July 2002

BY NADJI TEHRANI

The Story Behind Reported CRM Failures
Last month, our cover story reported on avoiding the failure of CRM technology and solutions implementations. Nevertheless, and in spite of some admittedly high failure rates reported in the media, the CRM industry continues to grow significantly and we continue to stand steadfastly behind the judicious deployment of such technologies and systems. Depending on the research source, the CRM market is currently valued at between 25-35 billion dollars. The CRM market is considered immature at this stage, which means many of the failures could be attributed to the early adopter syndrome. In addition, I believe part of the problem is due to a lack of understanding of what CRM means and unreasonable expectations or a lack of planning on the part of the companies that have installed new software, not on the software itself. If you understand the essence of customer relationship management, you understand that no company can live without it. CRMs raison dtre is that companies live or die from repeat business. The Cardinal Rule of remaining in business is that without satisfied customers there will be no repeat business, and without repeat business, companies cannot exist. Understanding this principle fosters the understanding of why, in spite of an alarmingly high failure rate, CRM technology implementations continue to grow and be a priority in worldwide enterprise applications.

Putting The Cart Before The Horse
Businesses need to understand that it is not technology per se that governs customer satisfaction, but rather the human side that continues to build a relationship between a vendor and a customer. The best advice I can give to those of you who are planning to use or currently are using CRM solutions in your enterprise is to focus even greater attention on the human side of CRM. The development of relationships between your company and your customers is paramount simply because 75 percent of all buying decisions are based on emotion. Therefore, it stands to reason that if a customer does not feel a special affinity with your company, he or she is not likely to buy anything more from you. This is simple common sense and nothing new. However, a common mistake in CRM technology implementations is some people believe that simply having technology in place is the answer to customer management, forgetting the importance of one-on-one relationship-building and not planning adequately for adjusting their business processes for the new customer-centric focus. You cannot simply install a software suite and expect all problems to magically be solved. CRM is not software and it is not simply business processes; it is the combination of business strategy, software and processes that turn a company into a customer-centric organization, one that truly listens to what the customers say and provides them with what they want.

Relationship-Building Should Be Priority # 1
Successful business-building begins with relationship development supported by technology to manage and provide vital information about customers and agents, always realizing that the human factor must be involved in each and every transaction. In plain English, nothing substitutes people-to-people interactive communication, which is the foundation of relationship-building. Todays CRM technologies and solutions are designed to facilitate that principle, and many are doing so very well, as evidenced by our CRM Excellence Awards published in this issue.

Avoiding CRM Failure
A brief, step-by-step guide to successfully managing customer relationships and judiciously deploying CRM technologies might look something like this.

1. First, take a long, hard look at what your company does and how it does it. Concentrate and define what your core competencies are, what you provide your customers and what your customers want.

2. Next, look at what processes and technology you have in place currently: what are they, how do they perform, what departments or groups are touched by them, and how current or legacy systems can be integrated into any new solution.

3. Define both short-term and long-term goals (with an emphasis on long-term).

4. Come to a consensus from all departments of what they need and expect from a CRM implementation.

5. Reinforce the fact that this will be a companywide change and get the management of all departments onboard.

6. Evaluate software and services from several different vendors. Look for systems that allow you to impose your business rules upon them rather than ones that force you to adapt to theirs. Examine how the new system will impact your partners, resellers and vendors.

7. Purchase the system.

8. Train.

9. Study feedback from customers and employees and implement valid suggestions.

10. Train.

CRMSo VitalYet So Illusive
Having said all of the above, and with reference to an article entitled How To Avoid The CRM Graveyard by Richard Early of COVANSYS (published in the June issue), I would like to enumerate the following as some of the other contributing factors to the high percentage of CRM failures:

1. Lack Of Know-How It seems like every time a new concept comes along that appears to be successful, many people jump on the bandwagon without really knowing what they are doing. This, by itself, in my opinion, is the biggest contributor to failures.

2. Implementing A CRM Strategy There is a tendency to wish for the benefits of CRM while neglecting the principles that make CRM a success. Many companies jump into CRM without adequately strategizing and keeping the entire corporations needs in mind. It is imperative to analyze your customer relationship needs and match system capabilities to those needs. Failure to do this also contributes significantly to failure.

3. Haste And Lack Of Due-Diligence To the extent that CRM technology solutions have produced many successful results, as evidenced by our CRM Excellence Awards in this issue, many companies hastily, without proper due-diligence, try to undertake a CRM venture to their detriment.

4. Substantial Consolidation And Innovations As in any growing business segment, consolidation occurs in technology industries, which can and does often lead to their failure (please see my explanation of this in my June 2002 editorial). This factor, plus continuous innovations, can lead to significant end user failures. Lack of continuity at the vendor level certainly increases the probability of CRM failure.

5. Unreasonable Expectations I believe systems and software are often cited as failures simply because someone chose the wrong system for the wrong reason. CRM implementations encompass a host of challenges, including having the appropriate personnel and rules in place, understanding and managing the scope of the project and managing the data strategy. Once again, due-diligence on the part of the implemeter is to blame.

6. Lack Of Proper Buying Strategy Because CRM encompasses many departments within the corporation, input and requirements from all other divisions are required before deciding on the CRM solution. In short, improper buying strategy will contribute immensely to failure, obviously.

7. The Bottom Line If you are not an expert about every aspect of CRM, selection and implementation, get a true CRM professionals advice and dont wing it because it will not work.

Keep these ideas in mind and you will be well on your way to designing a winning CRM strategy, but never lose sight of the fact it is the human element in the equation that is the foundation of building lasting relationships. As usual, I welcome your comments.

Sincerely,

Nadji Tehrani
TMC Chairman, CEO and
Executive Group Publisher
ntehrani@tmcnet.com

[ Return To July 2002 Table Of Contents ]

Congratulations To The
CRM Excellence Award Winners

This month, we take pride in presenting the 2002 CRM Excellence Awards. The winning companies presented us with case studies of how their CRM products and services have brought demonstrable results to their clients. The winning products and services have shown that CRM implementations can and do work to improve workflow, provide a consistent view of customers across the enterprise and provide a positive impact to the bottom line.

On behalf of the editorial staff of Customer Inter@ction Solutions (the industrys first and preeminent publication, serving the industry since 1982), I am proud to extend my heartfelt congratulations to the winning companies.

Due to an overwhelming response that resulted in a flood of entries, we will present the awards in two parts, Part 1 this month and Part 2 in the August issue.

Best wishes and all the best to this elite group of CRM product and service providers.

Regards,
Nadji Tehrani