January 2001

BY ED SCHREYER, PEOPLESOFT, INC.

CRM is the meeting point of expectation and experience. All customers approach your enterprise with a need and an expectation. The interaction that follows will create an experience that shapes their behavior, influences their lifetime value to your business and builds or destroys your competitive advantage. The ultimate promise of CRM is that it will enable your entire business to optimize around the process leading from prospect to profit. At every touchpoint with the enterprise, via every channel and device, all people who are able to shape customer experiences will be informed, empowered and motivated to help ensure that each and every interaction results in an experience that exceeds the initial expectation. Further, the efforts of the enterprise will be strategically applied, ensuring that the maximum effort is aligned with the most valued customer. By consistent and continual practice of good CRM, the business grows its top line revenue while reducing its costs; continually attracts new customers to its loyal and unassailable installed base, building sustainable competitive advantage and differentiation.

This promise forms the basis for the expectations that surround the adoption of CRM products and solutions. It is the justification that accounts for the "leap of faith" made by business managers who intuitively know and feel that the sound business practices CRM promises are the goal worth almost any price. Good CRM is a need borne out of the increasing challenges business face in the new economy. Global competition is a mouse click away -- competitors who don't have to make a profit until after they've hijacked your customer base; product cycles and technology improvements that shorten the lifespan of any better/faster/cheaper advantage. New business models like marketplaces that aggregate supply and demand, allowing small competitors to leverage economies once reserved for the big -- all are driving the critical need for businesses to leverage good CRM.

Align Business Expectations With Organizational Dynamics
The first and most fundamental pitfall of CRM is the failure to transform expectations of its own value into positive experiences. A company seeks to accelerate its revenue growth by adopting the best sales force automation (SFA) package they can find. Months later, managers struggle to prove that they are realizing the expected benefit. Published statistics tell a dismal story of failed implementations within the SFA space, consistently hovering between 60 to 80 percent. These statistics have not changed dramatically over the last 15 years despite an abundance of new features and additional technological capabilities. The primary reason for this is that at its core, traditional SFA is about giving salespeople a tool to capture everything they are doing with their territory and customers, enabling their managers to judge their performance.

This example of misaligned business expectations and organizational dynamics is revealing, and not isolated by any means to SFA packages. In many cases, the business goals are at odds with the individual incentives, causing the program to produce results that disappoint. For example, a call center automation package may help process a higher volume of calls, replete with statistical tracking of metrics such as the time it takes to complete a call. Individuals in the call center may be motivated, or evaluated on how quickly they can "process" a call -- in other words, how quickly they can get rid of the customer on the other end of the line. This may drive a reduction in talk times, but it also may sabotage the business goal of providing "better customer service."

Make CRM An Enterprisewide Mission
Good CRM is a fundamental business practice that ensures every customer expectation results in an exceptional experience throughout the enterprise. This type of basic business strategy must be acknowledged, endorsed and cultivated by the senior management of the organization. It involves all aspects of the enterprise, and aligns the enterprise with the overall goals of the program. A growing number of companies, for example, are basing incentives for the entire workforce on customer satisfaction metrics. When everybody's bonus is riding on how happy customers are, good CRM becomes an enterprisewide mission, not a front-office application.

This is very evident when you consider the early CRM implementations. These products evolved from the workforce automation era, and applied information processing to customer-interfacing functions such as marketing, sales or service. Predictably, there were cost-efficiencies gained within the department, and the ability to share customer information across the department's personnel made it easier to provide consistent information to customers. However, the individual department rarely supported the entire business process related to the customer expectation. Upon reaching the departmental boundary, the process reverted back to the disconnected, "fire and forget" method of dealing with issues.

Avoiding The "Deer In The Headlights" Syndrome
As CRM suites evolved, they were able to link information and workflow across the "front-office" functions of marketing, sales and service. This is the typical offering of today's leading CRM providers. It represents an improvement over the isolated departments, but in reality, the "islands of automation" have simply merged into a bigger island within the enterprise. This front-office suite is still unable to handle basic customer expectations such as, "About the order I placed the day before yesterday...I'd like to change it from eight green ones to six, and from seven red ones to fifteen. Can you make the change and bill it to my credit card?" In a great many instances, the call center agent trying to field this request will feel like the proverbial deer in the headlights. He or she can find the original order, but will have no idea of where it is in the fulfillment process. Has it been picked and packed? If it hasn't yet shipped, can the change be made? Does the company even have eight additional red ones in stock? At what stage is the billing process, and how can the bill be intercepted and changed? This can be a looming disaster that results in the customer seeing his or her ostensibly simple request blossom into a fur ball of botched shipments, erroneous billing and wasted time as he or she plays phone tag with a variety of different individuals and departments. The result -- another frustrated customer decides they'll see how business feels with your competitor.

