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Avoiding CRM's
Common Pitfalls
During the
hyper-growth economy of the late 90’s, and early 2000’s, many
companies invested hand-over-fist in Customer Relationship
Management (CRM) technology. With the anticipated benefits that
CRM brings, it is no wonder that many companies jumped on the
bandwagon. The benefits to be realized by the effective
implementation of CRM include:
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Increased revenue and profitability
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Improved customer and employee satisfaction and loyalty
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Increased operational efficiencies
So,
what is CRM?
Customer Relationship Management has been defined as a business
approach that integrates people, process and technology to
maximize relationships with all customers, through the seamless
coordination between all customer-facing functions.
Yet,
according to estimates provided by leading analysts, over half of
all CRM projects fail to meet their initial ROI targets. A recent
study published by Nucleus Research, Inc. found that 61% of Siebel
Systems’ reference customers reported negative ROIs from their CRM
implementations after two years of use. Another report issued by
The Gartner Group, Inc. estimated that well over 65% of all CRM
projects fail. There are a handful of reasons at the root-cause of
CRM failures. We will review each, and identify the strategy that
you can use to avoid common these pitfalls.
The
Pitfalls of CRM:
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Viewed as a technical, not a business, problem
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Driven from the top down
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Lack
of senior management involvement
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Not
targeting the areas of highest adoption
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Driven by the IT organization vs. business leaders accountable
for the numbers
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Trying to do too much at once
Viewed
as a technical not a business problem:
One of
the most common reasons why CRM projects fail is that the
technology was allowed to dictate how customer relationships would
be managed instead of the technology being the enabler.
My
first CRM assignment was targeted at improving the performance of
a service organization. Upon doing the high-level analysis, all I
kept hearing from the organization was “we need a single system”.
There were several customer-facing organizations that were each
using their own “system” to manage customer interactions. Some
were home-grown and others were paper-based. And, on the surface
it appeared that a single system was the answer. Per the
established protocol I went to my senior manager to provide a
project status update. In summary, I reported “we need to get a
new system”. My manager thumped me on the head and said “it is a
process issue. Fix that, and then we will discuss systems”. Not
fully appreciating the magnitude of what he shared, I went back to
work. I continued my fact finding, and coming from an IT
perspective (at that point in my career) I again went back to my
senior manager and said “we can fix this with a system”. Thump. He
responded, something to the effect of, “don’t talk to me about the
system, fix the process and then we’ll discuss systems”. That was
some of the best advice (and lumps) that I have ever received.
At this
point, we dove in and developed a customer contact management
(a.k.a., problem management, case management) process for handling
customer inquiries and problem reports. We then rolled out the
process with NO new technology, and spent a few weeks working out
the kinks. Once the process had been “burned in” we THEN defined
our systems requirements, selected the system and implemented.
And, we found that the systems part of the project was EASY. We
had already worked out all the issues regarding: roles,
responsibilities, process flow, etc.
STRATEGY: Define your customer relationship and interaction
processes, and implement them. Once these are "burned in"
consider the appropriate systems solution.
The
next article in this series will review how to avoid other common
pitfalls of CRM.
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