Can CRM Be Saved?

According to analysts' reports released late last year, customer-satisfaction rates for CRM initiatives are more disappointing than Gap's holiday sales numbers, especially considering the initial hype that accompanied the emerging market only a few years ago. (See "Users Give CRM Vendors a Big Thumbs-Down," page 58.)

Experts say their dissatisfaction resulted because so many early-stage CRM initiatives were full of lofty aspirations but had little in the way of specific goals, metrics or organizational buy-in on the customer side. What's more, as the hype grew, companies were inundated with wave upon wave of new products, but provided with little insight into how they could fit into the overall CRM landscape.

"The worst-case scenario was two years ago when the [expression CRM was truly content-free, because it could mean almost anything from a philosophy to a product," says Ken Lownie, vice president of professional services for software-maker ATG, Cambridge, Mass. "Some companies were selling sales-force automation, some were selling call-center technology and some were selling other things. Even ERP systems were starting to be called CRM platforms."

All that is changing. Vendors and solution providers are now demonstrating real ROI for CRM solutions. In a recent report on CRM initiatives among 225 Global 2000 firms, PricewaterhouseCoopers (PwC) Consulting, New York, found that a lack of internal CRM integration initiatives stands in the way of true ROI and customer satisfaction. (See "What Do Clients Want?" page 56.)

"It's all about managing expectations," says Sam Kapreilian, a partner at PwC Consulting, which goes to market through its CRM ACCEL offering, a cross-channel solution leveraging products from partners such as Avaya, BEA Systems, Siebel Systems and Sun Microsystems. "People have dreams of what CRM can do for them, and they get caught up in all the hyperbole around it."

While low satisfaction rates are no doubt troubling for manufacturers of CRM products, the good news is they will ultimately lead to more opportunity for VARs and solution providers, says Bob Thompson, president and founder of FrontLine Solutions, Burlingame, Calif. and founder of CRMguru.com, an online community for CRM providers.

"There's a need on the part of clients out there to have people help them a bit more, because the vendors are not filling that role extremely well," Thompson says.

And it's clear that CRM is still a hot area for solution providers. According to VARBusiness research, close to one-third of solution providers surveyed say they employ CRM technology for their clients. And even the big guys are still investing in their CRM offerings. Aside from PwC Consulting, Accenture has been working with Teradata, a division of NCR, on a solution to link CRM systems with business processes.

But what strategies should a solution provider consider when trying to implement a successful CRM system? Here are a few tips we've culled from talking to various CRM experts in the industry.

Walk, Don't Run

In theory, a properly implemented CRM strategy can completely transform clients' businesses and allow them to make the most of every relationship they have. But starting off any project with such a broad goal will likely lead to unfulfilled expectations and, ultimately, failure.

One of the most common mistakes early CRM implementers made was that they tried to bite off more than they could chew, immediately setting out to change their clients' entire way of thinking about their customers.

"The antecedents that we put in front were so great that there was no ability to really see the end and where the ROI would be," ATG's Lownie says. "Just the first step,a comprehensive segmentation study to identify core markets,could be a multimillion-dollar project in itself, and that's just the strategy work."

It's no secret that in today's economy, that kind of hazy ROI picture just doesn't sell anymore. So, instead of pushing complete solutions that will totally overwhelm (and, ultimately, undersatisfy) your clients, move in smaller steps, starting out with projects that will show immediate results for a smaller market segment and make your client more willing to invest additional money and resources.

"Get those [projects working in the real world," Lownie says. "That way, you can bootstrap it from there and go back to the company and say, 'Look what we did by focusing on this small group and changing their experience. We just demonstrated a 40 percent ROI. Now we want to go in and do some more.'"

But remember, convincing your clients to take things one step at a time isn't always going to be an easy sell. "Clients are equally culpable in looking for a quick fix," Thompson says. "It's human nature."

Balancing Act

Like many emerging technologies, early-stage CRM initiatives suffered from a lack of integration into clients' overall businesses as many companies pushed all CRM responsibilities on IT managers, assuming they should have the sole responsibility for implementation. That strategy ultimately leaves a gaping hole.

"Nearly 60 percent of all CRM projects we see result not from technology but from lack of business alignment or buy-in," says David Johnson, managing director of CRM for KPMG Consulting. "A lot of that has to do with the fact that even when people do business cases, they are largely dysfunctional business cases. They rationalize things along the lines of 'Our competitors have done it, so we have to do it.'"

