New Learning in Implementing CRM Successfully

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Back in June 2001, a Gartner colleague and I revealed that 55 per cent of CRM projects were failing to meet expectations and warned that this could rise to 70 per cent by 2003. Vilified as we were for this, many ‘experts’ since have taken time to study what is and isn’t effective in implementing CRM. A number of their reports have crossed my desk recently, so this month I have extracted some of the new learning.

The first thing of note is that although the term CRM took a dive during 2002/03 with many alternative terms invented, the concept continues to grow in importance. In the not too distant future a company’s CRM assets will be part of its market valuation. So learning how to grow those assets is imperative. Yet studies show that 60-70 per cent of companies are still struggling to achieve benefits. What does the research teach us about implementing CRM successfully?

1. CRM implementation is not a capability build project. It’s an evolving strategy to build up CRM assets. Implementing that strategy needs a phased programme of synchronised activity. Each phase’s activity should meet maturing customer objectives – phase one may fix basic problems and improve customer knowledge, whilst later stages will develop relationships, improve collaboration and reduce cost to serve. Many companies who struggle initially do so because the CRM objectives of different activity are not aligned and political tensions arise eg technology resources are far more sophisticated than relationship practices and lie unused. Brand promise is totally unsupported by the experience of customer service because of unaligned goals. (see Customer Centricity – David Rance – free and The Art of Change – Jennifer Kirkby – free)

2. The scope of CRM activity is not sales, service and marketing – this is seductively easy but is encouraging limited, silo thinking. Sales, service and marketing are misleading proxies for relationship building practices across the customer lifecycle (e.g. awareness, acquisition, development, retention). The scope of CRM has 3 tiers:

  • the relationship practices, plus
  • the integrated operational capabilities that support them and build effectiveness, (e.g. knowledge, process, strategy, metrics, organization) and
  • the underlying resources that enable them (e.g. channels, culture, skills, technology, data).

There are many models detailing the scope of CRM, all are roughly similar e.g. Customer Management – Key Messages for Senior Managers – Neil Woodcock, Merlin Stone – free and Eight Building Blocks of CRM – Gartner – free.

3. CRM should not be project based. From the start CRM needs weaving into the fabric of the organization – you are ‘turning a tanker’ not building a new one. That means co-ordinating teams in their business as usual roles as much as taking people away to man projects. CRM should be owned corporately, and involve everyone in the changes so that all activity become customer focussed, all of the time – not just some of the time. One of the biggest barriers in CRM initiatives is lack of resource, so to start with rearrange and redirect what is already there with the objective of fixing some of the important problem areas in current customer experience – customers and employees will tell you what these are. (see Make your business Fast + Simple for your customers – Budd – free)

4. A CRM leader can be highly dangerous. CRM needs senior leadership but not any leader will do – even one who is passionate about customers. The important requisites of such a person (or persons) is that they:

  • are in it for the long term, and not just driving for short term goals
  • really understand the scope and evolving nature of CRM
  • realise that their role is one of change management -to enable others and help resolve tensions and conflict.

(see Impact of Customer Management on Business Performance – QCi – free)

5. CRM is not just important. Managers need to see CRM as imperative to their own objectives, not just important. Executive’s accountability for customer experience should increase as they climb the organisation, not decrease as they get further from the front line. Their rewards should be firmly linked to the achievement of customer objectives and eradicating the conflict caused by overlapping functional objectives.

6. The biggest contributors to business success are the least tackled CRM implementation activities. A lot of surveys have tried to establish the CRM activities which make the biggest difference to business performance (eg CRM Works – IBM – free and How much are customer relationship management capabilities really worth - Accenture – free). The findings have a lot of synergy and are listed in order of importance:

  • Change Management – motivating people to align behind and deliver a brand promise. Encouraging customer service competencies – often found in people who are rule breakers.
  • Customer Service & Experience –evolving flexible, adaptive, relationship building practices that customers value and which support the customer lifecycle. To start with relationships are often adversarial, once the basics practices like complaints management meet hygiene standards you can evolve motivating and collaborative services.
  • Metrics and Goals – ensuring incentives and measures are in line with current corporate customer objectives and not at odds. Monitoring what is important to customers now, through feedback, not what is traditional.
  • Value Proposition and Strategy– competitively positioning a differentiating, branded, value proposition in the market place – and adapting it to environmental changes.

