How to Win at CRM

Strategy, Implementation, Management

Seth Kinnett

• Editore: Auerbach Publications
• Anno: 2017
• ISBN:
  9781351646024
• Edizione: 1
• Argomento: Business
• Categoria: Customer Relations

This book provides clarity and guidance on effective strategy, implementation and management of CRM. It explores both the conceptual and cultural context of CRM initiatives along with the particulars of CRM system implementation and management. In order to provide this clarity, it surveyed the existing academic publications surrounding CRM, sales force automation, and related topics within information systems literature. The book supplements this research with insights from CRM experts to provide a robust picture of the CRM landscape and how to improve it no matter what role you play within your organization. This book is for everyone who wants to achieve CRM success.

PART I

STRATEGY

1

THERE’S SOMETHING ABOUT CRM

Customer relationship management (CRM) has exploded in popularity over the past two decades. The potential value of CRM has been recognized throughout virtually all industry verticals, and CRM initiatives have been embraced by companies of all market capitalizations. Everyone wants to be a star player in the CRM game. When implemented correctly, CRM can satisfy a number of critical objectives, including lowering the cost of customer acquisition, increasing customer retention and satisfaction, building customer loyalty, segmenting customers for targeted marketing initiatives, and identifying cross-selling opportunities—all while reducing operational costs and increasing operational efficiency.

The noted research firm, Gartner, as of the writing of this book, anticipates that CRM will become a 36-billion-dollar market by 2017. From 2012 to 2017, CRM has shown a compounded annual growth rate of 15.1%, leading all categories of enterprise software in projected growth, and is on track to eclipse enterprise resource planning (ERP) systems in global market size in 2017. However, despite all of its promises and relentless market expansion, CRM has rapidly fallen out of many firms’ good graces as these firms struggle with myriad problems, including lack of clear CRM strategy, misalignment of business goals to the technical execution of these goals, and keeping CRM systems running, current, and usable. As a result of the vast potential surrounding CRM, folks working in the CRM space are under significant pressure and scrutiny—perhaps at a level unparalleled by those working in other areas of the enterprise. This is the result of several factors—most notably that CRM has such a direct link to the customer, to revenue, to success.

When analyzing CRM failures, a large portion of both academic literature and professional publications admonish firms for neglecting to consider the business process, not being customer centric, or placing too much faith in the technology. Instead of taking a magnifying glass to the specific implementations of CRM technology, many firms embark on soul-searching strategy quests, emerging with admissions that they may just not focus enough on customers—as if they had not previously considered that customers were important to running a business. The reality is that achieving CRM success is a result of understanding and taking action to improve upon certain functional, psychological, and technical realities. Our lens—perhaps more than any existing book on CRM—will examine just how important technology and organizational psychological phenomena precipitate CRM failure just as often as poor process understanding or implementation.

To begin with, to underscore how—in CRM especially—the quality of technology is so important, we need look no further than a study that examined the impact of three key enterprise systems on profitability and stock price. The systems studied were ERP systems, supply chain management (SCM) systems, and—our favorite—CRM systems. The study made no differentiation between well-designed and adopted CRM systems versus poor implementations, and the authors concluded that “investments in CRM systems had little effect on the stock returns of investing firms.”¹ They further noted that “investments in CRM systems seem to have had little impact on profitability.”¹ In the same study, SCM systems—also evaluated straight-up, not considering adoption, usability, or software quality—almost universally contributed to higher profits and stock prices for the surveyed firms. The very presence of a SCM system yielded benefits. Is it because all SCM systems are implemented flawlessly? Or is there something about CRM that is different?

While studying the ins and outs of supply chain software is not within the scope of this book, we can see that there is something going on here and that the effective implementation of CRM—while drawing parallels from other pieces of enterprise software—is unique. We will examine the distinctions at length, but we can briefly note two key differences: audience and complexity. First, salespeople are notoriously resistant to embrace technology, and second, CRM relies more on what might be called “soft data” than other systems. Events in the market may cause CRM systems to be required to be adapted more often than other enterprise systems, which leads to a need for agility that some CRM implementations are not prepared to address. Before going much further down the CRM rabbit hole, let us begin by examining the semantics of CRM so that we have a clear picture of exactly what it is we are exploring.

