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Ensuring CRM Success:
How to be in the 25%
Seventy five percent of all CRM implementations fail. Or is it 90%? Or is it 50%? And if any of that is true, why do all CRM vendors claim 95% customer satisfaction? The folklore around CRM failure rates has grown to nearly match the claims of ROI provided by vendors. The truth lies somewhere, but where?
Meanwhile, CRM spends are declining precipitously as do customer satisfaction scores across virtually any industry you can name. Customers are more demanding, expect to be known, want multi-channel access all the time and everywhere, and expect you to respect their privacy. Buying CRM software is 10% of the task.
The real issue is how to turn your CRM initiative and technology spend into something that will help you build brand strength, customer loyalty, and customer repurchase and cross-sell while controlling channel costs and delivering a superior customer experience. How indeed? Here are the rules:
Rule 1: Follow The Money; Find Your Value Anchors
Rule 2: Start With The Customer Experience
Rule 3: Establish Clear Business Requirements
Rule 4: Heed The Need For Speed
Rule 5: Build Your Team, Then Your Technology
Rule 6: Design For Your People
Rule 7: Give Sales The Steering Wheel
Rule 8: Require Executive Sponsorship And Oversight
The Rules
Rule 1: Follow The Money; Find Your Value Anchors. Most people know it as the “80-20” rule: 80% of the results come from 20% of the (actions, people, products, etc.). The rule is actually more properly known as the Pareto Principle, named after the Italian economist Vilfredo Pareto (1848-1923) who was apparently the first to note back in 1906 that twenty percent of the people owned eighty percent of Italy’s wealth.
It’s still true today. In most firms, twenty percent of the customers provide a disproportionate percentage of profits. This relatively small group of customers is what I call your “value anchor.” In fact, in some industries like banking, the top four profitability deciles often account for more than 100 percent of the profit, paying the way for the bottom 60 percent, which typically cost more to sell and serve than they earn back in profits.
If yours is one of those firms, there’s a lot to be said for aiming your first CRM efforts at your high-value customers and offers. Starting there delivers at least four important benefits:
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Reduces overall project costs and time to deploy your re-engineered processes (and you will need to re-engineer your processes) and enabling CRM technology.
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Gets you working across channels, silos, and product groups because these customers typically want it all, everywhere, right now (usually because that’s what we’ve promised them).
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Focuses management attention and resources on the biggest pool of potential profits and the biggest source of revenue and profit risk if those customers defect or diminish.
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Makes the obstacles commonly associated with large-scale organizational change more manageable, because the internal populations are smaller.
The increase in profits that becomes available by optimizing the processes that impact your high value customers is often far greater than can be realized by reducing the costs associated with serving the much larger number of low-value customers.
Rule 2: Start With The Customer Experience. This feels like it should fall in the realm of “so obvious it shouldn’t be said.” It should, but it still needs to be said. It is astonishing how many firms seem to lose sight of the customer when they deploy CRM technology.
One of the first tricks is to agree on: (a) who your customers are, (b) what they want, (c) the information you want to know and capture about them, (d) what you want to do with that information, and (e) what the customers expect you to do with that information. Regardless of the technology, a firm’s inability to answer these questions throttles growth and chokes the ability to deliver a great customer experience.
Second, you need to think about the impact technology has or can have on the user experience. This means actually asking real customers about what they do and what they would like to do with what you sell. What are the problems? Is it they can’t pay the bill fast enough? Is it that they want to do transactions at midnight? Is it that they don’t like to wait on the mail and then get a call that says ‘you’re late’? This isn’t about technology at this point. That comes later.
You’re looking to identify the interactions that your customers really care about. Of greatest interest are the interactions that you can brand in the sense that you can do something with the following drivers of a branded customer experience:
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Involve the customer.
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Exchange information for trust
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Adapt-to-enrich.
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Deliver the brand.
It is around these interactions – driven by those design considerations – that you should configure your CRM solution.
Rule 3: Establish Clear Business Requirements. The words “customer relationship management” should mean something more than technology. Exactly what they mean for your company should ultimately be driven by your go-to-market strategy.
Go-to-market strategy. A coherent set of choices that align your people, processes, products, premises (physical and virtual channels), and partners to deliver your brand promise, the desired customer experience, and tangible value.