7. There is no such thing as CRM best practice. The right way to implement CRM is unique to every organisation. It depends on understanding the market structure, how relationships are built in your market, competitor’s position on CRM, the maturity of current capabilities, geographical region, and organisation size. Even within a multinational company some practices like data integration can be implemented globally, but others like culture and regulatory issues need to be done locally.

As always we'd like to hear your comments. Make them below or email me at [email protected]

Jennifer Kirkby
[email protected]

About MyCustomer Newsdesk

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avatar
By admin
29th Jul 2004 16:12

1st, Jennifer's article is very good. I've passed around to several in my organization. However, I would disagree with her point #7.

Maybe it's semantics but I think there are broader best practices to follow when beginning CRM. One of the more carefully done studies I've seen has been the widely read "Blue Print for CRM Success" by Dick[***] Lee and associates. (One of the more carefully done, and statistically valid studies I've seen). I don't think you can read this and come away with the conclusion that there are not best practices that companies need to follow regardless of their vertical.

Maybe these are not best defined as best practices but rather are the broader structures/guidelines that companies must pay attention to in order to be successful. Within these broader structures or guidelines each company, as Jennifer has pointed out, must customize to fit their own goals and market. But I believe they do exist and to operate outside of these guidelines means you are at greater risk of failing.

Thanks (0)
avatar
09th Aug 2004 09:20

Eric, Jennifer

Whilst I agree with Jennifer that so-called 'Best Practice' can be very misleading when applied out of the business context in which they were developed, if you are struggling to get started in the CRM game, they can provide a useful pointer in which direction to go.

As both Jenifer's and my own list of best practices imply, you need to think carefully about where your are currently in CRM terms, what you can realistically do well and what you need to do better to be more profitable, before setting off in any particular direction. Once you have thought through these factors, then best practices will help you set stretch goals that you can develop towards.

Paradoxically, the better you are at CRM, the less use best practices really are. Here you should adopt the 'pursuit of perfection' approach from Lean CRM, developed by japanese companies like Toyota. (Take a look at the article I wrote at the www.crmguru.com website recently if you want to know more about how to 'Let the Customer Drive your Business with Lean CRM'.)

Best practices are useful if you are starting out in the CRM game, but the better you get, the more use Lean CRM practices become.

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
By admin
03rd Aug 2004 16:57

Graham, I really enjoyed your list of "best practices". I thought you had probably included that study. It was good to see a careful use of studies that were carefully done. I've seen alot (especially in America) of folks who put out "best practices" or draw conclusions from "work" that is not statistically valid. I am worried that one of Jennifer's conclusions was there are no best practices (although her article overall was fantastic). I still believe, and these studies certainly emphasize the point, that there are best practices that companies need to follow in order to help ensure a successful program. And ignoring them will, as statistical analysis shows, decrease the likelihood of success. Your list was great!

Eric

Thanks (0)
avatar
By admin
29th Jul 2004 12:11

Bromides don't work

Lists don't work

Implementations are for real with real people.

Read some of the real world articles others and I have written for this site have had published supporting my words

CRM is whatever the company thinks it is - consulatnts and writers might pontificate but the customer really knows best - what is right for themselves.

Many programmes are no longer have the name CRM the customers and their consultants have started calling the programme anything but CRM

By the way what is failure - failure to achieve falacious ROI numbers put in to get approval or metrics that consultants have thought up that appeared to work somewhere else.

A while back I wrote an article about real world programmes that outlines the reasons why many iniiatives never achieve what they set out to achieve. The real world moves on and the requirements of the CRM target change, the programmes funding changes, people change, the software doe not perform to specification, people don't buy in etc., etc.,

Quoting those who have a vested interest in spreading fear, uncertainty and doubt only increases the likelyhood of gold plated solutions that will never achieve an ROI.