What Is CRM?

CRM is the acronym for customer relationship management, and colloquially, it can refer to a concept or a specific type of technology system. Often when people say CRM, what they are really talking about are CRM applications, which are defined in a study by Liu, Liu, and Xu in 2013 as “enterprise information systems that digitize business processes at the customer-facing end of the value chain, including marketing, sales and post-sales support.”² We might also refer to CRM applications as CRM technology, as does another study that aims to clarify CRM applications as a component of CRM, specifically defining CRM technology as “the information technology that is deployed for the specific purpose of managing customer relationships.”³ Referring to CRM when we mean CRM applications—that is, conflating concept with mechanism—is considered by some to be one of the core drivers of CRM failure. The idea here is that people view CRM too narrowly, seeing it only as a piece of technology rather than a broader strategy woven into the web of a firm’s culture. If only people would understand that it is so much more than technology, some have reasoned, CRM would be successful.

CRM, the concept, is defined in many similar but distinct ways. Many of the varied definitions are really distinctions without differences. A study by Saxena and Khandelwal in 2011 succinctly and effectively defined CRM, the concept, as “the process of organizing business activities around customers.”⁴ It was in the 1990s that the focus of sales and marketing began to shift—we might say evolved—from transactional to relationship-based marketing. Transactional marketing was characterized by its focus around product, price, place, and promotion—sometimes known as the four Ps. The core difference between these two approaches is relationship marketing’s focus on creating a picture of a customer and nurturing a relationship through the long haul. As salespeople have known for years, it is easier to retain an existing customer than to prospect a new one, and relationship orientation helps to facilitate retention. Fortunately, CRM also aids in prospecting and acquisition.

Tim Kippley, CRM Practice Lead at Chicago-based Rightpoint Consulting, stated that the broad and varying definitions of CRM were one of the biggest surprises he observed at firms throughout his 16 years of experience. He extended this point during a 2016 interview noting,

People often perceive CRM—and good job to leading vendors for marketing their products so well—as a collection of tools and features. Philosophically, you can actually have a relationship without technology. The idea of having a relationship and leveraging that relationship to do business didn’t dawn at the beginning of the computer. People were doing business long before that. Sometimes this reality gets lost. The technology is just enabling what we want to do naturally anyway. It’s a supporting mechanism for that.⁵

Brad Schneider, cofounder of Rightpoint Consulting, recognizes that CRM tools have also evolved significantly since their inception. During a 2016 interview, he extended this point, explaining that “some of the tools we’re using on a day-to-day basis have evolved to not just be what traditional CRM was, but—lots of times—we’re looking at these as platforms for running people’s businesses. It’s been nice to see that evolution and see the different applications of CRM to see different viewpoints companies take when they use it.”⁵ We will explore the benefits and challenges of CRM as a platform solution in later chapters.

As we look to bring structure to our discussion of CRM, we can observe that some of the extant literature categorizes CRM as strategic CRM, operational CRM, analytical CRM, or interactive CRM. Some of the literature we will review in this book will use the term sales force automation (SFA), which is a technology tool with functionality including “managing customer information, appointments, handling time management and planning, generating daily/weekly reports, managing sales leads, creating quotes, and tracking customer communication.”⁶ SFA software was the precursor to what are now called CRM systems. The distinction is a small one, however, and what many firms have called a CRM system is actually a SFA system. SFA is a component of operational CRM, which is defined as software handling “sales force automation, campaign management, event-based marketing, opportunity management, product configuration and contact management solutions, inter alia.”⁷ This line is often blurred, however, with some studies considering SFA to be inclusive of functionality such as campaign management. In this text, we will consider all references to SFA to be analogous to operational CRM, which is the portion of CRM technology we explore most thoroughly.

