jim.shamlin.com

2 - Components of CRM Success

A successful CRM program enables a firm to improve its interactions with prospects and customers. Stress the word "program" here: it is not the computer system that creates the value, but the program it supports. The system merely gathers information and creates reports: decisions and activities are still undertaken by people in the organization. The CRM system is merely a tool that can be leveraged to make better decisions and undertake more effective activities.

The author considers a CRM program to be built on four pillars: people, process, technology, and expectations, each of which will be considered in detail in this chapter.

People

The author details a number of specific roles that will need to be played by various people within the organization. In some instances, a single person may play multiple roles; and in most instances, their role is a part of their current position, rather than a new job title.

The executive sponsor is a critical role, played by an individual who has the budget to fund a major project and the esteem or connections to support it within the organization. He must secure the necessary funding and resources, garner support at the executive level from all groups that will contribute to the program, provide guidance for the development project, set goals for the program and hold people accountable, exercise ultimate decision-making authority, and champion the use of CRM within the organization. Ideally, the sponsor is experienced with the customer-facing part of the organization (specifically, an IT executive is not a good choice for this role).

Another key group is the steering committee, chaired by the sponsor but including representative from the key constituent groups (sales, customer service, marketing, information technology). Subject to the sponsor's authority, this group develops the vision for the program and determines how various groups will use and contribute to the system, create and maintain the CRM roadmap for the organization, and assist in planning and budgeting. Key qualifications are the understanding and support of the ways in which CRM can benefit the organization, having influence within the groups they represent, and have the time needed to participate fully in committee activities. Another caution is given regarding IT involvement: the tail should not wag the dog. That is, the IT representative should seek to understand the needs of the business and consider how to meet them, rather than seeking to limit the group to the capabilities of present systems.

Another group that is critical for the initial installation of a CRM system as well as upgrades and modifications to it is the implementation team. This consists of several individuals:

1. The executive sponsor should be involved to ensure that the implementation meets the vision of the steering committee and remains on track with budget and schedule
2. A project manager is typically engaged to gather information to plan the execution of a project and monitor its progress. For significant implementations, a dedicated project manager is desirable.
3. Subject Matter Experts (SMEs) are engaged to represent areas of the organization that will be impacted by the system - those who will feed it and those that will use it. These are experienced professionals who can represent the users of the system, who can identify problems and suggest opportunities.
4. IT Representative. Since CRM is based on a data system, someone familiar with the existing information systems should be involved to identify where existing resources can be leveraged or where new ones will need to be acquired, and what ongoing tasks will be required to maintain the system.
5. Trainers. Since a significant factor in the success of a new system is in training the employees to use it, trainers should be involved to evaluate how the proposed system differs from current practice and determine where training will be needed.
6. Champions. The role of champions is to create positive buzz about CRM in their respective departments, to spread the good news and gather feedback to help identify "friction points"
7. Consultants. Often, a one-time project requires hiring a team of consultants who will work to implement the system, but will not remain aboard to maintain or operate it.

A separate group, perhaps with some overlap, should be assembled of those who will be involved in the ongoing maintenance of the CRM program after the project to deliver it has concluded. Ongoing tasks include providing support and training for people, maintaining the servers and databases, maintaining user accounts, and identifying deficiencies that need to be corrected or opportunities that should be taken advantage of by additional development projects.

(EN: It goes on from here, but becomes largely redundant to the project roles. A trainer will be needed because there will be new employees who need training; an program manager will be necessary to administer the program, a systems administrator will be necessary to monitor and maintain the system, etc.)

Process

Implementing CRM requires not only new processes for the CRM program, but entails changes to existing business processes such that they will leverage the benefits of the new system. Too much attention is given to the former, and too little to the latter - which is where CRM has the greatest potential to make a positive impact.

Each business operates in an idiosyncratic manner, which prevents a generic set of templates or guidelines from being applicable. However, from the author's experience, the kinds of process improvements seem for fall into a number of general categories.

There are typically indirect metrics in place to gauge the success of business activities, which the author suggests is like attempting to fly a plane based on "feel" instead of having a dashboard of gauges and instruments. Clearly, this is an opportunity for CRM to provide more granular and accurate reporting. The author provides a few examples to illustrate how CRM can provide hard facts to replace general impressions and improve focus, which illustrate this sentiment.

(EN: The danger here is measuring what is meaningful, not assuming that something is meaningful simply because it can be measured and quantified. I don't dispute the value of CRM for doing this, but have seen far too many instances in which statistical data became a fascination, and staff were motivated to improve numbers that didn't matter.)

