Top 10 CRM Success Factors — Doing It Right

Answer

Several analysts have recently come out with their "top 10 signs a company is not ready for CRM. Sixty percent to 80 percent of customer relationship management (CRM) projects fail to deliver positive returns, indicative of the industry's "quick fix" promises and employee- — not customer- — centric approaches. It's easy to see what's not working — but how do you do it right? The following are some of the emerging best practices in CRM to help ensure project success:

1. Strong Executive Commitment: There's nothing that gets company employees more worked up than dramatic changes in company processes, especially if they can potentially impact performance bonuses or sales commissions. Salers thinks with its pocketbook, service measures the cost, and marketing asks for all the customer information it has always wanted but never got from IT. Make sure someone's there to set the vision, step up to the costs, and follow through to address the inevitable learning curve and company change process.

2. Measurable Project Goals: Sure, CRM's about knowing your customer. But for what purpose? Start with a few measurable goals — improved service levels, reduced customer loss in key customer segments, improved response or conversion rates. And then figure out how you are going to measure results — against a pre-established baseline.

3. Clear Customer Focus: A key part of CRM success is breaking down organizational boundaries to focus on what the customer sees. Look at the overall customer experience from their point of view — not just what's easiest or "traditional" for each department. Midsize customers that don't get a lot of attention from direct sales may better appreciate a central telesales contact (or even a self-service site) that can help them navigate through company processes when required (not when they happen to "stop by"), as opposed to a "higher value" direct sales rep.

4. Incremental Approach: It took most companies three to seven years to implement comprehensive back-office enterprise resource planning (ERP) systems, and yet CRM vendors sometimes seem to promise results overnight. Of course, the reality is somewhere in between — a strong three-to-five year customer vision, with frequent, quick-hit projects to deliver business value quickly. Use prototypes, business process simulations and project reviews to ensure that the business is involved with and can make the appropriate business trade-offs for most effective deployment.  

5. Business Process, Not Technology, Focused: There are many technologies available for CRM — sales-force automation, product configuration, e-commerce, contact center — and lots of technical architecture to enable the "single customer view." But all these technology and architecture decisions are only relevant in a business context. Map out the business processes first (from a customer perspective) and then pick the technologies and approaches that deliver the highest value. Too much customization is a warning sign that the software application is not a good fit for the business — proceed with caution!

6. Build the Right Team: Most successful CRM projects have an equal number of business users and technical staff, especially if the project significantly changes customer processes (almost any project for the Web). Get input from the organizations that deal with customer exceptions today (finance, sales operations, relationship managers, sales) to make sure that the new processes fit the business. Don't rely on sales managers to represent the sales team — they have very different, often conflicting, ideas about information sharing and solution requirements. Use your most experienced, business-focused project manager who can understand the viewpoints of both business users and IT when weighing features and project risks.

7. Organizational Incentives Match Customer Goals: People do what they're measured on. Don't measure customer service on throughput and then expect service levels to rise. Don't ask for cross business-unit sales leads, and forget to compensate workers for successful referrals.

8. Treat Different Customers Differently: Every company has different types of customers that value different combinations of products and services, different selling models and different service strategies. So don't try to treat them all the same with CRM. Weigh each CRM project against its impact on different classes of customers, and consider staged rollouts to make sure you get the process right for each set of users. Figure out ways to build in rewards for high-value customers.

9. Build In and Monitor Success Metrics: No one gets it all right the first time. Sales people balk at awkward interfaces, customers misunderstand instructions and knowledge bases miss key questions. Determine key metrics that give early indications of lack of use or misuse, and act quickly to correct key gaps. Help key executives measure progress against business goals (starting with a baseline) and drill down when required to better understand key trends. Compare customer results to goals, and identify and fix process gaps.

10.Don't Under-Staff the Rollout: CRM is all about change, and no one really likes change. Use pilots to work out solution kinks and develop internal "champions." Go to every office to train users in their environment. Develop training that covers the process as well as the products — put the technology in the context of the overall job. Don't assume that "Web-based" means "roll-out not required" — new technology almost always required intensive walkthroughs and human assistance.

Recommendation

CRM critical success factors aren't very different than project success factors for any technology product. And, in fact, CRM projects fail for many of the same reasons that ERP projects fail: unclear business objectives; long, "big bang" projects; extensive customization; and poor project management (see Planning Assumption, Keys to Success With Integrated Application Projects, Including SAP, Byron Miller). But the business potential of CRM means that project success or failure may be at least as visible and potentially more costly — especially if competitors get there first.