Simplify CRM and it's objectives and maybe there is a chance. Overcomplicate it ideas that you must get customer centric, weave CRM into your fabric ... Please read up on unwritten groun rules or better yet get hold of "the coporate culture survival guide" - Edgar H Schien.

The real world needs down to earth advice not lofty bromideS.


GET REAL PLEASE!

Michael Meltzer

Thanks (0)
avatar
29th Jul 2004 10:32

Thank you Graham for comments, glad you agree with much of the learning from the research

Thanks (0)
avatar
29th Jul 2004 09:04

The trouble with lists is that they can all too easily become meaningless slogans. The trick is to turn them into pragmatic suggestions that can be turned into action.

The critical success factors for CRM that I tend to use are:

1. Develop a Customer Centric Strategy - if you aren't thinking about which customers you want, what you are going to offer them, how that will create value for both parties and what you need to do to implement the strategy, you are unlikely to end up anywhere you want to be.

2. Adopt a Lean CRM Approach - Lean CRM is built upon knowing how value flows through the business system. It forces you to understand the trade-offs between different processes, different IT/IS solutions, and how they drive value growth. Unless you know how different CRM activities create value, it is all too easy to 'invest' in too much reengineering or too much technology. The systems integration consultants and CRM analysts are prone to making this mistake.

3. Measure, Monitor & Manage CRM Projects - even if CRM is a business strategy, big-bang changes don't work in most cases. They didn't work for TQM, BPR, ERP and they aren’t for CRM. Start a few discrete, inter-linked CRM projects which take you towards your CRM goals and manage them by the numbers.

4. Provide Staff with Training & Incentivise the Right Behaviours - CRM is a business strategy that requires people to change. The only way you will drive change is through open & honest communications, line-level training, support in the workplace and a range of incentives that support the desired behaviours.

5. Organise Around the Customer - most organisations are still functionally organised. There is a well-documented organisational development process that evolves towards customer-orientation. Find out where your organisation is and start to change.

6. Deliver Value Quickly & Slowly - the best CRM projects provide a foundation for longer-term CRM success across the whole enterprise. But they have to pay their way in the short-term too. Aim for each project to create enough cost-savings or revenue growth to fund the next tranche of CRM projects.

The most important thing is to get started with simple improvements to how you profitably deliver value to your customers. And then to learn from these early experiences as you expand CRM into other areas.

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
29th Jul 2004 17:02

Eric

The CRMGuru study you mentioned was one of those that I used in coming up with my own list of best practices. It is a solid piece of independent research based upon the results of a survey of over 450 companies.

The other independent studies that I used were:

Prof George Day's 2002 study of over 300 companies entitled, "Superiority in CRM: Consequences for Competitive Advantage and Performance". Available from the Wharton Business School website.

Prof Werner Reinartz's 2002 study of over 200 European companies entitled, "Measuring the Customer Relationship Management Construct and Linking it to Performance Outcomes". Available from the Insead Business School website.

And one exception to prove the rule. (It was included because I know and trust two of the contributors from previous consulting work at PwC.)

The IBM Institute for Business Value's 2002 study of over 200 European companies entitled, "CRM done right". Available from the IBM Business Consulting Services website.

All four come to pretty similar conclusions. Although there is always safety in numbers, research on the 'wisdom of crowds' suggests that if all four agree independently, there is a high likelihood of there being more than just a grain of truth in their common conclusions.

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
By admin
29th Jul 2004 16:12

1st, Jennifer's article is very good. I've passed around to several in my organization. However, I would disagree with her point #7.

Maybe it's semantics but I think there are broader best practices to follow when beginning CRM. One of the more carefully done studies I've seen has been the widely read "Blue Print for CRM Success" by Dick[***] Lee and associates. (One of the more carefully done, and statistically valid studies I've seen). I don't think you can read this and come away with the conclusion that there are not best practices that companies need to follow regardless of their vertical.

