CRM Strategy—Why CRM Fails and a 6 Step Approach to Success

Key take away points in the discussion with Laurence Buchanan:

• When explaining Customer Relationship Management strategy, Laurence first references two definitions of CRM that stem from the earliest descriptions of CRM. First, treat different customers differently. Second, recognize that CRM is a business approach that aims to build long-term, mutually beneficial relationships with customers. Achieving CRM strategy is the process of identifying your current state and capabilities, and then defining the path to achieve your CRM vision and goal.
• While definitions and even objectives of Customer Relationship Management have remained relatively unchanged, CRM strategies have significantly evolved. In the early years of CRM, adopters tended to approach the strategy with an inside-out focus, a software technology centric deployment and a future (static) state destination when the CRM would be complete. From an operations perspective, there was also often an overarching management command and control mindset, whereby CRM could be used as a tool to control the activities of customer facing staff—such as getting sales people to record their sales activities and opportunities or contact center staff to follow a call script. CRM was even used as a tool to control and direct customer behaviors such as when a customer should make a purchase or which channels a customer should use to communicate with their supplier.
• Based on trials, tribulations and a significant CRM failure rate, CRM strategy has reflected back to original definitions and objectives to reconsider the methods to build mutually beneficial customer relationships. Based on experience and maturity, CRM adopters now focus on the customer rather than the technology, understand what the customer seeks to achieve and how as their supplier we can assist them better than our competition, and clearly recognize what the customer values from the relationship.
• In addition to business maturity, CRM software technology has similarly evolved. Cloud CRM services are now more flexible and modular that prior era monolithic business systems, which can significantly facilitate acquisition, deployment and utilization of enabling technology. The customers adoption of social channels and social technologies, portable (and even disposable) apps, and mobile accessibility show a clear customer driven technology evolution that poses both a technology challenge and an improved engagement opportunity for suppliers. The constant state of change serves as a reminder that CRM strategies cannot be designed as future static states, but must be architected with change in mind and recognize that CRM is a journey.
• Laurence recommends a six step approach for business leaders to successfully implement a CRM strategy. First, there must first be a compelling need for change that is recognized throughout the organization. Second, the CRM strategy must be customer-centric and designed with an outside-in customer perspective. Third, the CRM vision must be clearly articulated; not necessarily as a fixed point in time measurable objective, but with clear understanding of guiding principals, organizational priorities and objectives in achieving successful and growing customer relationships. It is essential that staff understand and buy in to the principals in order to accomplish the vision. Fourth, the organization must assess and design its capabilities to deliver upon the vision. These capabilities include the culture, people, business processes and enabling technology. Fifth, the company should develop a prioritized delivery plan in order to recognize dependencies and inter-related tasks as well as allocate resources and set the timing for which capabilities which contribute to the vision and objectives. Finally, the CRM strategy roadmap should start small, iterate and be agile in order to support the inevitable learning and adjustments incurred.
• Laurence believes a supporting business case or benefits case can be helpful in prioritizing the activities in a CRM strategy roadmap. However, caution should be exercised that any supporting document not imply or suggest that a CRM project is designed as a silo'd project. In fact, such a document can be effectively used to tightly link the CRM strategy to the organization's corporate strategy. A benefits case may further concretely reflect the benefits to all participants in the value chain; including the company, the staff and the customer. The business case can identify and quantify the benefits—whether seeking to do more business with existing customers for longer periods of time or reducing costs through operational efficiencies. When the business benefits are measured and compared to the costs involved, the organization is left with the amount of investment that makes business sense and can further prioritize objectives for maximum payback.
• Implementing a CRM strategy generally incurs a cultural change within the business, and such change may be the most significant obstacle to success. For example, disruptive technologies such as social media and big data represent big challenges to countless numbers of companies who severely struggle with these technologies—not because they don't understand the technologies but because the technologies challenge their existing cultures and business models—such as their departmental silos, speed of response and their command and control mindset of wanting to control the messaging or communications that occur in social channels.
• While recognizing CRM software is an important enabler of CRM strategy, Laurence notes its quite unfortunate that the term "CRM" has become synonymous with CRM software. His experience has shown that most companies procure far more technology than they need or can use.
• Disruptive technologies such as Software as a Service (SaaS) / cloud or social media / social CRM clearly bring innovation and opportunity but are not a panacea and may actually bring increased risk to CRM strategies. In fact, notwithstanding its value, cloud CRM can exacerbate historical CRM problems. For example, the ease of purchase of cloud CRM systems can facilitate putting technology ahead of strategy and result in rogue or departmental purchases by line of business managers that then contribute to further data and operational silos, and in effect splinter or fracture the ability of a CRM strategy to support a corporate strategy.