unlikely to be delivered successfully. The trick is to balance the development of the CRM programmes with the implementation of appropriate IT infrastructure.

This all seems so obvious that it is worth asking why we even need to say this. There are three key influences, I believe, which often make it difficult to adopt this approach.

Firstly, the business side usually lacks CRM expertise and so feels nervous of defining those CRM programmes. Better to wait till we've got a better understanding through building the system. I'm convinced this is a mistake. Take all your courage in your hands and jump in the deep-end. If you're of a particularly nervous disposition, get someone to hold your hand, but don't let it be a CRM consultant, let it be a CRM practitioner. These are few and far between, but you can find them. They are recognisable because they have actual experience of delivering business benefit for other organisations through CRM and they talk the practice, not the theory.

Secondly, the IT side is used to achieving benefits by reducing costs. There are situations when this is appropriate in CRM implementations, but usually the real financial benefits of a CRM implementation comes from increasing revenues, not reducing costs. This means that you have to think like an entrepreneur, not like an accountant, when you're developing the benefits side of your cost-benefit study. We have to think not of incremental cost-savings we can make by doing what we do today more
efficiently, but rather of opportunities to use the enabling technology to do new things which deliver more value from our
customers.

Thirdly, the cultural differences between the business side and the IT side, over-simply defined as the left-brain, right-brain divide, makes it very difficult to build a creative dialogue across those cultures to identify the opportunities that the business has from the use of CRM technology.

2. Inappropriate Project Management techniques

After we have defined our CRM strategy and implementation project, it is likely to fit into one of three categories: (i) a project which adds CRM to our existing business model; (ii) a project which implements a new CRM-focused business strategy; or (iii) a new customer-facing business model. I am indebted to Jennifer Kirkby of Gartner for pointing out that each of these different types of project requires very different management approaches. Standard project management techniques will suffice to implement CRM with no changes to business strategy or business model, though we should note that this type of project is unlikely to deliver all the benefits of CRM. A new business strategy will require more of a programme management approach and if we're going for a New Business Model we need to adopt what Jennifer calls "Endeavor Management", or what I think of as the entrepreneurial business start-up approach.

If we adopt an inappropriate approach to managing our project we may well run into difficulties, and of course the highest risk is that we adopt our tried-and-tested project management approach to delivering a new business strategy or new business model, putting the whole project at risk.

The appointment of the individual in charge of the project is also, of course, key. Let me add one thought in this area, derived both from Jennifer's thinking, and a recent comment by Professor Merlin Stone. Don't appoint a CRM enthusiast as the manager in charge, appoint a politician. Ensuring consensus and buy-in to the CRM project across all the functional areas involved in the CRM project is critical, both at initiation and throughout the project lifecycle.

3. Failure to deliver the benefits, short-term and long-term

The strategy we've outlined in step one implies that the delivery of benefits from CRM programmes goes hand-in-hand with the implementation of CRM technology - which by-the-way, improves cashflow and NPV on the project, as well as building management
enthusiasm for the project as it is delivering value on the way through.

This converts the CRM implementation approach from a major infrastructure build into an iterative set of small steps, each of which should deliver value. The danger of a set of steps is that they don't lead anywhere. We need to have a strategic framework and a sense of direction into which each steps fit. Hence our oft-repeated maxim, "Think big, but start small". We need to set ourselves a long-term strategic CRM vision, and make sure that each step we take not only delivers value but also fits into that strategic framework which will, of course, evolve over time.

Most importantly, each implementation stage will be associated with a CRM programme with tangible, quantified results, defined when we set our CRM strategy. The execution of that programme is an essential part of the implementation process, building the skills of the users of the system, proving the technology which has been developed and implemented, and delivering the benefits which help fund future developments.

Many of the case studies in the CRM-Forum website represent one such incremental step with documented benefits. Check out at least the following two:
For a retail financial services example:
/library/cas/cas-001/brandframe.html
For a telecommunications example:
/library/sophron/sophron-007/brandframe.html

As always, any comments on this editorial can be made here, by adding a comment to this editorial, in the discussion forum, or by writing directly to me, Richard Forsyth

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avatar
29th May 2001 14:03

If you have been working since 1997 on CRM engagements, then you are a
practitioner, surely??

I agree that if a major consultancy takes a financial interest in a crm project, that will tend to focus the mind on making sure the project succeeds, and that may help get the right balance to the project.

However, I still don't think this invalidates the idea of using CRM practitioners. For example, I myself have worked on a number of Big-5 CRM projects, adding what I hope is practical experience of CRM to the project, and that seems to have been appreciated by the project team, and the client. This doesn't have to be a huge amount of effort, perhaps 2 - 5 days a quarter at key points in the project life-cycle (Q.A of end of output
from completed project stage; brainstorming scope and focus of next project
stage).

You will be aware of the huge interst in CRM around the world, and the large numbers of clients undertaking projects in this area. I am sure you are also aware of the small number of people experienced in CRM. This must mean that there are large number of projects (both proof-of-concept, and full-scale implementations) where the project team has limited CRM experience. Trying to add some practitioner experience to those projects, seems to me to be a good way of reducing project risk, and in the interests of all parties, including a consultancy with a financial stake in the project.

Perhaps part of the disagreement arises from different understandings of the word 'practioner'. For me, that is not a label which excludes empoloyees of major consultancies. It means someone who has significant practical experience of helping a company make money through the use of CRM.