Maybe these are not best defined as best practices but rather are the broader structures/guidelines that companies must pay attention to in order to be successful. Within these broader structures or guidelines each company, as Jennifer has pointed out, must customize to fit their own goals and market. But I believe they do exist and to operate outside of these guidelines means you are at greater risk of failing.

Thanks (0)
avatar
By admin
03rd Aug 2004 23:46

Jennifer, thanks for clarifying. I agree with your points! Again, good article.

Eric

Thanks (0)
avatar
03rd Aug 2004 17:51

Eric
Thank you for taking time to add to the debate, this is what the Forum is for.

Just to clarify my point on best practice, I have been asked so many times to tell people what 'best practice' is in CRM, what are others doing. However, if CRM was 'one size fits all' then there would be little competitive differentiation in it. To get CRM benefits the implementation needs tailoring to the situation. One of the interesting points in the IBM study, and one I have noticed myself over the years, is the difference in the way CRM is implemented in geographical regions. This if often to do with different industry structures and cultural differences.

A second point on best practice is when does best stop being best? If your company positions itself as a market follower, then best practice for you is not what the market leaders are doing - well not until it is fully tried, tested and accepted by the majority. If you are a market leader then you are probably not interested in best practice at all - well not if you want to stay a leader.

However, I do understand your point that at a microlevel it is useful to look at what others have done and learn from their failure and success. That I fully agree with.

Jennifer

Thanks (0)
avatar
29th Jul 2004 13:56

Mike

In reading your response to Jennifer's article, I am not quite sure what your point is? Is it not to have lists at all? Is it to read your previous articles?

We all know that implementation is important. But implementing what? Without a CRM strategy, or at least CRM goals to drive your implementation, it is unlikely that just 'implementing CRM' will deliver much. As a 1993 Sloan Management Review article described the dilemma, is it “Great Strategy, or Great Strategy Implementation”?

And how exactly do you make implementation work? Organisations do not always know what CRM can do for them and do not always know how to get it done either. If it was that easy, organisations would have 75% success rates for CRM implementation and CRM consultants would all be out of a job. But the reality is that CRM consultants are very busy helping all types of organisation to implement CRM. Because quite simply, it is, difficult.

The fact is that business life in general and CRM in particular, is complicated, complex and dynamic. It is complicated because it involves many different parts of a business-customer-competitor ecosystem in its operation. So a marketing offer today, that awakes a customer’s interest, is just as likely to elicit a counter-offer from a competitor tomorrow. It is complex because many of these different parts interact together to shape what we see in business. The introduction of new call centre technology is likely to require staff re-training and may require team incentives to be redeveloped too. And it is dynamic because all of these things interact with each other and change continuously over time. Back to the marketing offer again.

Doing well in this difficult environment requires a thorough understanding of where the best CRM opportunities lie and what they are worth. These opportunities then need to be turned into manageable projects that deliver value in the short-term and provide CRM foundation stones to build on to achieve longer-term goals too.

Lists do help to focus people on common themes, indeed, Jennifer used one to simplify her take on the complex business environment outlined above. List's work because of the step-by-step way the logical mind works.

My challenge to you is to put up your own simple list of what helps CRM succeed.
I believe you know the saying about putting-up…

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
29th Jul 2004 17:02

Eric

The CRMGuru study you mentioned was one of those that I used in coming up with my own list of best practices. It is a solid piece of independent research based upon the results of a survey of over 450 companies.

The other independent studies that I used were:

Prof George Day's 2002 study of over 300 companies entitled, "Superiority in CRM: Consequences for Competitive Advantage and Performance". Available from the Wharton Business School website.

Prof Werner Reinartz's 2002 study of over 200 European companies entitled, "Measuring the Customer Relationship Management Construct and Linking it to Performance Outcomes". Available from the Insead Business School website.

And one exception to prove the rule. (It was included because I know and trust two of the contributors from previous consulting work at PwC.)

The IBM Institute for Business Value's 2002 study of over 200 European companies entitled, "CRM done right". Available from the IBM Business Consulting Services website.