For CRM programs to be truly effective, they must be able to support all the business processes that shape a customer's experience. This involves the entire enterprise, and is the obvious reason that operational CRM must integrate with other functions in your company. How this happens will depend on the vendor's familiarity with the overall enterprise processes and systems, how "integration-friendly" their system is, and their willingness to work with products they didn't sell you. This need for integration is the basis for a happy and productive consulting workforce. Some vendors are taking the approach of the "one-stop-shop," which alleviates the burden of integration; the tradeoff is that you can't pick and choose from among vendors. Other vendors are building to an open standards framework in an attempt to simplify the integration process.

When Benefits Become Liabilities
The next major pitfall for CRM is to focus only on the operational aspects of the program. Like any process automation activity, the application of technology can make things go faster, but the benefit can become a liability if the process itself is bad. To avoid "automating your own incompetence," good CRM must be able to monitor, measure and improve the business processes on a continual basis. It's no surprise that CRM analytics are getting more and more attention, but it's surprising how much of the analysis is limited to a single function, failing to provide true insight that can support operational improvement. Reports detailing activity and results for marketing or for service are better than nothing, but they won't address the basic goal of giving the right customers the right level of effort.

To illustrate, a company might follow a thought process as follows: We'll get finance to give us a list of all our customers, sorted by how much they've bought from us. This should tell us who's worth the most attention, right? Not if we also pull from our SFA system the expected future revenue by customer and mix it in to create portfolio value. Good enough? Not if we want to consider service costs, which may include special contractual commitments or service level agreements that soak up revenues to create a better idea of profitability. Now, we can focus our efforts on the most profitable customers, right? Well, it might be better to weigh their current satisfaction index and focus our efforts on the customers with the highest value who are at risk of defecting as evidenced by their low satisfaction. Just creating this report involves analytics that can draw from a multitude of sources across the enterprise. Implementing the practice of good CRM involves feeding the output of the analysis back into the operational system to modify its behavior to focus more effort on the right customers -- priority queuing, routing to better skill sets, "first-class" treatment that corresponds to their analyzed value.

Good CRM Is Pervasive
Finally, the obvious pitfall that accompanies this enterprisewide operational and analytical involvement is ensuring that the system is accessible by those who need it. If the business goal is to empower every person who can help shape customer experiences to act with insight and consistency, then this empowerment must be pervasive, reaching the individuals wherever they work. Deployment and maintenance of applications on every user's system is laborious, costly and, in some cases, impractical. Your customers won't want to install applications in order to get self-service empowerment, and your suppliers and partners are not going to install their customers' applications in order to facilitate collaboration. Good CRM is pervasive, supporting every role -- customers, suppliers and employees across every channel: face, voice, e-mail, Web, pager and more, as they relate to every touchpoint -- marketing sales, service, finance, production, fulfillment, administration and development. Only this enterprisewide support can ensure that your company will manage every approaching expectation into an experience that exceeds it, and deliver on the promise of good CRM.

Transform Expectations Into Great Experiences
To avoid the most common errors of CRM, you need a recipe for success. A successful CRM program must be integrated, insightful and across-the-board. Integrated CRM allows your entire enterprise to align around the common goal of exceeding the expectations of your customers. It must be embraced and supported by the entire enterprise, which demands the attention and endorsement of senior management. Insightful CRM enables you to truly understand which customers your efforts should focus on, and how to continually optimize your enterprise to meet their needs. The only constant in business is change, and the days of gut-feel decision-making are fading fast. Pervasive CRM leverages technologies such as pure Internet applications and wireless communications to enable everyone who makes your enterprise work -- your customers, your employees and your suppliers, to easily access applications and analysis, wherever they may be. The enterprise is dynamic and fluid, and connected by the Internet. The fundamental benefits of the Internet -- global reach, platform independence and consistent usability -- must be harnessed by your business systems. Together, these abilities will foster a successful CRM program that transforms expectations into great experiences, forming the foundation of competitive advantage, growth and profitability.

Edward Schreyer joined PeopleSoft, Inc. in 2000 as the vice president of Strategic Marketing for Customer Relationship Management. He is responsible for directing marketing initiatives and setting the strategic direction for PeopleSoft's CRM product line.