Customer relationship management (CRM) is the Rodney Dangerfield of software—it never gets any respect. The running joke is that CRM really stands for "customers rarely matter." And there are those who insist the acronym means "can't remember much"—a stinging indictment of what's basically an electronic memory.
At the root of the jokes is a perception that CRM programs don't measure up. According to an August 2004 survey by CIO Insight, a third of companies that used CRM said it failed to meet expectations. Yet that's better than a few years ago, when surveys routinely painted one half to two thirds of all CRM customers as dissatisfied.
In fact, the $11 billion CRM market is on the rise, growing annually at around 8 percent, according to Boston-based AMR Research. But if you buy and deploy either an integrated enterprise-level CRM system or à la carte from vendors like Salesforce.com Inc. or NetSuite Inc., and the solution you choose doesn't do what you expected it would, the fault may not be with the program. Here are the most common mistakes:
1. Don't Think, Just Buy
Many companies buy a CRM solution for all the wrong reasons, says Bruce Culbert, executive director of BPT Partners, a global consulting, training, and research company headquartered in Atlanta. "I've seen so many companies buy because their competitors got one, or because they thought it would differentiate their product, not necessarily because it was the right solution to support their business goals and customer processes," he says.
Culbert says he had one client, a large systems integrator, who ditched a good, if somewhat dated, CRM system and spent millions on a new one simply because the CEO wanted to cultivate a closer business relationship with the CRM software vendor. (Culbert declined to name either of the firms, citing confidentiality agreements.)
"The rollout was a disaster," Culbert says. "It was a huge investment, the software didn't support the sales process, and the company never achieved that closer partner relationship. It just put the business in turmoil."
When you do something like that for the wrong reasons, Culbert says it's almost impossible to recover.
2. Don't Involve the Sales Team
If you want employees to use a CRM system, you've got to sell them on the benefits, says Mini Peiris, senior director of product management for NetSuite, a Web-based CRM vendor based in San Mateo, California.
"There needs to be something in it for employees," she says. "A new CRM system might mean your sales team can see how much of a commission they just made, or executives can access more real-time information on their dashboards. It can't just be technology for technology's sake."
Peiris says smart companies will invite employees from each affected department to participate in the decision before they decide on a CRM system. "If you can get the top salesperson in your organization on board, he can act as an evangelist to get everyone else to go along."
3. Pay No Attention To Process
"CRM is not just a technology but also a process," says Bob Furniss, president of Touchpoint Associates Inc., a customer service consultancy based in Bartlett, Tennessee. "The technology should adapt to your processes, not require your processes to adapt to the system."
Furniss recommends sales organizations create cross-functional teams to map out the procedures the company uses, identify which ones need to change, and pilot new processes before rolling them out en masse. "The question to ask is, 'How can we change processes to improve the customer experience?'" he says. "You've got to workflow everything from the lens of the customer."
4. Go It Alone
Managers who try to implement a CRM package without support from top management may find their projects crippled. According to the CIO Insight survey, executive support is the second most important factor in CRM success.
"The main reason most CRM initiatives fail is that companies lack the discipline and executive commitment needed to make the solution work," says Stan Bunn, who heads up the CRM practice for enterprise solution provider BST Global based in Tampa, Florida. "In many cases, management allocates funding for a solution and expects its production personnel to succeed without help from operations. That type of hands-off approach is destined to fail."
Candyce Anderson, a project manager for telecommunications equipment manufacturer ADC, has been through four attempted CRM initiatives since 1993. Now the Eden Prairie, Minnesota–based company uses Kana IQ, a knowledgebase application, for its in-house and customer call centers.
Anderson says some initiatives failed because circumstances changed—a product's price suddenly jumped—while others died because executive support waned. "It was really difficult to get executive sponsorship, though some of that was due to economic conditions," she says. "You really need executive buy-in for a project to succeed."
5. See the Forest, Not the Trees
A lot of data collected by CRM systems is wasted, says Paul Kowal, president of Kowal & Associates, a customer service consulting firm based in Cambridge, Massachusetts. For example, Kowal says most call center software will flag big accounts, but fail to call out more subtle things like when it's a customer's birthday.