All four come to pretty similar conclusions. Although there is always safety in numbers, research on the 'wisdom of crowds' suggests that if all four agree independently, there is a high likelihood of there being more than just a grain of truth in their common conclusions.

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
29th Jul 2004 09:04

The trouble with lists is that they can all too easily become meaningless slogans. The trick is to turn them into pragmatic suggestions that can be turned into action.

The critical success factors for CRM that I tend to use are:

1. Develop a Customer Centric Strategy - if you aren't thinking about which customers you want, what you are going to offer them, how that will create value for both parties and what you need to do to implement the strategy, you are unlikely to end up anywhere you want to be.

2. Adopt a Lean CRM Approach - Lean CRM is built upon knowing how value flows through the business system. It forces you to understand the trade-offs between different processes, different IT/IS solutions, and how they drive value growth. Unless you know how different CRM activities create value, it is all too easy to 'invest' in too much reengineering or too much technology. The systems integration consultants and CRM analysts are prone to making this mistake.

3. Measure, Monitor & Manage CRM Projects - even if CRM is a business strategy, big-bang changes don't work in most cases. They didn't work for TQM, BPR, ERP and they aren’t for CRM. Start a few discrete, inter-linked CRM projects which take you towards your CRM goals and manage them by the numbers.

4. Provide Staff with Training & Incentivise the Right Behaviours - CRM is a business strategy that requires people to change. The only way you will drive change is through open & honest communications, line-level training, support in the workplace and a range of incentives that support the desired behaviours.

5. Organise Around the Customer - most organisations are still functionally organised. There is a well-documented organisational development process that evolves towards customer-orientation. Find out where your organisation is and start to change.

6. Deliver Value Quickly & Slowly - the best CRM projects provide a foundation for longer-term CRM success across the whole enterprise. But they have to pay their way in the short-term too. Aim for each project to create enough cost-savings or revenue growth to fund the next tranche of CRM projects.

The most important thing is to get started with simple improvements to how you profitably deliver value to your customers. And then to learn from these early experiences as you expand CRM into other areas.

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
29th Jul 2004 10:32

Thank you Graham for comments, glad you agree with much of the learning from the research

Thanks (0)
avatar
By admin
29th Jul 2004 12:11

Bromides don't work

Lists don't work

Implementations are for real with real people.

Read some of the real world articles others and I have written for this site have had published supporting my words

CRM is whatever the company thinks it is - consulatnts and writers might pontificate but the customer really knows best - what is right for themselves.

Many programmes are no longer have the name CRM the customers and their consultants have started calling the programme anything but CRM

By the way what is failure - failure to achieve falacious ROI numbers put in to get approval or metrics that consultants have thought up that appeared to work somewhere else.

A while back I wrote an article about real world programmes that outlines the reasons why many iniiatives never achieve what they set out to achieve. The real world moves on and the requirements of the CRM target change, the programmes funding changes, people change, the software doe not perform to specification, people don't buy in etc., etc.,

Quoting those who have a vested interest in spreading fear, uncertainty and doubt only increases the likelyhood of gold plated solutions that will never achieve an ROI.

Simplify CRM and it's objectives and maybe there is a chance. Overcomplicate it ideas that you must get customer centric, weave CRM into your fabric ... Please read up on unwritten groun rules or better yet get hold of "the coporate culture survival guide" - Edgar H Schien.

The real world needs down to earth advice not lofty bromideS.


GET REAL PLEASE!

Michael Meltzer

Thanks (0)
avatar
By admin
03rd Aug 2004 16:57

Graham, I really enjoyed your list of "best practices". I thought you had probably included that study. It was good to see a careful use of studies that were carefully done. I've seen alot (especially in America) of folks who put out "best practices" or draw conclusions from "work" that is not statistically valid. I am worried that one of Jennifer's conclusions was there are no best practices (although her article overall was fantastic). I still believe, and these studies certainly emphasize the point, that there are best practices that companies need to follow in order to help ensure a successful program. And ignoring them will, as statistical analysis shows, decrease the likelihood of success. Your list was great!