Another application for CRM is in sales methodology: the ability to develop a process, hold sales representatives to following it, and measure the impact helps to reduce the variability of the sales process and increase performance.

CRM can also identify behavior of market segments better than traditional measures, giving the marketing department the ability to refine its segmentation logic, focus resources on the most productive market segments, and avoid embarrassing mistakes (treating existing customers the same as prospects).

Where communications are spread among various departments, CR can reduce waste (sending sales promotion to current customers) and avoid conflicts (sending two different offers to the same household) as well as cross-channel inconsistencies (making a different offer by mail than the customer sees on the Web site).

CRM is also valuable to expedite the service provided by the firm to a customer. Knowing the products a customer owns, and the past conversations that have been held, enables a service representative to proceed directly to resolving issues rather than wasting time trying to figure out what the customer needs and what has been attempted so far. The same data can be used to expedite customer self-service: customers will be more likely to use a self-service channel (such as a Web site) if it is easier to get to the information they need because the system can make an informed decision about what to present.

A specific component of customer service that can be vastly improved by CRM is service escalations, where a customer is handed off from an employee who does not have the skills or authority to resolve an issue to another who does. In real time, being able to pass details about the conversation to the next level of support will save the customer having to repeat details. In aggregate, the nature of service calls that need to be escalated can be analyzed to discover how to prevent the issue from arising or to better train first-level support to resolve without escalating.

CRM Maintenance Process

Implementing a CRM program requires new processes -to maintain the CRM system itself.

The most important of these processes is training: all employees who will use the system will need to be trained in how to use it - to provide the system with data or retrieve data from the system. This should be done for all employees when the system is rolled out, but training new employees is often neglected, as is training when new features or changes in functionality are implemented. As such, training is not once-and-done, but an ongoing process.

The CRM system itself will be maintenance, as does any computer system. The serve will need to be monitored, performance issues addressed as they occur, disaster recovery planned, periodic upgrades to software and hardware installed, etc. (unless, of course, a system is "software as service" provided by a vendor).

Business process support will need to be ongoing. There should be a number of employees whose role is to serve as an expert and advocate of the CRM system, as a consultant to any discussion of customer-facing processes, so that they can advice when a new process could leverage or support the CRM system. This is different to (but no less important to) "support" in the form of a resource who can help users who need answers to day-to-day operational questions.

There should also be an enhancement process, which considers problem reports and suggested improvements to determine whether they should be handled in an ad-hoc manner or scheduled on a roadmap of future developments, then coordinates and oversees implementation.

Technology

Technology is a component of CRM, and one that receives perhaps too much attention, is that firms that consider CRM to be "technology and nothing more" are setting themselves up for failure. While technology plays a central role, it is merely a tool that enables a company to improve relationship management. In this section, the author provides an overview - he will not evaluate specific applications or offerings.

Generally speaking, CRM consists of two major server components: a database server and an application server. They should not be considered in isolation, as they should interface (share and draw data) from any system that contains information about customers. Also, the application server should feed client software on a variety of platform (the desktop, the mobile device, etc.) rather than having a separate system in place for each.

The complexity of the organization will determine the complexity of the system, the number of users, and the number of customers. A relatively small firm that has an inventory system that contains information about customer orders and a marketing system that maintains customer mailing lists will need a modest solution. A larger firm with complex data systems will need a correspondingly complex solution.

The author returns to the notion of "software as service" in which a vendor offers a CRM solution they manage, often at a remote location that enables the customer to supply and access data via the Internet. (EN: This is an exceptionally bad idea for a number of reasons, not the least of which is that CRM involves sensitive customer data and planning/procedures that contribute to competitive advantage. Placing this in the hands of a mercenary is highly inadvisable.)

The author also recommends having multiple environments. Production should be pristine, and there should be separate environments for development, testing, and training purposes. He elaborates on it further, but the rationale is self-evident. He also mentions two critical processes - refreshing development/testing environments from production and promoting new functionality from development to test to production, which are also not unique to CRM installations.

