The problem with customer relationships

A CRM system can boost sales and profits, but many CRM initiatives are doomed to fail. Cath Everett finds out why a major...

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."

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