CRM is much more of a philosophy and a strategy than it is a technology, so implementing a CRM system in isolation will bring few benefits. It is only by changing the entire way that the organisation thinks about itself and its customers – and how it interacts with them – that it will bring about transformational benefits in terms of increased revenue and profitability.
“Organisations that think they can drive change in the business by implementing technology are deluding themselves.” says Gareth Herschel, research director at Gartner, the analyst. “The benefits of CRM projects come from the improvements in philosophy and processes, rather than the technology itself. Organisations will fail unless they think about what cultural and process changes are necessary to make CRM a success.”
Bo Lykkegaard, an analyst at IDC, explains that a lot of the cultural and organisational costs are hidden and are difficult to quantify. He estimates that at least half the internal effort would be concerned with organisational issues, including, planning, educating users and changing practices around CRM.
Any sensible CRM project starts with the board setting high level objectives and agreeing a means of measuring progress against targets. These then need to be translated into a series of cascading contributory key performance indicators (KPIs), each of which is relevant to the group to which it applies. Customer-facing staff must be measured and rewarded according to their contribution towards achieving overall customer relationship goals, as this encourages customer-centric behaviour.
“You need to translate very long-term overall objectives into what is tangible and relevant to the individual in the organisation,” says Mr Herschel. “It must be tied to what they can understand and control on a daily basis, to change and drive their behaviour in a way that contributes to the organisation’s overall CRM objectives.”
The obvious example of a metric needing attention is call centres that aim to minimise average call times with customers. Although this reduces costs, it also lowers the time that the organisation spends listening to its customers, understanding their concerns and building their loyalty. It also discourages increasing customer profitability through cross-selling and up-selling.
Customer-centricity doesn’t just affect front line staff. Customer transactions touch all parts of the organisation, such as invoicing, cash collection, despatch and logistics. The sheer amount of change that must be brought about across the whole organisation means that it must be driven by a senior executive.
“Somebody who can make things happen has to be involved,” says David Bradshaw, principal analyst at Ovum. “It doesn’t matter who they are and what title they carry. There will be political struggles to avoid, but when you get interdepartmental contention, you need somebody with a ‘big stick’ to encourage them to do what is necessary and change their priorities. People always find a very good reason to do what is comfortable for them, not what needs to be done. One of the most contentious issues in CRM is the need to collect data from a wide range of systems, especially when measuring customer profitability.”
One of the toughest areas to change is the sales force, which is under constant pressure to meet ever more demanding quotas. Old established informal sales processes, based on verbal communications and long memories have to be swept aside. They must be replaced by a structured system that provides a full history of interactions with the customer, both pre-sales and after-sales.
“It is all about the long term benefits,” says Mr Lykkegaard. “Too much time goes into internal enquires about the status of leads.” He says that the whole process has to be made transparent, so that anybody can see the complete sales and service history and what the customer has installed. A big change management process is needed to set up the system so it isn’t too cumbersome and to educate the users so that they understand the benefits to them.
“It multiplies productivity for new sales people and makes it easier to move them around or to take vacations,” he says. “It takes a big commitment to change customer-centric processes and create multi-channel transparency.”
Scott McArthur, executive consultant at Atos Origin, warns that organisations can get the balance between pre-sales and support wrong. For example, the sales executives are professional, competent and respectful and react quickly, and then when the customer wants post-sales support they are put on hold for half an hour!
Teresa Jones, senior research analyst at Butler Group, believes that CRM is a life-changing thing for an organisation. Becoming customer-centric requires organisational change and using a consultancy that is not tightly affiliated to one vendor can be very beneficial.
“I would expect them to confront you,” she says, “about what you are trying to achieve, how you intend to achieve it and what internal processes must change, and you can’t always do it internally. Somebody who has experienced organisational change a number of times in various organisations will have seen what works and what doesn’t.”
The use of an external consultant can also ensure a long-term focus. Mr Herschel warns that the initial project enthusiasm and senior management attention tend to decline over a few months, whereas driving change into the organisation tends to take more than a year.
“It is an ongoing series of day-to-day tactical decisions about how best to do things and driving behaviour so that it becomes second nature,” he says. “It takes a long time and you can’t have it micromanaged by senior executives cheerleading or managers trying to drive everybody to behave the same way.”
Mr Herschel also points out that there are societal trends for more concern for ethical and environmental issues. The organisational culture needs to make sure that its values are perceived to align with the values of its customers.
“People used to concentrate on the technology, which they are good at, and forget that there are human beings on both ends of the transaction,” concludes Mr McArthur. “They must address the political and emotional dimensions. Above all, everybody really needs to know what the future looks like and buy into it.”