Eric

Thanks (0)
avatar
29th Jul 2004 13:56

Mike

In reading your response to Jennifer's article, I am not quite sure what your point is? Is it not to have lists at all? Is it to read your previous articles?

We all know that implementation is important. But implementing what? Without a CRM strategy, or at least CRM goals to drive your implementation, it is unlikely that just 'implementing CRM' will deliver much. As a 1993 Sloan Management Review article described the dilemma, is it “Great Strategy, or Great Strategy Implementation”?

And how exactly do you make implementation work? Organisations do not always know what CRM can do for them and do not always know how to get it done either. If it was that easy, organisations would have 75% success rates for CRM implementation and CRM consultants would all be out of a job. But the reality is that CRM consultants are very busy helping all types of organisation to implement CRM. Because quite simply, it is, difficult.

The fact is that business life in general and CRM in particular, is complicated, complex and dynamic. It is complicated because it involves many different parts of a business-customer-competitor ecosystem in its operation. So a marketing offer today, that awakes a customer’s interest, is just as likely to elicit a counter-offer from a competitor tomorrow. It is complex because many of these different parts interact together to shape what we see in business. The introduction of new call centre technology is likely to require staff re-training and may require team incentives to be redeveloped too. And it is dynamic because all of these things interact with each other and change continuously over time. Back to the marketing offer again.

Doing well in this difficult environment requires a thorough understanding of where the best CRM opportunities lie and what they are worth. These opportunities then need to be turned into manageable projects that deliver value in the short-term and provide CRM foundation stones to build on to achieve longer-term goals too.

Lists do help to focus people on common themes, indeed, Jennifer used one to simplify her take on the complex business environment outlined above. List's work because of the step-by-step way the logical mind works.

My challenge to you is to put up your own simple list of what helps CRM succeed.
I believe you know the saying about putting-up…

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
03rd Aug 2004 17:51

Eric
Thank you for taking time to add to the debate, this is what the Forum is for.

Just to clarify my point on best practice, I have been asked so many times to tell people what 'best practice' is in CRM, what are others doing. However, if CRM was 'one size fits all' then there would be little competitive differentiation in it. To get CRM benefits the implementation needs tailoring to the situation. One of the interesting points in the IBM study, and one I have noticed myself over the years, is the difference in the way CRM is implemented in geographical regions. This if often to do with different industry structures and cultural differences.

A second point on best practice is when does best stop being best? If your company positions itself as a market follower, then best practice for you is not what the market leaders are doing - well not until it is fully tried, tested and accepted by the majority. If you are a market leader then you are probably not interested in best practice at all - well not if you want to stay a leader.

However, I do understand your point that at a microlevel it is useful to look at what others have done and learn from their failure and success. That I fully agree with.

Jennifer

Thanks (0)
avatar
By admin
03rd Aug 2004 23:46

Jennifer, thanks for clarifying. I agree with your points! Again, good article.

Eric

Thanks (0)
avatar
09th Aug 2004 09:20

Eric, Jennifer

Whilst I agree with Jennifer that so-called 'Best Practice' can be very misleading when applied out of the business context in which they were developed, if you are struggling to get started in the CRM game, they can provide a useful pointer in which direction to go.

As both Jenifer's and my own list of best practices imply, you need to think carefully about where your are currently in CRM terms, what you can realistically do well and what you need to do better to be more profitable, before setting off in any particular direction. Once you have thought through these factors, then best practices will help you set stretch goals that you can develop towards.

Paradoxically, the better you are at CRM, the less use best practices really are. Here you should adopt the 'pursuit of perfection' approach from Lean CRM, developed by japanese companies like Toyota. (Take a look at the article I wrote at the www.crmguru.com website recently if you want to know more about how to 'Let the Customer Drive your Business with Lean CRM'.)

Best practices are useful if you are starting out in the CRM game, but the better you get, the more use Lean CRM practices become.

Graham Hill
Independent CRM Consultant

Thanks (0)

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