Management Update: CRM Success Lies in Strategy and Implementation, Not Software

Transcription

1 IGG D. Hagemeyer, S. Nelson Article 12 March 2003 Management Update: CRM Success Lies in Strategy and Implementation, Not Software A customer relationship management (CRM) package doesn t ensure success. Success lies not in software but in sound strategy and precise implementation. Many executives are interested in insights on how to achieve success with their enterprises customer relationship management (CRM) initiatives. A CRM software package doesn t ensure success. Success lies not in software but in sound strategy and precise implementation. Critical Elements That Drive CRM Success The assertion that the secret to CRM success lies in software is dangerous for enterprises and vendors alike, because it ignores the critical strategy and implementation elements that truly drive success. When one analyzes the causes of CRM failure, software-related failure is not among the list of usual suspects. Nevertheless, in CRM Magazine, a senior executive of a CRM software company recently made the following statement: I do think that it is true that most CRM implementations fail and it is true that virtually all [software vendor name withheld] CRM implementations succeed and that kind of works to my advantage. The implication is that purchasing CRM software from any vendor other than the one quoted will result in failure. The truth is that software and project failure are not strongly linked. That is probably because software vendors are rarely involved in the development of the enterprise s CRM strategy, and only about 25 percent of the time does the software vendor perform the implementation. Regardless of who manages the development of the strategy and implementation, it is critical that they be done both carefully and thoroughly. Seven Key Reasons for CRM Project Failure Gartner has outlined the seven key reasons why CRM projects fail (see Figure 1). What is striking about the seven key reasons is that none of them is related to software they are all related to implementation and strategy. In light of the analysis of why projects fail, it stands to reason that software is not named as one of the key reasons for failure. If a project is undertaken with a flawed or incomplete strategy and implemented with no attention to details, such as data integrity, unity of purpose among IT and business organizations, or user adoption, the project is likely to fail. Ironically, it will have been Gartner Entire contents 2003 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 deemed a failure and probably abandoned long before the software can be adequately tested and evaluated. Figure 1 Seven Reasons Why CRM Projects Fail Reason for Failure Failure Point What Software Can't Solve Remedy 1. Data quality is ignored. 2. Organizational politics are driving departmental or totally disconnected initiatives. 3. IT and business organizations can t work together. Call center users as well as sales users will walk away from theapplicationifthedatais suspect. Strategy: Implementation is likely to implode before users ever see the solution. Ifitdoessurviveto implementation phase, the politics will have diluted the customer focus to where sales and customer service users may reject the solution. Strategy, Implementation Data hygiene software can address some issues but does not address missing data and erroneous data or compensate for a flawed data capture process. There is no software solution for political in-fighting or "not invented here" behaviors. There is software to facilitate collaboration, workflow and virtual teams, but only among organizations that want to work together. 4. There is no plan. Strategy, Implementation Project management software can capture a plan andhelpinmanagingtoitbut cannot create a plan. Human input is required. 5. CRM is implemented for the enterprise, not the customer. 6. A flawed process is automated. 7. No attention is paid to skill sets. Source: Gartner Research Strategy: Users in sales and customer servicewillreverttomanualor prior systems unless they perceive incremental benefit. TheessenceofCRMis improving customer-facing processes. Sales as well as service users won't want to learn a new solution that enables the same bad process. Rejection of a CRM solution by sales or service personnel may not be a conscious decision if they simply don't havetheskillstooperateor understand it. Software cannot provide customer focus or fix a flawed process. It may automate an alternative process, but thought is required to optimize a process. Software can facilitate distance learning and some interactive training but cannot change management or organizational dynamics. Project plan should allow for data cleansing and testing prior to deployment. CRM strategy must encompass customer touchpoints across the entire enterprise. Both organizations must be jointly responsible for the strategy and accountable to the project sponsor for every step of the implementation. Don't undertake any initiative until an articulated multiyear vision, a business case including baseline metrics, and a project plan are in place. Involve stakeholders from across the enterprise in evaluating which processes must be improved to eliminate the "rubs" that exist between the enterprise and the customer. Ensure that employees understand why CRM is being implemented, that CRM tools are aligned with their skill sets, and that adequate training is provided (a final and critical step, where many enterprises attempt to cut corners or save a small amount of money). The Eight Building Blocks of CRM

3 Imperative: Enterprises should use a strategic CRM framework to estimate, plan and promote their CRM initiatives, while building up their capabilities in small, piloted steps. Gartner has created the Eight Building Blocks of CRM (see Figure 2) a framework to help enterprises see the big picture, make their business cases and plan their implementation. Enterprises need capabilities in all eight areas for successful CRM: Figure 2 The Eight Building Blocks of CRM 1. CRM Vision 2. CRM Strategy 3. Valued Customer Experience 4. Organizational Collaboration 5. CRM Processes 6. CRM Information 7. CRM Technology 8. CRM Metrics Source: Gartner Research CRM Vision: Building a market position against competitors with defined value propositions based on requirements, personified by the brand and communicated CRM Strategies: Turning the customer base into an asset through the delivery of customer value propositions, gives objectives (for example, development) and how resources will be used in interaction Valued Customer Experience: Ensuring constantly that the propositions have value to customers and the enterprise, achieve the market position and are delivered consistently Organizational Collaboration: Involving the changing of culture, structures and behaviors to ensure staff, partners and suppliers work together to deliver what is promised Processes: Managing customer life cycle processes (for example, inquiry, welcome, complaints and win back ) and processes in analysis and planning that build customer knowledge Information: Ensuring the right data is collected, and the right information goes to the right place

4 Technology: Involving data and information management, customer-facing applications, and supporting IT infrastructure and architecture Metrics: Involving internal and external measures of CRM success and failure A Six-Step Approach to CRM Strategy CRM strategy guides how an enterprise turns customers into assets, beginning with an understanding of the current customer base in relation to the market. Because fewer than 15 percent of enterprises understand this relationship, most skip this vital planning step. They begin instead with tactical initiatives which becomes the primary reason for CRM failure. CRM benefits are achieved when customer insight is captured, analyzed and applied to increase the quality of communication and to deliver relevant value-added services. Technology and the Internet economy are increasing the opportunity (and the expense) of understanding customer needs. Therefore, knowing what is possible and managing available funds to optimize benefits are crucial. Gartner considers CRM an evolving creative science and advises a six-step methodology to develop CRM strategy: Audit the current market position and customer position. Segment consumers and customers and identify target segments. Set customer objectives (that is, acquisition, development and retention) for each market objective. Define metrics for monitoring the execution of the strategy and for evolving it. Outline by segment the strategy to customize products, pricing, communication and channels, as well as how to manage service customer and contact, thus creating the customer value proposition and desired customer experience. Specify required customer capabilities and infrastructure (such as people, IT and data). Action: Use Gartner s methodology as a starting point customize and enhance it to develop a meaningful strategy for your enterprise. Bottom Line Despite the claims of software vendors, the key to CRM effectiveness is not the purchase of software. Enterprises that will succeed in CRM initiatives are those that have a well-laid-out CRM strategy and adhere to sound principles of deployment in addition to well-suited software. Software vendors can play a greater part in helping their clients to succeed by diminishing the magic software rhetoric and building on the foundation of strategy and implementation. Written by Edward Younker, Research Products

5 Analytical sources: Dale Hagemeyer and Scott Nelson, Gartner Research For related Inside Gartner articles, see: Management Update: A Case Study of CRM Excellence, 5 February 2003 Management Update: The Importance of Developing a CRM Strategy, 30 October 2002 Management Alert: How to Salvage or Perhaps Avoid a Failed CRM Initiative, 20 February 2002