This week, we provide you with a two-faced review of what's going on in CRM. The Roman god Janus (after whom January is named) was portrayed with two-faces - one looking back to the old year, and the other looking forward to the new. So this week's editorial looks back over 2001, and tries to also look forward to what 2002 has in store for us.
Before focusing down on CRM in 2001, no review of that year can ignore the major change introduced to all our lives with the tragic events of 9/11 and subsequent activity in Afghanistan. It is by no means clear what the consequences of those events will be, but one thing seems fairly certain. We now live in a world where all our different cultures can and do affect each other regularly and profoundly. Somehow we need to learn how those different cultures can co-exist, perhaps even enrich each other's lives, as well as resolve the inevitable conflicts that will arise. In last week's editorial on Community and Corporations we tried to outline some of the ways that our need for community is met in today's world, and the consequent risks and opportunities. The CRM industry has a direct impact on these issues in two main ways. Firstly, the global corporations for which many of us work are some of the main instigators of cross-cultural transactions, and secondly the global e-channel, an inherent part of CRM, is also a major channel for such transactions. So in our work CRM professionals are likely to have a significant impact on how we learn to live together in this new emerging world.
If we focus down on the CRM industry itself, 2001 has also been a significant year. It was the year when most major corporations stopped talking about CRM and started seriously implementing and doing it - hence the significantly lower interest in CRM-related conferences. There has been large-scale adoption of operational CRM, with building of customer databases and implementation of multi-channel customer contact systems. As we pointed out in CRM ROI - A vendor's approach, those implementations were frequently undertaken for defensive reasons - protecting market share and trying to make sure that competitors did not gain significant competitive edge by getting ahead with CRM. That focus has meant that many implementations have not seen the returns on investment that CEOs demand and that have been achieved by leading exponents.
Frequently this has been due to the much lower focus on analytical CRM. It has been our view for a number of years that, for many companies in many industries, the efficiency benefits available from the implementation of operational CRM are far outweighed by the effectiveness benefits available through a better understanding of customers derived from analytical CRM. However, this misplaced focus on operational CRM does not explain the lack of ROI that many companies are experiencing. Our own survey of CRM implementations in June '01 has shown quite clearly (see Successful CRM: Global Trends) that the major impediments to the successful implementation of CRM are the organisational changes required, and the lack of CRM skills - perhaps particularly in the analytical CRM area.
This failure to deliver the benefits from CRM is the major challenge facing the industry, threatening the large-scale adoption of CRM techniques. As Gartner has pointed out, CRM project failure rates are high and are expected to grow higher. CRM, according to Gartner, has entered the 'trough of disillusionment' associated with the adoption of most new technologies. Our hope must be that this trough has bottomed, and we can put our efforts into demonstrating, through results, that confidence and benefits can grow as we become more experienced in the practical application of CRM.
The lack of confidence in the value of CRM, combined with stock markets' lack of faith in the whole IT sector, has had a serious impact on the CRM software vendors. Consolidation has been the name of the game, as vendors struggle to achieve financial strength as well as provide full-function CRM solutions. We expect that consolidation to continue over the coming year as well as a growing number of multi-vendor collaborations coming together to provide particular industry or market sector solutions.
So if that outlines the state of the CRM market in 2001, what has the CRM-Forum been doing during that year? Well, we hate to say "I told you so" but for a long time now we've been trying to persuade members of the need to focus on delivering value from CRM. As our regular readers will know, we believe companies adopting CRM would be well advised to adopt an incremental, iterative approach to implementing CRM, focusing on practical, immediate opportunities to use CRM techniques to address current business opportunities and issues. Where we've seen such an approach adopted, return on investment has usually followed. The only other approach that we've seen work is when a major established corporation has initiated a green-field start-up in a related business sector based on CRM principles.