He then discusses some of the most common CRM application functions:

• Enable customers to be categorized and segmented by multiple parameters
• Provide reporting that examines a given segment and compares/contrasts among segments
• Create multiple, ad hoc relationships that link accounts and contacts
• Track all interactions with each customer in all channels
• Classify individuals as existing customers, qualified prospects, and unqualified prospects
• Develop lists that use various criteria, including qualitative and behavioral data
• Record marketing activities to which specific individuals have been exposed
• Coordinate individual activities into campaigns
• Plan, execute, and track campaigns via digital channels
• Correlate purchasing behavior to marketing efforts
• Create quotes for customers and prospects and track quote history
• Correlate sales activities to a structured methodology
• Create a sales forecast based on segmentation and planned activities
• Record support/service contacts with customers
• Track support/service activities to a process
• Correlate service activities to product sales
• Facilitate support/service routing, escalation, and resolution
• Support customer self-service portal and track usage
• Support ad-hoc queries and custom business logic
• Receive and supply data to other business systems in real time
• Facilitate flexible analysis tools including basic reports and dashboards
• Enable customer reporting that can be configured without programming changes
• Automate workflows by creating tasks based on events or trends

Social media poses a special concern for CRM applications. In addition to interacting with customers directly through social media channels, firms recognize that customer and prospect behavior in social media, even when the behavior does not involve direct interaction with the firm. For example, an individual who makes an open post, asking their contacts for advice on a given product, is likely a good prospect; or a customer who makes a negative remark about a product they have recently purchased may be worth contacting to resolve their issues. Also, anything said by a competing brand, or by a competing firm, should be of great interest.

Presently, social media is often treated as a separate issue, and custom tools are used to monitor sites and services, indentify influential individuals, flag potential problems, coordinate marketing via social tools, and discover prospective customers based on their profiles or behavior. All of this has value, but it would likely have greater value if it were integrated into the CRM program rather than treated as a separate matter.

Expectations

One of the greatest challenges to CRM, or to an new technology, is that there are great expectations. It's often quite expensive, and firms expect miraculous results to occur almost immediately. For that reason, it is critical to set realistic expectations to avoid disappointment and abandonment of a CRM program before it has had sufficient time to prove its value. Because a program can be crushed at a whim by a disgruntled executive, and even low-level employees may poison the effort if they are discouraged from using the system due to a lack of phenomenal results. For that reason, setting expectations is a very important factor.

In addition to setting realistic expectations about the outcome of a CRM program, it is also important to set expectations about the impact of using CRM to the employees whose support and participation will be critical. Any change in working procedures will cause "some pain and some friction," and being forthcoming and realistic about the impact to employees is critical in gaining support.

Pitfalls

The author presents some of the common mistakes companies have made in approaching CRM:

Poor executive sponsorship is a major pitfall. An unenthusiastic sponsor, or one whose enthusiasm is brief, will deprive the CRM system of the support it needs from him, and as a leader within the organization, his lack of commitment and enthusiasm sends a strong message to others that CRM is not very important, which discourages their support.

Excluding or insufficiently engaging the employees who will actually use the system also dampens enthusiasm and undermines support. When front-line workers are not involved in decisions and planning, there is the sense that it is another wacky management idea that is being thrust upon them, that it will not work. They will make a token effort to seem supportive, but will be reluctant to adopt it and will seek to work around the new tools to do their jobs the way they are accustomed to, by methods they feel are practical and proven. Morale aside, the exclusion of the actual users from the planning process can result in serious omissions being discovered too late in the design process, or even after the system has been moved to production.

Implementing CRM without a clear roadmap is another common issue: companies that have a vague notion that CRM is a good thing to do, or who want to jump on the bandwagon, have no clear vision of what they wish to achieve. Not surprisingly, they find that they do not achieve anything, or have no goal against which to assess any results that are accidentally achieved.

Inadequate training is another significant pitfall of CRM. The problem is pertinent to software in general, as people are typically given software without training and expected to figure it out on their own. The problem is that they very often do no, or learn just enough to limp along, and do not make productive use of the technology. This is no less true for CRM applications.

Failure to migrate or integrate data from other systems also cripples CRM efforts - meaning that the system does not have access to customer information that is crucial to making accurate assessments and informed decisions, or employees are faced with a labor-intensive process of porting data into the system as-needed (and well behind "real time"). However, migration is neglected to save budget or expedite implementation, without consideration of the consequences.

Another pitfall of a CRM system is failing to provide value to all stakeholders. Willingness to dedicate resources to support a system is driven by the value the resource owner expects to derive - such that if the sales department is expected to change procedures and perform additional work that is beneficial to the marketing department, but not themselves, their enthusiasm and support will be short-lived.

Oversimplification can also be an issue - which often precipitates from the former. The department that processes inbound orders complains about the additional data entry (because they perceive no benefit to themselves for doing so), so the amount of data is reduced to ameliorate, but to do so, critical data are dropped, undermining the value of the system.

On the other side of the coin, some programs are foiled by attempting to do too much at once. Rolling out too many features requires a long development effort and a significant expense, and does not deliver any benefits until the far future. A project such as this is an attractive target for budget cuts, and may well collapse under its own weight as a large team of stakeholders with conflicting agendas further drag out the process.