We will also review analytical CRM, which “explores customer-related data to answer questions such as ‘what should we offer this customer next?’, ‘what is this customer’s propensity to churn?’ or ‘how can our customers be segmented for campaigning purposes?’”⁷ Interactive CRM—that is, a CRM through which customers interface directly—will not be covered in this text. Placing our focus on operational CRM is not accidental. This component—the most critical component—of CRM seems to be lacking in glamour compared to analytical CRM. Dreaming up new data cubes is certainly more exciting than upgrading a piece of hardware. All data cubes are useless, however, if the operational CRM system—an important source feeding the analytics engine (which may also be receiving external data such as market metrics)—is poor. Investing in analytical CRM when operational CRM is a failure is like trying to paint a kitchen before you have dug the basement (Figure 1.1).

Figure 1.1 CRM categorization.

Why Pursue CRM Success?

Current research has shown myriad benefits resulting from the successful implementation of CRM, as well as the costs associated with failed CRM implementations. As one example to highlight the impact a poor CRM implementation may have on your company, consider the findings of a study conducted in 2006 by Ang and Buttle that highlighted the impact of a poor CRM system on a firm’s human capital. The study found that CRM was “instrumental in causing sales people to leave the company after 6 months.”⁷

Note that the impact is a direct hit to frontline salespeople, not an upstream frustration by sales management. In other words, the lack of, for example, analytics capabilities, while frustrating to management, is less likely to cause salesperson attrition than a slow, unreliable system that provides more headaches than benefits. While it may seem shocking that an enterprise software system could have such a large impact on as substantial a life decision as switching employers, the evidence shows us that it is indeed a real concern. We should also acknowledge that the deployments analyzed in this study also failed to contribute to increases in sales volumes or contracts. The authors do not note any decrease in sales volumes or contracts following CRM implementation, which contributes even further to our assertion that it is the human–technology component that fueled user attrition.

At the beginning of this chapter, we noted that CRM has become a hugely popular initiative for many organizations. The drivers for these initiatives encompass many different goals, and organizations engage in CRM initiatives for a variety of reasons. Tim Kippley, CRM Practice Lead at Rightpoint Consulting, Chicago, discussed some of those drivers for CRM during a 2016 interview:

A lot of them [CRM implementation requests] will come surround some form around revenue. They’ve either acquired a company or they’ve changed their revenue model in some way. So they want to see what they can do to improve sales in that area. Also when there’s internal turmoil. They may be unable to get an accurate view of things. Everybody has their own version of the truth and [these organizations] want to get to one consolidated version of the truth. Another one is pipeline issues—less now but more so early on. They say “I can’t forecast my business. I need to be able to run my business effectively.” That’s fundamental.⁵

Kippley also noted that particularly professional services firms realize that they are not selling widgets. They know that understanding what relationships exist and the strength of those relationships leads to the best opportunities to win business. Kippley’s observations speak largely of the broad goals of CRM as a strategy—revenue generation, forecasting, and getting to a single version of the truth. Firms that have had CRM for a long time may benefit from reviewing some of those core fundamentals as sometimes firms are embarking on CRM for far more tactical reasons than just to keep their organizations running. A CRM expert who specializes in large enterprise implementations for Fortune 500 companies explains the organizational context of firms embarking on these types of CRM initiatives, noting,

Most times, firms are trying to replace legacy systems which are expensive to maintain, lagging in innovation, can’t keep pace with the business. Typically the business has voiced enough concern and complained enough to drive the technology team to be forced to make a decision. Are we going to continue to support an old system that’s outdated and not improving or are we going to move to a platform that’s going to make us flexible and responsive and even lead in marketplace conditions? Large companies understand if they’re not advancing their technology platforms, their competition is going to leave them in the dust. They know they have to move with the market or get left behind.⁷

These sentiments are largely based on technology. This reveals both that some organizations may be viewing CRM as only a system and neglecting the process component, as much of the research implores us to do, and also that poor technical implementations are a real, tangible concern for organizations to the point where they have prioritized spending on correcting them. CRM has reached a certain level of market maturity, and both the consultants interviewed for this book confirmed that highlighting a large quantity of their business comes in the reimplementation space, often due to poor adoption. The anonymous consultant provided additional insights:

Most companies have CRM, but there are absolutely divisions within a company. These large enterprise global corporations th...

Indice dei contenuti

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• PREFACE
• ACKNOWLEDGMENTS
• ABOUT THE AUTHOR
• PART I STRATEGY
• PART II IMPLEMENTATION
• PART III MANAGEMENT
• INDEX