Thanks (0)
avatar
29th May 2001 13:58

Jacques, I'd include user motivation as a lower-level issue under appropriate project management, though I'd agree with you that it is a key difficulty. Making staff change to a customer-centric view of the world is not easy.

Thanks (0)
avatar
25th May 2001 15:41


Indeed, an interesting article which has the virtue of attempting to answer the question: Why do so many CRM Projects fail? [Statistics suggest up to 60 %!].

However,I would have thought that failure in motivating the CRM users should have been included in your pitfalls?

Time and time again I hear that there is a resistance to change by the users. For the most part, they have not been included from the beginning. Therefore it is hardly surprising that CRM Projects end-up like this.

This, surely, should be part of a CRM Strategy. I would personally recommend that the relevant part of this Strategy be communicated as early as possible to the staff. Furthermore, that perhaps some Customer Service Training be delivered - This would enable the organisation to be prepared.

Thanks (0)
avatar
22nd May 2001 17:30

Comment from an anonymous Big-5 consultant:

"
I have been much interested by your recent article dealing with CRM
projects more common pitfalls.
However, I would like to underline that I am not really sure about the
veracity of your opinion "take a crm practitioner, not a crm consultant".
This vision seems to be a little bit updated to me. More and more,
consultants are financially involved in crm project sucess or failure, and
clients need proofs of concept even before beginning the project.
I personaly have been working since 1997 on client engagements, totally
hands-on client crm business strategies and implementation, and no doubt I
am not alone in the consultancy world !
"

Thanks (0)
avatar
By admin
29th May 2001 15:45

One of the key issues in making your CRM projects successful is to get a buy-in from the business areas which will be affected. By 'buy-in', I don't just mean a half-hearted 'yes, that sounds like a good idea' but rather a 'yes, this IS a good thing to do, and we would like to do x,y,z in this call centre'. This is where having a CRM PRACTITONER rather than a Best-Practice Droid is important. Rather than confuse line staff with best-practice, the practitioner would be able to say "That will work because of x,y,z", or more importantly "That won't work because x,y,z and doing it will be a waste of money at this time".

Thanks (0)
avatar
29th May 2001 14:03

If you have been working since 1997 on CRM engagements, then you are a
practitioner, surely??

I agree that if a major consultancy takes a financial interest in a crm project, that will tend to focus the mind on making sure the project succeeds, and that may help get the right balance to the project.

However, I still don't think this invalidates the idea of using CRM practitioners. For example, I myself have worked on a number of Big-5 CRM projects, adding what I hope is practical experience of CRM to the project, and that seems to have been appreciated by the project team, and the client. This doesn't have to be a huge amount of effort, perhaps 2 - 5 days a quarter at key points in the project life-cycle (Q.A of end of output
from completed project stage; brainstorming scope and focus of next project
stage).

You will be aware of the huge interst in CRM around the world, and the large numbers of clients undertaking projects in this area. I am sure you are also aware of the small number of people experienced in CRM. This must mean that there are large number of projects (both proof-of-concept, and full-scale implementations) where the project team has limited CRM experience. Trying to add some practitioner experience to those projects, seems to me to be a good way of reducing project risk, and in the interests of all parties, including a consultancy with a financial stake in the project.

Perhaps part of the disagreement arises from different understandings of the word 'practioner'. For me, that is not a label which excludes empoloyees of major consultancies. It means someone who has significant practical experience of helping a company make money through the use of CRM.

Thanks (0)
avatar
By admin
29th May 2001 15:45

One of the key issues in making your CRM projects successful is to get a buy-in from the business areas which will be affected. By 'buy-in', I don't just mean a half-hearted 'yes, that sounds like a good idea' but rather a 'yes, this IS a good thing to do, and we would like to do x,y,z in this call centre'. This is where having a CRM PRACTITONER rather than a Best-Practice Droid is important. Rather than confuse line staff with best-practice, the practitioner would be able to say "That will work because of x,y,z", or more importantly "That won't work because x,y,z and doing it will be a waste of money at this time".

Thanks (0)
avatar
22nd May 2001 17:30

Comment from an anonymous Big-5 consultant:

"
I have been much interested by your recent article dealing with CRM
projects more common pitfalls.
However, I would like to underline that I am not really sure about the
veracity of your opinion "take a crm practitioner, not a crm consultant".
This vision seems to be a little bit updated to me. More and more,
consultants are financially involved in crm project sucess or failure, and
clients need proofs of concept even before beginning the project.
I personaly have been working since 1997 on client engagements, totally
hands-on client crm business strategies and implementation, and no doubt I
am not alone in the consultancy world !
"

Thanks (0)
avatar
25th May 2001 15:41


Indeed, an interesting article which has the virtue of attempting to answer the question: Why do so many CRM Projects fail? [Statistics suggest up to 60 %!].

However,I would have thought that failure in motivating the CRM users should have been included in your pitfalls?

Time and time again I hear that there is a resistance to change by the users. For the most part, they have not been included from the beginning. Therefore it is hardly surprising that CRM Projects end-up like this.

This, surely, should be part of a CRM Strategy. I would personally recommend that the relevant part of this Strategy be communicated as early as possible to the staff. Furthermore, that perhaps some Customer Service Training be delivered - This would enable the organisation to be prepared.

Thanks (0)
avatar
29th May 2001 13:58

Jacques, I'd include user motivation as a lower-level issue under appropriate project management, though I'd agree with you that it is a key difficulty. Making staff change to a customer-centric view of the world is not easy.

Thanks (0)