CRM remains a key priority at c-suite level. But with many CRM initiatives failing to deliver the expected results, how should you approach a CRM transformation project?
Forecasts predict that the global CRM market will grow by 36% through to 2022. CRM remains one of the top three priorities at C-level and strategic planning.
Despite this, failure rates for CRM projects remain high. Why? Well an old maxim from the American Management Association may help shed some light on this paradox:
“There’s an equation at PricewaterhouseCoopers for the change practices they used to run:
“OO + NT = EOO (Old Organisation + New Technology = Expensive Old Organisation).”
So commonly misconceived as a technology implementation, businesses continue to overlook the people and process requirements involved in CRM transformation.
The Mercedes effect
To understand exactly how a CRM transformation project should be approached, it’s worth citing how Mercedes burst back onto the Formula One scene, in 2014.
Having been in the F1 wilderness since the 1950s, the German auto manufacturer rejoined the fold four years ago, immediately highlighting the need to involve wider aspects of its team to deliver a car fit to fight for a world championship.
It inferred that other teams – including the dominant Red Bull - had spent the preceding five years honing the aerodynamics of their car, but little else.
Instead of following suit, it incorporated more feedback from aspects of its engineering unit who had identified some rule changes that could hold the key to gaining an advantage on competitors.
Everybody participates as a team and has an impact on winning, not just the driver.
“The engine would now be a key performance differentiator, and the whole car had to be conceived together in a fashion more integrated than ever before,” writes Andrew Benson, the BBC’s chief F1 writer.
“Some clear thinking about the ramifications of that led to a technological breakthrough on the engine.
“That not only produced a power unit that had more performance and better fuel consumption than those from rivals Renault and Ferrari, who had not thought of the concept, but also created key advantages to do with weight distribution and packaging that made the car faster as well.”
It was this unique understanding of an “integrated” team that meant Mercedes would go on to win the constructors and drivers’ championship at the first time of asking.
“Everybody participates as a team and has an impact on winning, not just the driver,” says Hideki Hashimura, a CRM transformation expert and CMO of Redk.
“You can apply this to any business and its CRM thinking: Sales people and customer service –they’re the drivers because they interact with customers. But behind them, you have your pit crew, your tyre manufacturer, your sports psychologists and the guys tweaking the engine – they’re the back office teams in a business.
“The frontend relationship builders are nothing without the back office functioning effectively.”
In terms of CRM transformation, this concept is as much about CRM leaders understanding their role in empowering everyone across a business to work together to achieve project goals.
“If all departments understand how a positive customer experience impacts the business and the bottom line then they’d be far more cooperative when it comes to getting involved with complex projects that require effort beyond the day to day operations, and move towards a customer-centric operation,” adds Hashimura. “This is what CRM transformation is really about.”
So what aspects of an F1 team’s approach can be harnessed by those business leaders charged with running complex, ongoing CRM transformation projects?
A clear vision
In Mercedes case, this was an understanding that following the mode of thinking at other F1 teams wasn’t suffice. In the case of CRM transformation, it is an understanding of the PricewaterhouseCoopers OO + NT = EOO equation:
“What we find is that when companies are trying to implement new systems, they often have technology in place and so approach the change as if they are simply moving old systems into a new system,” states Hashimura.
It’s about having a methodology – it’s CRM by design.
“This is the wrong approach because if you do this, all you’re doing is moving outdated design into new technology without addressing two elements of CRM transformation – how people work with technology, and the process design.
“It’s about having a methodology – it’s CRM by design. It’s based on design thinking, which allows you to plan for the future.
“You don’t want to replicate the problems and constraints of your current business model – you’re designing for how you want to be working three years down the line and should build a roadmap for that.
“You need to ask - how does this strategy fulfil the omnichannel expectations of your customers and how will employees fit into this roadmap? Making sure staff feel empowered by the tools you’re including in the transformation project.”
Agile CRM delivery replaces the more traditional, build phase synonymous with traditional CRM deployments. With agile methodology in place, a business adopts several short build iterations that support working towards longer-term goals.
This approach is commonly adopted by all F1 teams, who take a car to a drivers’ championship with the ethos that upgrades will enhance its capabilities over time; in cycles of continuous improvement.
Being agile is about matching the needs and concepts of the modern CIO.
“Being agile is about matching the needs and concepts of the modern CIO. Those are – how can I modernise my technology, at pace? Being able to implement new systems without having to wait months and months,” says Hashimura.
“You should be able to future-proof technology now – if you look at modern platforms, they allow your business to do that.
“But not taking this approach you’ll find it impossible to apply agile thinking; and CRM transformation thinking. It’s about what the best scenario is, how the user interacts with technology and whether the user is able to feel empowered to do their job.”
For F1 teams, the issue of governance is something that has been close to tearing the sport apart in recent years, before the sport was taken into control by new governors who have structured the sport’s finance in a fairer way. In CRM’s case, this is as much a lesson in how not to do things as the reverse.
“Governance doesn’t only control the finances surrounding initiatives, it’s a mentoring tool that’s used to help create team dynamics and cohesiveness in leadership – it’s the catalyst for focusing on single objectives,” says Hashimura.
“It’s about aligning efforts to effectively deliver a set of technologies and operational capabilities that realise and monetise CRM value for the business and its customers”
While Mercedes was seen as at the vanguard of F1 in 2014, the team was still built on a wealth of experience and knowledge within its ranks, backed by an innate understanding of best practice.
“The majority of companies aren’t Google or Amazon – or Mercedes and Red Bull or Ferrari in this analogy – they don’t lead the way in terms of technology innovation,” says Hashimura.
“But there are many companies that have implemented customer-centric business models through solid CRM transformation projects, and those companies are the ones to learn from.
In terms of tech, service design, organisational change management – these are all aspects that a business can learn from and lean on partners and external forces to help them through this evolution.
“In terms of tech, service design, organisational change management – these are all aspects that a business can learn from and lean on partners and external forces to help them through this evolution.”
The danger with any transformation project is assuming that technology can be a panacea, and indeed, the idea that employees can be circumnavigated in the push to implement new technology.
“What gets in the way of delivering is often companies have a mental divide in terms of the role of technology and the ability for the business to reach its potential,” Hashimura explains.
“Technology is a powerful ally and a core element for a company to deliver their objectives. So everyone has to understand that they need to work with their technology teams, and that means educating non-tech people how to deliver on things like agile thinking, dev ops and governance – things non-technological people can learn about.”