The Trouble with CRM Systems: Tomorrow’s forecast – Sunny with some early fog.

When CRM began to evolve in the mid-’90s, every software vendor who had an application that had anything to do with managing customer or prospect data began pitching itself as a “CRM System.” Many of these systems were built to address one particular aspect of CRM, such as Sales Force Automation (contact management, Campaign Management, or Customer Analytics, and could not possibly deliver the value promised as “CRM System.” It was a case of “over-promise and under-deliver.”

Unfortunately, there were no end-to-end technology solutions for CRM at the time, and today, there still aren’t (although we’re getting closer). As much as vendors collaborate to provide an “integrated solution,” the results have been less than stellar. One only needs to read the Wall Street Journal or any number of business and trade
publications to learn about the failures of CRM System implementation where multi-system integration is involved. It’s no wonder that Pragmatists don’t believe that CRM Systems are worth the investment. However, this may be about to change.

While there are undoubtedly a few CRM System vendors who are trying to monopolize the market with an end-to-end solution, there is a somewhat conscious move by most CRM System vendors to segment themselves into specific vertical segments. At this writing, these vertical segments seem to be:

  • Sales(Sales Force Automation, Contact Management, and Telemarketing)
  • Marketing(Campaign Management, Online/E-mail Interaction Management, and Marketing Management)
  • Data Management and Analysis( Business Intelligence, Customer Segmentation, and Data Transformation)
  • Customer Service(Order Management, Supply Chain Management, Call Center Management, and Interactive Customer Contact

By self-segmenting into these categories, CRM System vendors will ultimately force segment standards, against which all vendors within the segment will be measured. This segmenting is the first step to vertical segment consolidation, which will force the smaller, less well-funded players into merging, or failure. In the end, there will likely be 5-7 significant players in each of these segments.

So, what does this mean for marketers and how can we benefit from coming change? Here are my Top 3 predictions, with a few thoughts on how we, as marketers, will benefit:

  • CRM System vendors will concentrate on delivering value within a vertical segment using their core technology, rather than through integration of their offerings with other CRM Systems. This will lead to an increased success rate with CRM system projects and give the Pragmatists the comfort level they need to accept CRM technologies. This will be a blessing for both the CRM System vendors and organizations that are struggling to make an internal case for their Pragmatists.

Marketers will benefit from this segment concentration by having the flexibility to select a system that specifically addresses a specific business goal, rather than a system that tries to solve all of the organization’s CRM ills at once. For example, if the organization primarily derives revenue through direct mail or database marketing efforts select a campaign management, rather than a system that is focused more on sales-automation, but offers campaign management capability. A vertical segment system will provide the fastest ROI for the organization, and will likely allow for a more compelling business case for additional CRM technology in the future.

  • CRM System vendors will encourage more firms to address “people and process issues” before application installation. CRM System vendors have learned the hard way that implementing technology before dealing with resource skills and abilities, as well as supporting processes often negatively impacts installation success.

This helps create an opportunity for marketers to drive CRM as a business strategy, rather than the technology initiative for which it is often mistaken. Marketers should use this occasion to gain visibility for the strategies, tactics, and processes that the technology enables.

  • There will be increased market consolidation between CRM front-office and back-office applications in an attempt to gain market domination in the CRM space. This consolidation will provide more seamless data integration between customer service, supply chains, and marketing, providing a wealth of data to use in improving the value offered to the customer. We are beginning to see this with acquisitions such as Vantive by PeopleSoft (www.peoplesoft.com), and Octane by E.piphany (www.epiphany.com). Of course, Siebel (www.siebel.com), Oracle (www.oracle.com) and SAP (www.sap.com) are also players in this space.

Increased data access will be the biggest benefit for marketers in using these enterprise-wide CRM Solutions. The wealth of data from nearly all customer interaction points can provide marketers with a more complete picture of the customer, and provide the potential to increase corporate value through improved message, product, and service delivery. As this occurs, the challenge for marketers will be how to become “information rich”, rather than “data poor”.

The evolution of CRM Systems space is taking place. Vendors are beginning to focus their offerings to differentiate themselves from competitors better, and there is a deliberate attempt for market domination (in both each segment, as well as those attempting an enterprise-wide solution). While these critical factors are necessary for CRM System vendors to gain full acceptance of their systems, how long this evolution ultimately takes is dependent on how firmly marketers push their needs, values, and expectation, and the proven, documented success of the vendors in meeting those defined goals and objectives.

The Trouble with CRM Systems: It’s always darkest before the dawn

In the last four years, billions of dollars have been spent on CRM technology that doesn’t live up to its promise. A recent Gartner study suggests that nearly 60% of managers will view their CRM initiatives as failures. Organizations are wise to be skeptical of CRM system capabilities, but they are as much to blame as the system vendors. Many of the organizations that have failed with CRM did so because they did not conduct appropriate cost-benefit-analyses, reevaluate processes, procedures, and organizational structure, or fully develop CRM as a business strategy. Instead, they invested only in the technology, because as one manager said to me, “This software will solve all of our problems.” It didn’t, and it won’t. At least not without addressing all of the other issues.