The words “coherent set of choices” are code for the word “strategy.” I’ve sat through more debates about how to define that word and how it’s different from initiatives and tactics than I care to remember. What gets lost in the semantic wars are the concepts of coherence and choice:
Coherent (adj). 1. Intelligible and articulate. 2. Consistent; easily followed. 3. Cohering. 4. Physics (of waves) having a constant phase relationship.
Choice (also decision): an irrevocable allocation of resources.
If what you’re doing on the demand side of the business doesn’t align how you’re set up to deliver on the supply side, you don’t have a coherent go-to-market strategy. If your marketing activities don’t have anything to do with your sales activities, you don’t have coherence. If you’re promising your customers one thing, and training (or not training) and paying your people to do something else, your go-to-market strategy is incoherent, in which case it can’t honestly be said that you have one.
If you decide to do something but don’t follow through, you really haven’t made a choice or a decision. Certainly not a quality decision because you’re missing the part about the irrevocable allocation. If you follow through but change course at the first sign of difficulty, you haven’t really made a decision. It was more like an intention. Same reasoning.
But where and when you’re able to make coherent choices that line up your business behind a differentiating brand promise to deliver a unique and compelling customer experience and value proposition, you have yourself an honest to goodness go-to-market strategy. That’s where you need to start. Once you’ve done that, you can start specing out your technology.
Rule 4: Heed the Need for Speed. Despite all of your good intentions, foresight, and planning, big technology implementations have a way of going off track. Some of that is due to the natural entropy of organizations and projects. Some of it is due to Murphy’s Law. A lot of the problems come from time.
Time is the enemy of big projects. It takes time to work towards complete coordination across all customer data, channels, and touch points—presumably one of the goals of your CRM project. Yet the passing of time creates opportunities for your project to get off track. The solution is to roll-out your CRM initiative so as to achieve incremental wins along the way, thus fueling optimism, commitment, and opportunities for further success. Speed to first business benefit is key. As Carol Gray, EVP of CIBC’s incredibly successful small business banking unit says:
It’s tempting to try to solve for nirvana. What you’ll wind up with is an impossible to implement solution that takes five years and millions of dollars, or tens of millions of dollars, to implement. You need to chunk down your project into six-month deliverables that are meaningful, have an impact, and have utility immediately. If you don’t, people will disengage and funding will dry up.
It’s not quick wins. Everyone uses those words, but that’s too transactional a view of implementing something that’s really quite complex. It’s too ‘throw it out, let them use it, and then throw it away.’ What you want is a deliverable that encourages the behavioral changes you’re looking for. That’s the first and hardest thing to do.
Rule 5: Build Your Team, Then Your Technology. One of the exciting parts about operational CRM technology is the ability to give sales, service, marketing, and anyone else who cares a single view of your customer across the firm. It’s interesting for decision making reasons; it’s even more interesting as that single view is what you need to deliver value-adding customer experiences.
The handmaiden of all that cross-organizational viewing and doing is that your CRM project will have lots of stakeholders. That means you need a design team to represent those varied and sometimes very different wants, needs, and interests. That’s fine as far as it goes, but it’s a recipe for a camel (a horse designed by a committee) if team members don’t:
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Have relevant expertise instead of just opinions.
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Use some sort of organizing mental model to think about the what, how, and why of customer relationship management.
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Focus on what it takes to deliver an extraordinary customer experience versus digitizing whatever you currently do in marketing, sales, and service.
Rule 6: Design for Your People. Of all the stakeholders you need to worry about, the ones to really pay attention to are the front-line sales and service people who use your CRM technology to meet customer needs. If you build it and they don’t come, to crib a line from Field of Dreams, you’ve got serious problems. This goes quadruple for your sales people who are notorious late adopters of complex technology like CRM, something that smacks to them of big brother.
Deploying CRM technology means a lot of organizational change. Many, if not most, of those changes show up in the middle of the processes and job descriptions of the people touching your customers. If all that those changes do is layer more work on your front line people without any obvious and immediate pay off to the user, you’ve going to have a big problem with morale, and an even bigger problem with the quality of your information (which won’t be that high). Using technology should make achieving goals easier, not harder.
Regardless of what your vendors and IT people tell you, there is no such thing as totally intuitive software. It’s a myth. Even assuming you’ve solved for all the work flow issues, people won’t necessarily rush to adopt your new technology if they don’t know how it works. You’ll need training and more training to promote adoption. Don’t scrimp. Also, make sure that you create context – the big picture – to ensure that your people understand how using the technology impacts the overall business, not just their jobs.