Whilst we've been focused on these messages, we've also published quite a lot, and our members have read a lot, so at a practical level we thought you would be interested to see those documents in our library that have been read most by our members. We measure the popularity of documents in two ways - by the number of page impressions generated, and the number of unique visitors to each document. So here, in alphabetical sequence, are our 'top twenty' from 2001, made up of the top ten documents by each measure:
A Step-by-Step Guide to Successful CRM, John Frazer-Robinson
A Strategic Framework for CRM, Patrick Sue & Paul Marin
Are Your Customers Profitable?, Michael Meltzer
CRM - Understanding your customers better, Richard Forsyth
CRM - What Is It All About?, Barton Goldenberg
CRM Implementation Strategies, Richard Forsyth
CRM Management Model, Alan Crawley
CRM One, Two, and Three, Sir Richard Heygate
CRM Strategy and Architecture, Toby Detter
Customer Relationship Management, Prof. Adrian Payne
Customer Relationship Management & Evaluation, Brian Birkhead
Customer Retention and CRM Techniques, Richard Forsyth
First Direct: Capturing Value from CRM, Richard Forsyth
How to Build Valuable Customer Relationships, Sir Richard Heygate
Implementing CRM at a European Telco: A Case Study, Steve Collins & Mike Byrne
Leadership in Turbulent Markets, Michael Treacy
Successful CRM: Global Trends, Richard Forsyth
What is CRM, and what does it consist of?, Richard Forsyth
Why does CRM fail?, CSC
Why You Should Implement CRM, Dr Ivan Roche
So if that's what happened in 2001, what can we expect from 2002? I'm not going to follow my own advice and use back-casting to predict the future, but use the more conventional approach of predicting forward from current trends.
Firstly, we hope and pray that the current disillusionment with the return on investment from CRM has nearly bottomed. If ROI from CRM is a key concern of yours, then you could do worse than check out the top twenty documents provided above. We hope to continue our focus on ROI throughout 2002, not least with the launch of the newsletter by Sir Richard Heygate on the topic, as well as other documents we hope to publish.
It may be that the difficulties of delivering these benefits, due to lack of skills and organisational issues, may lead to the development of a CRM services industry with major players providing CRM as a service rather than as a software solution. Recent moves in the CRM space by Microsoft suggest that they may be an interesting player to watch. It is not beyond the bounds of belief that the opportunities in the CRM marketplace provide Microsoft with a chance to move into mainstream corporate IT as a major supplier.
Whatever the impact, we expect the consolidation of the CRM industry to continue, with support for CRM coming from a small number of major suppliers collaborating to provide a full-function, full-service CRM environment.
There are likely to be a number of significant growth areas. Firstly we are likely to see a growing emphasis on support for the larger SME companies, with again a focus on CRM services rather than software, and the adoption of CRM by public service organisations.
We also expect growing interest in the currently unfashionable electronic channels. We still have to see mature self-service channels implemented, leading to a move to customer-managed relationships, another hobby-horse of ours. That growing emphasis on the e-channel is also likely, in our view, to lead to a growing interest in the use of e-community techniques to support customer service and customer retention programmes.
What the CRM-Forum plans for the coming year.
- Continue to publish high-quality documents
- Improve the quality and focus of our news service
- Growing commitment to providing help on delivering CRM
- More moves to make members pay for the value of the service we provide.
However the CRM marketplace develops, the CRM-Forum plans to be there, supporting our members' needs for independent information on CRM. We have plans to enhance both the quality of the news service we offer, and the quality of the documents we publish. We will continue to try and meet our purpose of providing leading independent informational resources to support the CRM industry.
That purpose requires reasonable funding from a variety of sources, and in particular - if we want to maintain our independence - from the members who use our services. So, in line with many other Net-based organisations, you can expect to see a number of moves aimed at persuading you, our members, to contribute towards the continuing development of the CRM-Forum.
Can I end by thanking all our members for their support over the last year. We hope that you will continue to use, and find useful, our services in 2002 and beyond.
Regards, and best wishes for the coming year.