Successful Customer-Relationship Management
Getting close to your customer, we're told, is the key to success in the marketplace. That mantra of modern marketing has led to a boom in information-technology spending to help companies get in touch with their customers. Indeed, interest in customer-relationship-management (CRM) systems continues to heat up.
To improve service and retain customers, CRM synthesizes all of a company's customer “touchpoints” — including e-mail, call centers, retail stores and sales reps — to support subsequent customer interactions as well as to inform financial forecasts, product design and supply-chain management.
But given the mixed history of other recent big-ticket IT projects — from enterprise-resource planning (ERP) to supply-chain systems — just how successful has CRM been? And what are the keys to its success?
Research published recently by two industry groups reinforces the notion that CRM has to be more than just a marketing and customer-service initiative and that success depends on extending the effort deep into the organization.“CRM is a paradigm shift in terms of what you are focusing on,” says Wayne W. Eckerson. Eckerson and Hugh J. Watson of the University of Georgia's Terry College of Business were co-directors of “Harnessing Customer Information for Strategic Advantage,” a survey from The Data Warehousing Institute (TDWI). Moving from a product-centric view to a customer-centric view, Eckerson continues, means transforming how a corporation organizes itself.
The Data Warehousing Institute got a view from the trenches by questioning 1,670 IT professionals and consultants. Some 59% of the respondents said their CRM implementations were “meeting expectations” or better. (However, only 29% of respondents had actually deployed their CRM solutions; the rest were still in the planning phases.)
The senior-level executives surveyed in the upbeat “Customer Relationship Management: An Entirely New Way of Looking at Business” from The Conference Board in New York are even more positive. Some 80% of the responding marketing, customer-service and sales execs at 96 companies characterize their organizations' CRM efforts as “very successful” or “somewhat successful.” Even more important, the main lesson learned in The Conference Board survey has little to do with budgeting or technical issues, but rather involves “greater involvement and support at all levels.” The best predictors of CRM success, according to the survey, a re corporate culture and process and technology improvement.
The key is for the CRM effort to move beyond sales, marketing, customer services and assisting customers to include operations and the “Office of the CEO” or strategic planning. It's critical, for example, to integrate sales-force automation with demand planning efforts that then feed supply-chain systems.
These success factors certainly seem akin to those of other cyber-enterprise efforts, notably ERP. But there are some key differences that make CRM even more structurally troublesome. “In the case of CRM, IT and marketing must be operating on the same wavelength. These departments are not traditionally that close in orientation and culture,” s ays Thomas M. Bodenberg, author of The Conference Board study. Finance and production, the departments associated with ERP, Bodenberg points out, are much more likely to be culturally aligned with corporate IT.
To be sure, many lessons learned from ERP have legs in CRM, especially the emphasis on change management. And like ERP, a successful CRM project requires a major financial commitment. The median annual CRM budget now runs at just over $1 million, with an implementation time of four years. ERP veterans may also recognize that enterprisewide projects don't have to be installed with a big bang. “Work toward a unified vision,” advises TDWI's Eckerson. “But start small with a proof of concept, and build momentum and support. You can't do it all at once.”
Most important, get buy-in from top management. “A sure sign that a company is serious about a strategy or technology initiative is that it appoints a high-level executive to manage the strategy,” according to the TDWI report. That may be a problem for many companies, since the survey also reveals that only 22% of companies have appointed a chief customer officer to facilitate change.
Such a senior executive also might help overcome what The Conference Board study found to be the greatest CRM obstacle — competition for time — by making sure that someone is dedicated to championing the project. In TDWI's survey, those companies that have adopted a customer czar are twice as likely to say their CRM project is “doing better than expected” or is “a runaway success.”
What the studies don't reveal, of course, is what customers think of all this. “When folks in the industry talk about CRM, they really mean extracting time, information and money from customers. They then call it a ‘relationship,’ but really it's building a system that draws those things out of a customer without giving anything back,” says Chip Walker, managing director of strategy, insights and analytics for Impiric, a marketing-solutions company based in New York. Walker adds that companies should look beyond their internal processes when designing a CRM solution. “CRM isn't a bad idea, but companies should be sure to take their customers' points of view into account.” After all, isn't that what managing the customer relationship is all about?