There’s more. People won’t use your new CRM technology if the data isn’t current and accurate. And it will take them about thirty minutes to figure out if the data they’re working with is any good.
Clean data is easy to talk about and hard to come by. Too many organizations find that their CRM implementations stumble and fall because of the problems embedded in working with crummy data. Instead of smoothing work flows and creating new productivities, CRM now doubles the workload of employees – they check the system and then do manual investigation to ensure the accuracy of what they see before making decisions or responding to customers.
Make sure you take as much care with the employee experience as you do with the customer experience. Explicitly build the same kind of research, testing, and iteration into setting up the technology interfaces they use as you do for your customers.
Rule 7: Give Sales The Steering Wheel. In most organizations, Sales is the most difficult group to automate, and yet its performance is the most critical to your success. No sales, nothing left to talk about.
Most sellers view whippy cool new technologies as a pain and an intrusion. While some of that may just be inherent in the kind of people that do those jobs, that doesn’t make their point of view wrong. In general, sellers and sales management need four things to make technology a worthwhile part of their lives:
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Visibility into everything that has occurred between the customer and your organization and partners.
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Easy access to other information sources that provide cues and clues to potential customers needs, upsets, buying opportunities, and attrition risks.
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The ability to affect and prioritize communications and interactions in other parts of the organization in support of sales pursuits and improving customer satisfaction and retention.
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The ability to automate mundane tasks like literature fulfillment will improve adoption and increase productivity.
Make sure your CRM project meets the needs of your toughest users.
Rule 8: Require Executive Sponsorship And Oversight. Executives often view technology as something to be left to people who are paid to deal in bits and bytes. That’s usually a big mistake. It begs the question, why wouldn’t you/they want to understand the business capabilities that technology enables, have a working understanding of the trade-offs inherent in the technology, and be able to design MBOs to encourage interdepartmental collaboration around the customer?
More to the point, everything implied in the other seven rules points to CRM as something that will have profound and potentially wrenching effects on how the organization goes to market and how it plays together behind the scenes. Without executive sponsorship, the big changes just won’t happen.
The Basics of a CRM Project
From a project management standpoint, implementing CRM technology is pretty straight forward. Every consulting firm has its own super secret project methodology that probably winds up looking something like this:
Phase 1–Assessment. Scoping the project, developing a project plan and building the contracts. Usually done by the vendor or integrator.
Phase 2–Project Launch. Meetings with key stakeholders to get everyone on the same page. Project expectations are set and communication plans created and launched. Some amount of product training can go on at this phase to familiarize the project team with what the technology can do, or might do if enough money is spent to turn the vendor’s demo into a production system.
Phase 3–Requirements Gathering. Gathering and documenting the business requirements from the various constituent groups. This would also be where you would wrap in the customer experience and user experience requirements.
Phase 4–Solution Design. Operational CRM ships as a lot of plumbing and templates that need to be mapped to the work flows that define your business. The majority of time in this phase is spent mapping the process flows to the technology and developing how the system will be configured to get the right information to the right people at the right time. This is also where you start to plan the training and testing phases of the project.
Phase 5–System Configuration. In this phase, the technical types configure the user interface (the screens that customers and employees will see and use) and building the business rules that support how your process work into what’s called the “business services layer” of the technology. This is also when all your existing systems need to be tied into your shiny new CRM technology. There will be a series of prototypes to confirm that the design meets the needs of the users.
Phase 6–Pilot. This stuff never works right the first time, so there will be a round of beating on the system to make sure that it works as planned.
Phase 7–Rollout. Now comes the fun part: turning on the production system and teaching all those people who were used to doing something else, how to use this new life changing technology. Be prepared for lots of noise about how the new gear isn’t as good as what it replaced. Sure as shooting, it won’t be in some parts and places. Two weeks into rollout and you’ll already be working on upgrades.
Phase 8–Continuous Improvement. Whatever you deployed in Phase 7 will need to be improved. One reason is just because that’s the way it is. The other is that over time your business and business requirements will change. So will utilization of the system by some percentage of your people. The two together create a gap between optimal and actual performance and thereby return on investment and impact on customer outcomes. Plan on tweaking in year one, and looking at a refresh no later than year three.
Word to the wise. Don’t go crazy defining everything to the nth degree during phases three and four. Especially beware of project documentation that exceeds what is necessary to define, manage, and maintain accountability for a project that should be designed to help you to “do a little, learn a lot; start small, deploy fast.”
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Kevin Hoffberg
Last modified:
05/03/06