Instead, it's important for solution providers to reach out to both sides of an organization early on, starting out with business requirements that are specific regarding goals or requirements, and then putting the technology in a position where it can support those goals.

"A lot of it has to to with understanding how customer priorities are shifting and what specifically you can do with CRM to help reach new target segments," Johnson says. "People usually don't step back and look at the value chain and say, 'How can I add value to the customers and their interaction?'"

It's also important to keep the business and technology concerns fully integrated throughout the life of the implementation. That usually means laying down the groundwork early on as far as who is going to be responsible for each part of the implementation.

Educating Clients

Some experts believe that most companies are still holding onto their traditional view of the Internet,as being solely about content,thus hampering the way they view CRM and how it can ultimately help their businesses. So it's up to solution providers to educate them on the possibilities--whether it's through information seminars and Webcasts, training sessions, case studies that show successful CRM implementations at work and even client references.

Marcel Holsheimer, president and founder of Amsterdam-based analytical CRM company DataDistilleries, says a key part of his company's sales efforts includes taking potential clients through ROI exercises,demonstrating how his company's products can help their call centers save money and increase sales.

It was that process that helped the company score a multimillion-dollar contract with the Bank of Netherlands,an impressive feat, because the bank had put all of its other CRM-related expenditures on hold indefinitely.

"If you look right now at CRM implementations, there's a lot of stress and pressure on the market," Holsheimer says. "So customers basically told us they will only implement CRM products that they are pretty sure will generate revenue or have a ROI within the next year."

Solution providers should be able to accurately assess how the solution will affect customer loyalty, satisfaction and retention, while mitigating any and all risks to the business' operations during the implementation.

For instance, PwC Consulting devised a series of models and templates to help clients articulate specific goals and aspirations so they can continually monitor and measure performance. "We've done that with a number of engagements, helping develop what we call linkage models," Kapreilian says. "We identify the key levers we need to pull, then we link them to operating and fiscal benefits."

Don't Overlook the 'R' In CRM

MaryAlice Colen, chief evangelist at Interwise, Santa Clara, Calif., a provider of real-time collaboration solutions for large enterprises, says the first wave of CRM solutions had everything to do with data,collecting it and giving users access to it.

But it's the second phase,what she dubs the "relationship phase",that will ultimately define successful CRM initiatives moving forward. She believes solution providers that can partner with vendors to provide clients with access to collaboration tools and programs that let them interact with end users in real-time will be positioned for success.

"Relationships are based on data, [but they aren't only data," Colen says.

To that end, Interwise works with a number of large clients, including Microsoft, PeopleSoft and SAP, to produce programs offering live interaction in a number of different formats. It also has a close relationship with consulting giant Accenture, which recently provided funding to the company.

Know Technology's Limitations

One of the biggest mistakes solution providers make when implementing CRM solutions is trying to solve every problem with new technology, ultimately implementing expensive solutions that result in little up-front ROI. Instead, solution providers should take a narrow approach and focus on areas where technology can have the biggest impact.

Take call centers, for example. According to the PwC Consulting report, while 74 percent of consumers surveyed typically use the Internet to contact a company, more than 70 percent still identified the phone as the preferred mode of contact, despite the heavy investment over the last few years in e-CRM initiatives.

So, rather than try to completely replace the traditional call-center channel with Internet-based CRM initiatives, you should pinpoint specific areas where technology solutions can alleviate pain points or complement existing channels, says Frank Nigro, director of e-applications product management at WorldCom, Clinton, Mass.

"What technology can't do is duplicate complex human behavior, but it can mimic very simple repetitive tasks, so you can take those out of your center to free up reps for more productive tasks," Nigro says, noting that WorldCom has achieved good results of late, selling solutions based on speech-recognition technology where clients take mundane, repetitive tasks and automate them. "Rather than have them tie up a rep, which is very expensive and time-consuming, speech-recognition technology takes care of it."

For example, WorldCom recently used speech- recognition technology for a retail client whose call centers were frequently inundated by callers looking for directions to specific stores. Using the solution, the client was able to convert directory information into a data file that can be accessed directly by callers. "Now, all those queries are directed there, and it takes a task out of the call center that is easily handled by technology," Nigro says.