Slow and Steady Can Win CRM Race

Information technology managers are caught in a bind. Their budgets are shrinking faster than a snowman in a rainstorm, but that doesn't mean that their colleagues will stop asking for IT to help improve the business. IT became strategic during the '90s, putting CIOs in the boardroom. Now, CIOs are on the spot to demonstrate that IT is as valuable in the thin times as it was during the fat ones.

There are only two real ways to do that, according to Ronald Boeving, vice president of information systems at health care benefits company First Health Group Corp.

One is to find a way to get the company into new market niches; the other is to improve and extend the services you offer existing customers.

This sounds like a situation tailor-made for a CRM system, such as the one you have probably partially rolled out. But as IT budgets shrink, big CRM projects are among the first to get frozen out.

A Meta Group Inc. survey says that companies with CRM projects are shrinking the scope and budgets of these projects by 35% on average.

Gartner Inc. has expressed concern that this trend might cause a backlash against the whole idea of "customer-centricity," but the actual danger is different.

If you freeze a migration halfway, you might still have to pay half a million dollars or so in maintenance costs on the old system and twice that much for the new one, plus the cost of products and developer time to integrate data from the two.

A better idea is to keep the migration moving, but slowly. Assuming you're moving from one vendor to another, call them both and ask to renegotiate your maintenance and purchase costs—they might benefit from offering a discount. The old vendor will benefit because it won't be losing you as a customer as fast; the new one will help cement a new relationship.

Cathie Kozik, CIO at Tellabs Inc., says that almost every vendor with which she has tried that tactic has agreed to renegotiate, even when the contract was just a few months old. It's in vendors' interest to help you manage your budget, even if they're having a hard time themselves.

If they resist, she says, it doesn't hurt to mention that when good times return, you'll remember which vendors were willing to provide solutions to your budget problems, as well as your technical ones.

If you're not caught midmigration, or if you're between phases, you're in much better shape. If you can break a monstrous CRM project into smaller units, each of which has a clearly defined benefit, you can still make a real difference to your bottom line, using parts of a plan you've probably already built.

First, pick a target you're sure will deliver so much benefit to the business unit involved that it will lobby the CFO for the money to pay for the system, even if you sold the idea originally. To a CFO, IT proposals are always expenses; business proposals are investments.

Try narrow areas that will show improvements quickly:

• Make your automated voice-response systems so effective that customers don't hate them (as much).

• Make more customer data available to call center operators so they can solve customer problems on the first call.

• Add self-service features to your Web site.

• Add ordering and sales capabilities to your Web site, even if you pass those orders to retailers or other partners.

• Improve the integration between your billing system and the customer's ordering system to make selling smoother. Do the same thing between your ordering systems and your suppliers, then ask for discounts in exchange for making the relationship seamless.

The key to the CRM concept, after all, is knowing what customers need and getting it to them. If you can make your business more responsive to customers with small changes, rather than with massive CRM rollouts, so much the better.

Kevin Fogarty is a contributing columnist in Sudbury, Mass. Contact him at


Why Do CRM?

The top three strategic rationales for implementing customer relationship management programs:

Increase customer retention/loyalty 94%
Respond to competitive pressures 77%
Competitive advantage from superior customer service 73%
Base: Survey of 96 global companies; multiple responses allowed

Source: The Conference Board Inc., New York, August 2001

Biggest Challenges

Here are the top challenges to implementing a successful enterprisewide CRM strategy:

1. Dedicating resources
2. Cost
3. Resistance to policy changes
4. Awareness of top executives
5. Vendor selection
6. Conflicting organizational priorities
7. Elusive ROI
Base: Survey of 102 companies

Source: IDC, Framingham, Mass., November 2001

Touch Points

Companies were asked: “Through which channels do you touch customers today?”

Phone 93%
Field 63%
Web 63%
E-mail 52%
Fax 43%
Base: Survey of 60 global companies; multiple responses allowed

Source: Forrester Research Inc., Cambridge, Mass., October 2001

Special Report


Sober CRM

Stories in this report:


Copyright © 2002 IDG Communications, Inc.

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