It`s not just customer relationship management (CRM) that`s in the dock, accused of costing businesses vast amounts of money, with relatively little return on investment: it`s all of IT. Right now, though, CRM is occupying the attention of executives because of the extravagant promises made and expectations raised over the last five years.
History shows that senior leadership, not just "buy-in", is vital to aligning different departments and functions to provide consistent customer management.
Doug Leather, CEO, Knowledge Factory
The best studies on IT projects have been done by the Standish Group, which reports that between 1994 and 1998, the success rate for IT projects in Fortune 500 companies was no higher than 9% to 24%. Gartner expects more than 50% of CRM projects to fail; the Hewson Group says 30% to 40% of tactical CRM projects fail, and 60% of strategic projects do not make it.
Importantly, sales force automation projects (often touted as full-blown CRM) are most likely to fail, as salespeople can resist or hinder implementation, and even refuse to use the software. Imagine asking executives to assign budget to ANY business initiative with such a high risk of failure; there simply has to be a better way: a way of reducing the risk involved in CRM initiatives.
Here, for any CRM programme manager, is a checklist for reducing the risk and increasing the chances of success. This information is drawn largely from the 2003 State of the Nation report prepared by QCi, in conjunction with Knowledge Factory:
1. Convince leaders in the business, engage their support, and make it visible. History shows that senior leadership, not just "buy-in", is vital to aligning different departments and functions to provide consistent customer management. 67% of senior managers do not give clear, visible leadership in achieving excellence in customer management.
2. Appoint an experienced, knowledgeable, senior programme manager to oversee the whole project. A customer management programme usually consists of several different projects within the overall programme. Managers should understand the risks of each project and manage each from a business perspective, to ensure the programme delivers the required results.
3. Develop a vision of the future, the "desired state". Establishing the vision is normally the starting point. This should cover markets (segments), competitive positioning and your broad approach to distribution channels. Unless your company is a start-up, or changing its customer management approach as part of a wider change programme, the vision need only be in outline.
4. Know where you are starting from. If you do not know where you are now, it makes reaching the destination difficult. An important reason for CRM programme failure is not knowing your starting point and the company`s current "competence" in managing customers. Be clear and unemotional about how well you manage your customers now. Your current maturity in customer management will significantly affect your programme structure, timing, risk and payback.
5. Before developing the business case, have in mind a phased, steady approach to CRM development. There are generally two options. Big bang: moving as rapidly as possible to implement customer management principles across the business, or steady progress: moving steadily towards a customer management vision, while recognising that the vision will continue to change. This is usually a better option for larger companies.
6. Develop a clear, practical, realistic business case, with clear assumptions. It must be short, to the point and clear to understand; believable to senior management; based on clear, specified assumptions; based on specified improvements to retention, efficiency (cost to serve), and acquisition or penetration (REAP); trackable over time; and linked clearly with other strategic initiatives and goals within the business.
7. Work on all aspects of customer management model, not just systems. Process and IT correlate positively, but should be viewed as enablers of good customer management, rather than drivers of it, so develop the proposition and business model first.
8. Focus on a few easy actions that will lead to increased profitability quickly. The programme needs careful construction to ensure that payback is spread throughout and might even be cost-neutral or profitable from the start; and that sponsor and staff engagement is maintained.
9. Use cultural inputs to refine programme plans. The culture (the behavioural "norms") of an organisation, or of a department, can affect which actions get done readily and which never get beyond first base.
10. Engage all key stakeholders. Important staff including the sponsor may change jobs during the programme or leave the company. This can cause CRM programmes to stop and start, and fail to deliver against objectives. The programme manager should ensure that a succession plan for key staff is developed. New incumbents should be well briefed and clearly aware of their role and responsibility.
11. From the beginning, manage the programme by outputs as well as inputs, to ensure that what you expect to happen with customers does happen, or at least to understand why it doesn`t. For instance, if you expect certain customer or employee behaviours to happen, check that they are, or at least understand why they are not.
12. Measure progress and success, against project metrics, set up for each project; the overall business case; desired changes in customer behaviour and attitude; desired changes in employee behaviour and attitude; desired changes in cost to service and efficiency; and progress towards the desired state.
13. Provide coaching and training. The programme plan should allocate enough resource to training, coaching and measurement. In many systems projects, too much time and resource is spent on systems development and formal (initial) training. This point covers coaching and building of the programme team and post-implementation coaching of staff and partners.
14. Carry out regular programme management health checks. You need to be confident the programme has been developed in a sensible way, and that you are minimising the investment risk. Use a programme management checklist, based on the points above, for determining the likelihood of programme success and for identifying where changes are needed. The checklist is normally scored using a simple red/amber/green flagging system.
There are no guarantees of success when it comes to customer management (remember, there are only a few guarantees in this world ... death and taxes being two of them). But the checklist above will certainly improve your chances of delivering a profitable and sustainable CRM initiative.
And it will be one that makes your CRM programme manager look great!
* I`d be delighted to discuss and debate some of these points with you. Please feel free to contact me on, 083 327 1010 or dougl@knowledgefactory.co.za.
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