The CRM glass: half full or half empty?

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CRM and pessimism seem to go hand in hand at the moment. But don’t listen to the prophets of doom. CRM is delivering results, competitive advantage and measurable ROI at leading organisations, says David Eldridge, CEO, Alterian.

Industry analysts estimate the market for CRM products and services will be in the range of $5.1 billion to $11.7 billion by 2004. And certainly, corporate investment in CRM shows no signs of a slowdown. In fact, it would be hard to find a CEO of a Global 2000 company who isn’t consumed by improving customer relationships.

However, according to recent research, at least 50% of CRM implementations fail. Considering that an enterprise may invest millions in its initial CRM launch, that statistic is daunting. What’s most troubling is that the worst implementations have little or nothing to do with the CRM software or the integration effort; the chief risk to business success is often the business itself.

That’s the pessimistic view, but of course there’s another way of looking at these figures. Somewhere between 30-50% of organisations implementing CRM strategies have gone on to achieve significant results thanks to an intelligent, business-focused approach, supported by technology that delivers real business advantage.

According to Insight Technology, this can mean increases in revenue of up to 51% per salesperson, and customer satisfaction improvements of 20%. Impressive figures indeed. So how do you make sure that your business matches these achievements and doesn’t join the list of failures?

Common grounds for success
Most successful projects have one thing in common: complete understanding and buy-in across all relevant areas of the organisation. For many businesses, CRM is the single most important strategy contributing to business success. Without total commitment from the highest ranks in the sales and marketing team, IT department, system users and executive board, you can wave goodbye to the CRM promise.

Secondly, nearly all these projects recognise that business, and not technology, must take the lead. Nearly all CRM projects require significant re-engineering of the business. A technology solution in itself won’t deliver results. If your processes are flawed, then you can be pretty sure that technology will only accentuate these inadequacies. At best you will only get a small improvement in performance. In effect, the company ends up automating – rather than eliminating – bad processes, and as a result, helps the business run ineffectively and inefficiently more quickly.

It is no accident that some of the most successful CRM initiatives have been driven through in relatively young organisations looking to play established businesses at their own game. These companies have implemented CRM solutions that enable smart business decisions and deliver real competitive advantage.

An intuitive approach
Looking at this in a bit more detail, most organisations have a highly sensitive radar tuned to changes in company performance. In many cases where company performance fluctuates, they have a pretty good idea why this has happened – whether it’s the opening of a competitor’s branch just up the road, a change in the weather, or a hike in interest rates.

Unfortunately classic reporting tools don’t support an intuitive approach. Instead you get fairly clunky responses to pretty straightforward questions – What happens if I up the price on product x? What will be the impact of a 5% discount on product y? And typically you can’t even interrogate the database unless you have a pretty thorough grounding in the appropriate query language.

But today there is no longer any reason to base key strategic decisions on a series of hunches. The latest database analytics software enables organisations to ask questions in plain English – which translate conjecture into hard information. Armed with these facts, agile businesses can respond with lightening speed to changing market conditions and deal with customers on a one-to-one basis – the real strategic objectives of any organisation that wants to flourish in today’s fast moving economy.

Reduce the risk
Here are five steps you need to consider to reduce the risk of failing in your own CRM efforts:

1. Design a customer model that leverages all customer touch-points. The core of efficient CRM is a well-defined sales and marketing strategy that integrates the strengths of all customer-facing resources. These models should be designed with one thing in mind: to free up time for your most coveted – and often scarce – face-to-face resources.

2. Set realistic project metrics and measurements to quantify return on investment.

3. Engineer business processes for customer-centric automation. In the end, the application may support every documented requirement, yet there’s no guarantee that employees will use the system consistently.

4. Ensure that users are trained and prepared to use the system.

5. Get buy in from the board and keep your c-level executives involved throughout the implementation.

The way forward
There are many significant variables businesses should consider before taking the first step on the CRM journey. The key is to prepare your organisation for a fundamental shift in thinking. Ensuring your organisation is flexible and non-resistant to change is essential if your business is going to prosper from a CRM implementation. Above all, don’t let the pessimists get you down.

CRM works – make sure that it works for you.

David Eldridge
As Chief Executive Officer of Alterian plc and Analysis Database technology
provider, David Eldridge is responsible for devising and implementing business development strategies, forming partnerships and identifying market opportunities. He is one of the three founders of the business, which develops data analysis and data mining tools.

Previously, Eldridge was corporate strategy and business development manager for GB Information Management where he identified and implemented projects to develop the business. He set up improved customer service mechanisms and managed the introduction of several of the company’s most significant new product offerings.

Eldridge joined GB in 1991 from Shell UK where he worked for five years in a number of project analyst and business consultant roles. He led a diverse range of projects during this time, including initiatives to reengineer contract ordering systems; reduce the cost of credit; review transport policy and improve efficiency through the use of on-truck computers; and monitor competitor information.

While still at school, Eldridge formed Cumbria Software Systems Limited with two fellow pupils and won the BBC National Software Competition for Schools. The company is now an established supplier of software packages to educational establishments.

Bristol-based Alterian is a provider of data analysis technology and floated on the London Stock Exchange in July 2000. It was named the ‘Fastest growing IT company in the UK’ by Deloitte & Touche in their national Fast 50 awards. Since that time, the company has more than doubled its partner base to 25, opened a US office and expanded its employee base. Founded in 1997, Alterian has a turnover of £2 million and its customers include Britannia Building Society, BSkyB and Telia.

Alterian

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