Building an Effective Strategy

CRM Challenges

CRM strategies and implementation can deliver great benefits - but only if companies do it right..

Customer centricity is the key to success in any business today. Building lasting customer relationships is a strategic advantage. While these facts seem simple, businesses around the world have struggled with them. The key element of this crisis is the need to get a 360 degree view of customers, leading to massive investments in CRM solutions. If done right, these investments can help businesses increase their sales effectiveness, drive customer satisfaction, streamline business processes, identify & resolve bottlenecks; all contributing directly to increased bottom line revenues.

In 2003, CRM was the single most popular business initiative for companies around the world. This trend continued in 2004. Today, three out of every four companies is using, implementing or planning a CRM Solution. The question therefore is not whether to do CRM or not, but how to do it right.

Key CRM Challenges

Companies around the world have leveraged CRM strategies to gain competitive advantage. As more and more companies rush to implement CRM, precautions must be taken to do it right. It is approximated that 50-70% CRM implementations fail, depending on the Industry vertical - it is essential to identify the key challenges, address risks and build a strategy that can make your CRM successful. CRM talks about strategy, but at the end of the day, someone has to lead the way and implement it. Listed below are some practical tips to consider when building effective CRM strategies and implementation plans.

1. What is CRM?

CRM is not a software - it's a business philosophy. It is a strategy, implemented by an organization using a software solution, that typically covers all customer facing departments like sales, marketing, customer service, etc. "CRM" is a term, collectively used to refer to a combination of strategy & software.

A visualization of CRM

2. Getting Clarity on Objectives

What are the set of objectives the company wishes to achieve with CRM? Trivial as it may sound, a majority of implementations don't have these goals spelled out. Ensure that these objectives are listed and define a measurement metrics to be used to assess the success of the implementation. Without these, companies can't calculate the benefits or ROI from the CRM system.

3. No Core CRM Team

Unlike other software implementations, IT teams alone should not be expected to roll out a CRM system. It is very critical for companies to form a core CRM team, which in addition to IT draws participation from the top management plus senior executives of Sales, Marketing and Customer Service departments and subsequently the end-users. Decisions related to the implementation should be discussed in this forum.

4. The Costing Iceberg

It is not unusual for CRM implementations to overrun costs and timelines. When assessing the costing, always calculate the Total Cost of Ownership (TCO). There are two ways of implementing CRM - the license model or the ASP (hosted) model. In the former model, licenses typically represent 9 - 18% of the TCO. The actual TCO will need to include the cost of hardware, software, engineering, operations, AMCs, etc. On the other hand, in the ASP model, a subscription fee represents the true TCO. Since, ASP models offer a fully managed and a continuously evolving system, it also saves implementation time, upgrade costs and ownership hassles. Any implementation delay also has a cost associated with it, in the form of lost time and opportunities.

Hidden 'Total Cost of Ownership' (TCO))

5. Achieving User Adoption

User Adoption is the key to success for any CRM. It is important to design effective training programs in order to provide an understanding to end-users for them to be able to effectively use the system. Ensure that the user interface is kept simple. Consultants often underestimate or miss the motivation required to get the end-users to start using the system. Consider the sales executives, their motivation is to meet their targets to get large incentive cheques. They are happiest when selling, to them everything else is a waste of time. Don't expect them to navigate complex screens or enter detailed time-consuming forms, because it simply won't fly.

6. Managing the Application

Once the CRM has been rolled-out, it is important to re-align the working culture of teams around it. At times, the "As-is" bug bites people. To illustrate, the VP sales direct his sales team to carry excel sheet prints of their pipeline when coming for a review. Here, either the report was not configured well in the system, or users have not been updating it enough. Such scenarios need immediate correction or else the CRM system will slowly loose its relevance. The core team must review such anomalies from time-to-time.

7. Process, Process, Process

Clearly defined processes and their enforcement are critical to the success of any CRM rollout. The objective is to cut out the ambiguity in the system. It is advisable to create a central depositary, accessible to all, which stores all process definitions. Some key processes that need to be defined are the Change Management process, Feature Re-evaluation process, Success Evaluation process, Business Flows, etc. Any process implemented via CRM, must map your real-world process and vice-versa.

8. Finding the Right Partner

The results of CRM success go up considerably with the right solution partner. While strategy consultants are good, it is the solution partner who will make it work. Ideally, select a partner who can do both - strategy & implementation. It is important that your partner shares the risks of your implementation. Pay only for success. While global knowledgebases are impressive, local issues can often negate these learnings. Work with a vendor who understands local work cultures, technology limitations, cultural sensitivities and is willing to listen.

Conclusion

In today's world, CRM can bring numerous advantages to an organization. Though, the model is not entirely without risks, with a well-planned strategy and implementation framework companies can implement CRM successfully resulting in better productivity and customer satisfaction.