A CRM system can boost sales and profits, but many CRM initiatives
are doomed to fail. Cath Everett finds out why a major
philosophical shift is needed
The goal of implementing any customer relationship management (CRM)
system is to help organisations acquire, retain and develop
customers so they can sell more products and services to them. But
many industry watchers agree that for companies to place customers
rather than products and services at the centre of their world view
involves more than purchasing a nice new application suite - it
needs a major philosophical shift, whether enterprises describe
themselves as customer-centric or not.
Phil Robinson, vice-president of international marketing at CRM
suite supplier Siebel Systems, explains, "When businesses went to
market 10 years ago, they focused on what was logistically the
easiest way to deliver their product and built their supply chain
around this. Now they need to look at the demand chain, and how the
customer might want to deal with them at any time, any place,
anywhere by using the Web, going to a dealer or calling the call
centre. It is a different way of thinking about things."
To handle these customer requirements, companies generally buy CRM
software to automate either the sales, marketing or services
department including the call centre. But the problem to date, says
Jennifer Kirkby, research director at Gartner's CRM practice, is
that the implementation of these one-off or even multiple-point CRM
projects has been neither co-ordinated nor integrated on a
company-wide basis.
As a result, this has led to high rates of failure because the
initiatives have not been perceived to improve the customer
relationship. About 65% of projects failed during 2001, according
to Gartner figures, but this figure will rise to more than 80% by
the middle of 2003, falling again to less than 50% by 2005.
Moreover, while 45% of European companies had still not embarked on
any type of CRM project in 2001, 35% were working on unco-ordinated
departmental projects - only 17% involved in a programme of
multiple linked initiatives.
A mere 3% were undertaking "true CRM" programmes where they fully
understood and were serious about doing what it takes to become a
fully customer-centric organisation.
"My advice is to understand the business requirements and what you
need to do across the company as a whole," says Kirkby. "Devise a
framework and do it bit by bit with pilot initiatives. Small pilots
are fine as long as you understand how everything fits together and
see the big picture. Otherwise you will end up with little rivers
in the desert, but not an irrigation system."
Robinson agrees that it is important for organisations not to bite
off more than they can chew and recommends going for a phased
approach. "Companies need a quick win to show the value of CRM to
the business. As a result, many of Siebel's customers start in one
area, such as sales, and then expand out into others, such as
marketing," he says.
According to Anna Jones, vice-president of consulting and head of
the CRM practice at Siebel consultancy Akibia, the single most
important thing for IT managers to go for in a CRM implementation
is executive sponsorship. "To make end-to-end CRM work, you need
people's time, whether that is getting sales people off the street
to tell you what they need from a solution or getting people on the
service desk to look at prototypes. And for that you need senior
management buy-in," she says.
"You also need to get the key stakeholders to agree what they want
out of CRM so that you know what you want to achieve from the
project. If you don't understand that, you won't achieve it and the
project will be deemed a failure."
However, Kirkby says that to really become customer-centric,
enterprises need to abandon traditional ideas of sales, service and
marketing departments completely and see their company-wide
business processes in terms of the customer lifecycle. That is how
they can go about targeting, acquiring, developing, retaining and
winning customers back if they are lost. "Service staff should be
asked to sell more, marketing staff to offer customers more support
and sales staff to provide the business with more information about
customers." she says.
"As for finance, manufacturing, security and HR, they belong to the
organisation too and even if they are not serving the customer
directly, they serve someone who does, so it is a matter of looking
at the customer lifecycle and seeing how they can be brought
in."
One of the key benefits of such an approach, says Gordon McLennon,
SAP's solutions marketing manager, is being able to present one
face to the customer whether they are buying products in a shop or
on the Web or calling the helpdesk. "There are real advantages to
being able to provide these levels of consistency - the operator
can pull up the entire history of the customer immediately, which
means they can deal with them more proactively," he says.
Neil Robertson, chief executive at 30/30 Vision, a consultancy that
specialises in Onyx's mid-market CRM software, believes that the
software is "all about driving productivity". "It represents the
most significant step over the past few years in driving revenue
per full time employee, but sustainably so that staff don't get
burnt out. This means that multiple CRM projects will take off over
the next 12 to 24 months and become the norm over the next six or
seven years," he says.
Robinson cites statistics from a biannual customer survey that his
company undertakes, which reveal that the average CRM user company
saw employee productivity rise by 20%, customer satisfaction grow
by 20%, and revenues increase by 12% in the past two years.
But Robertson warns that, despite what the suppliers say, there is
no one-size-fits-all offering available. In addition, best
practices do not readily translate from one organisation to another
because each one is different and has its own customer
requirements.
"CRM is about the people in the organisation who use the software
every day and it is important to acknowledge that it should
complement what they do. If the system is too complex or too
time-inefficient and unwieldy, users won't use it, which means you
won't be able to trust the customer information it contains. It
doesn't matter how much garbage is put in there, it will still be
garbage," he says.
Case Study: Irish Life
Irish Life is rolling out Siebel
Systems' insurance applications suite across its life and pensions'
sales force and new contact centre in an attempt to improve sales
opportunities and boost customer loyalty.
The system integrates policy, mortgage and bank account data from
the firm's back-office systems to provide sales staff with a single
view of customer information. This enables them to see what
products and services the customer has already purchased and
potentially provides them with the opportunity to sell more.
Irish Life has also introduced a point of sale system to provide
the 80 bancassurance personnel in its retail branches with a visual
means of taking customers through what other products the company
can offer.
The company's new contact centre opened in November to make
appointments on behalf of sales people. Aine Cassidy, senior
manager at Irish Life's bancassurance unit, says that, to date, it
has delivered five more appointments to each sales person per
week.
"Evidence is only anecdotal, given the newness of the system, but
it seems to have delivered new business, especially multiproduct
sales," she says. "It has also made sellers' jobs easier and they
appear more professional. The contact centre makes appointments and
they can check their diaries in the Siebel system - it's all very
integrated."