Not surprisingly, some of my friends in the CRM system business tell me that closing sales so far this year has been unusually slow. While undoubtedly, the cause of some of this slow-down is due to reduced Marketing and IT budgets, there is a growing realization among most organizations that CRM is a business strategy supported by technology and not a technology in-and-of-itself. It is likely this realization is playing a significant role in causing the current CRM system space to stumble. So badly, perhaps, that the rash of closures, layoff announcements and revised earnings projections announced daily by the significant CRM system vendors, may leave many to wonder if spells doom for the CRM systems space. I would disagree with the doomsayers, as I believe this fall-out is necessary for the space to evolve.

Consider this. Some years ago, Geoffrey Moore (www.thechasmgroup.com) wrote a book called, Crossing the Chasm. In it, he discussed his theories on technology adoption, and how innovators and early adopters (called “Visionaries”) drive the early market acceptance of technology, while the early majority (called “Pragmatists) help drive mainstream acceptance of the technology. The Chasm occurs when the Visionaries don’t see enough of a head-start advantage to adopting the technology, and the Pragmatists don’t see any compelling reason to jump on the bandwagon. This is what I believe is happening in the CRM system space.

Over the past three years, the Visionaries have tried–some successfully–to implement CRM in their organizations because they “see” and “feel” the benefits of the strategy. However, the Pragmatists, while reasonably confident that CRM as a strategy will work, have not been able to see any significant success and, therefore won’t help champion the system initiative within their organization. So, organizational investment in CRM initiatives wanes, the sales cycle of CRM systems slow, and everyone selling a product or service in the CRM space begins to get nervous about what’s around the corner.

Of course, those are the very folks that have the crystal ball. All they have to do to build the bridge across The Chasm is to drive the next stage of product evolution that makes CRM systems acceptable to the Pragmatists. Sounds simple, right? We shall see, but as we all know it’s always darkest before dawn.

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Featured Image: Photo by Gabriel on Unsplash

Preparing for trouble with CRM

Customer Relationship Marketing (CRM) is one of the most prevalent and vital initiatives undertaken by corporations both large and small. Industry experts claim that nearly five out of every ten CRM initiatives fail. What’s the difference between those that succeed and those that fail? What does it take to implement CRM successfully?

My observations from successful CRM initiatives suggest that success can be, in part attributed to the ability to strategically manage the various aspects of CRM within the context of your organizations broader business direction. Based on our experiences, we suggest organizations consider the following points when developing and deploying a CRM initiative:

  • Create a strategic CRM vision. Buying the latest and greatest CRM software application or developing the slickest e-commerce site will not solve your CRM challenges. While technology certainly plays a significant role in supporting the success of CRM, CRM is a strategic initiative. It’s a way of doing business, not just a way of managing information. As such, a CRM initiative will be most successful if an organization has a clear vision for how it wants to deliver value to its customers.

A robust CRM vision is critical because it helps ensure that the decisions made in selecting technology will be made based on the goals of the company and not be driven-or limited-by the functionality or capability that a particular software application may provide. Remember that technology should support the vision of CRM, not drive it.

  • Avoid the cookie-cutter technology approach to CRM. Every business has a unique way in which it deals with its customers, and while many technological CRM solutions designed for your particular industry, virtually all will need customization to address your specific organizational needs to build loyalty with your customers. The goal with CRM is to differentiate your business from your competitors. If everyone uses the same technology or software application without customization, there’s no significant competitive differentiation, and you’ve gained little from your investment. Make sure the application purchased meets the needs of the organization.
  • Manage the number of cooks in the kitchen. The complexities of CRM may require working with multiple vendors on various aspects of the initiative. Often the efforts of the vendors are uncoordinated and result in “finger-pointing,” which inevitably occurs when something goes wrong. For example, depending on the organization’s needs, there may be a systems integrator; a contact management or sales force automation software vendor, a campaign management software vendor, and maybe an analytical software vendor. Each of these vendors will have specific needs, such as particular data structures, data, and system processes, data needs-for implementation, but how can an organization ensure that these needs are aligned to effectively and efficiently enable the CRM initiative?

Best practices suggest that the way to ensure success with multiple vendors is to:

  • Identify and hire a prime contractor as the lead project manager. One of the vendors should be charged with the primary responsibility for ensuring that all of the applications work together correctly. In some cases, the prime contractor could be a consultant; in others, it could be a systems integrator. However, it’s often best to hire an independent, neutral party to serve as the prime contractor or project manager to manage and coordinate the overall project.
  • Develop an integrated project plan. A project plan, which incorporates the critical tasks and milestones of all vendors, is a necessity. In many cases, there are significant dependencies between vendors that may go un-checked if not combined with the overall plan.
  • Engage all vendors in the system design and implementation process. Proper engagement should help prevent one or more vendors moving in a direction which may be optimal for their product or service, but which may render another vendor’s product or service inoperable as planned.
  • Engage all vendors in ongoing communication. All vendors involved in the project should receive weekly project status reports, as well as participate in weekly team meets. Overcommunicating will help avoid miss-communication as the project progresses.
  • Bind the vendors contractually. An excellent way to minimize these disputes is to bind the vendors contractually and enforce mutual warranties of performance for each vendor involved. In other words, each vendor would warrant that its work or applications will operate free of defects with the products and services of the other vendors on the project.

There are many challenges and issues to address when managing a CRM initiative. Addressing the factors here alone may not ensure success. However, if you keep these at the forefront of your initiative, you will have the ammunition you need to overcome many major contributors to CRM failure.

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Featured Image: Photo by Josep Castells on Unsplash