"If your sales rep says 'Happy birthday, Mr. Smith, how can I help you today?' it takes the conversation to a whole new plane," Kowal says. "By giving your reps tools to make conversations more interesting, you empower them to be the human beings they really are, and not machines."
Kowal urges companies to add qualitative data to call center reports—such as the issues most frequently voiced by customers each week—and to have senior management listen in on calls. "Reports and statistics aren't enough," he says. "When you're on the phone listening to the interaction is when the numbers become real."
6. Customers? What Customers?
A CRM system's ultimate goal should be to serve customers better, a fact that's too often neglected, says Tom Connellan, a keynote speaker based in Orlando and author of Inside The Magic Kingdom, a book about how Disney creates great customer experiences.
"Too many companies forget there's a 'C' in 'CRM,'" he says. "They get totally focused on the software and don't ask customers what they want a CRM system to produce."
Connellan tells a story about one of his clients, a major Midwestern insurance firm that decided it would respond to all customer applications within 24 hours, instead of the usual 72 hours. But its field agents balked, saying it would take them at least 48 hours to pull together the supporting information for each applicant. Connellan suggested the company run the idea by 20 or 30 of its most loyal customers and gauge their response.
"Their response was, 'So what?'" Connellan says. "The difference between twenty-four and forty-eight hours mattered not one whit."
He says involving top customers in what the CRM system should deliver can help companies define their CRM goals and strengthen their customer relationships.
7. Disdain Training
Changing how employees do their jobs can be like trying to stop a runaway train—unless you make training a priority, it's easy to get flattened. "The main mistake I usually see in companies is they allocate little or no budget for training or support," BPT Partners' Culbert says. "That's huge in terms of employee adoption and effective use of any business solution."
Barry Stern, Internet sales manager for Vendstar, agrees that training is vital. The Deer Park, New York, company manufactures vending machines and sells them to entrepreneurs via an 800 number, using NetSuite online CRM tools to manage incoming calls.
"Training is a big thing for us," he says. "If our salespeople want their orders to ship, they have to use NetSuite—there's no bypassing the system. Some people picked it up within a week, and for others training is continuously ongoing. But we always say, 'The number-one reason we hired you is to sell. If you're not computer savvy, just sell. We'll help you with the tools.'"
8. Hold the Staffing
Most sales organizations don't think about how a new CRM system will impact their staffing needs, says Kimberly King, president of InterWeave Corporation, a consultancy based in Tampa, Florida. Sales organizations need to ask some basic questions before they roll out a new system, she says. "Will call volumes go up or down? Will you have more manual work initially as the system is rolled out? Will you be running two systems in tandem until the one billing system has all the complete information? You may need some temporary help for a while."
9. Testing Schmesting
A failure to adequately test new systems—from a functional as well as a business perspective—is one of the most common CRM mistakes, says Laura Johnston, vice president of CRM and loyalty for Travelocity. The Southlake, Texas–based travel services company uses Teradata's Warehouse and CRM applications to manage marketing campaigns for its 16 million monthly visitors.
"At Travelocity, our CRM strategy isn't to build grandiose visions," Johnston says. "We start with small, focused initiatives and test them extensively in market."
Earlier this year, the company tested its ability to customize offers on its popular Web site based on a visitor's geographical location. Instead of building an automated system for the hundreds of Travelocity origin cities, the company manually programmed custom pages for a handful of markets, then used the data it collected to build a business case for expanding the project. Johnston urges organizations to create a "culture of measurement." If testing reveals flaws in their CRM road map, she says companies can then redirect the project without wasting millions.
10. Don't Define Success
One reason many CRM projects look like failures is no one ever stopped to ask what success might look like. Companies must clearly define their expectations—whether it's sharing customer information across the organization, more real-time sales information, better forecasting, or enhanced cross-selling—and develop ways to consistently measure their progress.
"Sometimes the hardest thing is for organizations to identify what they want from a CRM system," NetSuite's Peiris says. "They feel it's something you have to have, but they don't know what's driving that decision. If you don't know what your criteria for success are, it's hard to figure out if you've succeeded."