Putting CRM to work

Did you hear the one about the salesman who fell 190,000 transactions behind in using his company's customer relationship management (CRM) software? It's no joke -- just a symptom of the cultural challenges many companies face internally when they implement a CRM system with the goal of attracting and keeping customers and nurturing customer relationships.

"He crashed our server. He didn't think," says Jeff Koeper, vice president of operations at Crane Engineering, a Kimberly, Wisconsin-based industrial equipment distributor, about the salesman who neglected to update address changes, read messages or input customer appointments for several days.

It also helps explain why there's such a high failure rate for CRM implementations. According to a recent report from Meta Group Inc. in Stamford, Connecticut, a staggering 55 percent to 75 percent of CRM projects fail to meet their objectives, often as a result of sales force automation problems and "unaddressed cultural issues" -- sales staffs are often resistant to, or even fearful of, using CRM systems.

"Our biggest challenge was our sales guys -- changing their habits, getting them to use it for planning. They'd make comments like, 'I don't have time to enter the information.' Some are afraid of using Windows, not to mention CRM," Koeper says.

"Salespeople want to know what's in it for them; it's not enough to tell them they have to do it. But give them a panoramic view of what their customer is doing in call centers and on the company Web site, such as buying other products or complaints. That's a very powerful motivator -- they respond to revenue potential and growing their customer base," says Liz Shahnam, a Meta Group analyst.

Crane responded by urging employees to synchronize data daily with the company's server to prevent further crashes, requiring sales managers to ride herd on foot-draggers, and using peer pressure from salespeople selling different products to the same accounts. A cross-functional CRM steering committee meets monthly to discuss problem areas.

Breaking Down Barriers

But companies face a bigger challenge: CRM is a mind-set -- a business philosophy that reshapes a company's sales, marketing, customer service and analytics and presents a radical cultural shift for many organizations. Unfortunately, that doesn't occur magically once the software is booted up.

"It's a change from a product-centered or internal focus to a customer-centered or external focus. It's a change from a monologue to a dialogue with the customer; with the advent of the Internet, customers want to converse with a company. Also, it's a change from targeting customers to becoming the target. Customers are now the hunters," says Ray McKenzie, Seattle-based director of management consulting at DMR Consulting and author of The Relationship-Based Enterprise (McGraw-Hill, 2001), which contains a dozen case studies describing companies' use of CRM.

This switch means getting IT professionals to "think customer" and breaking down the barriers between IT and the employees who interact with customers. It also means structural changes in how the company operates, like sharing information and resources across departments and job functions, which translates into giving up control over who "owns" it; retraining employees in new roles, responsibilities and skills; and measuring their job performance, and even how they're paid.

"Companies that think of CRM as a silver bullet [that can] solve their problems fail. Too often, they see CRM as software, when it is merely an enabler, a tool in their tool kit," says Naras Eechambadi, president of Quaero LLC, a CRM services consultancy in Charlotte, North Carolina.

"When has there been a technology that created or improved a customer relationship?" asks Bill Brendler, an organizational psychologist and president of Austin, Texas-based consultancy Brendler Associates Inc. "Technology is just a transactional thing; it's people who have to make a decision about it. Most of CRM doesn't work because the culture has to change first -- 95 percent of separate departments in a company are focused on only one thing and have no clue who the customer is."

Some IT organizations have tried to tackle these problems head-on. At Pitney Bowes Inc., a Stamford, Connecticut-based business equipment manufacturer, IT staffers met with customer-facing employees and focus groups to solve problems and jointly develop a CRM system salespeople could live with.

"The IT people loved getting out of their cubicles," says Russ Wilson, vice president of customer process re-engineering at Pitney Bowes. "How you establish your requirements and initial design is crucial. You need to understand how sales reps need the tools to do their job, which means a user-friendly GUI. IT people love pull-down menus -- salespeople look at it and go, 'Aarggh!' "

Emerson, a maker of electronics products ranging from air-conditioning system compressors to power-related supplies and tools, is deepening its customer relationships. Formerly known as Emerson Electric Co., the St. Louis-based firm held a three-day seminar for marketing staffers in 1999 that included an introduction to a CRM system the company launched last year. Six of Emerson's 60 divisions now use the system, and 20 more are about to go live with it.

The company's IT staffers and customer-facing employees and executives meet regularly to discuss opportunities to create new business models and how to rapidly deploy applications to enable them.

"We try to follow the Jerry Maguire school of marketing: The customer is the money. Historically, we thought of the retailer, such as Sears, Roebuck, as our customer and totally depended on retailers to push our product out," says Charles Peters, senior executive vice president and e-business leader at Emerson. "But the Internet changes how we interface with the customer, how we manage internally, and makes it possible to do direct marketing. For the first time, we're talking to our true customer."

Emerson's actions are on target, analysts say. "IT should be sitting at the business planning table before the decision to get CRM and can help guide businesses by working hand in glove to lead CRM projects," Shahnam notes. "If IT is perceived as a provider of technology after the fact, CRM will not be successful."

IT professionals need to spend time with salespeople or call center employees and watch them work, says Eechambadi. "Even one day is valuable," he says.

The departments where cultural changes are needed most are the ones with which most customers interact, Eechambadi says. "If most customers interact through a call center, that's where the focus should be," he says. "Call center employees are often fairly minimum-wage labor trained to get off the phone fast to be more efficient. But there are huge opportunities for cross-selling in call centers. They can be trained not just to take a change of address or close an account but sell extra products, or persuade a customer not to leave."

Commitment Is Key

Crane Engineering formed a cross-functional team with IT, sales and customer service staffers to hear sales automation software vendors' presentations and mutually decide on the desired goals. After a vendor was chosen in 1999, a cross-functional pilot was formed to iron out any kinks before the system was rolled out companywide. Two full-day training classes have been held since the initial implementation.

At KeyCorp, a Cleveland-based financial services company, CRM means changing the employee incentive system and having different departments share information and use common sales practices, says Bob Dutile, senior vice president of enterprise architecture. "We act as if a client of one part of the company is a client of the whole company and give more credit to cross-selling," he says.

Early last year, KeyCorp set up cross-functional senior executive councils based on areas such as consumer and commercial markets. Performance goals for all employees were outlined last summer. An integrated back-end data warehouse was set up to share customer leads across telephone, Web and Asynchronous Transfer Mode channels.

Another major challenge companies face: a lack of responsibility and commitment from top management to a companywide CRM strategy.

Pitney Bowes' Wilson wholeheartedly agrees. "If you don't have executive alignment and support -- not just the CEO -- the first time you come to a bump in the road, you'll be ready to jump ship," he says. "Don't even start CRM if they're not willing."

Nine CRM Planning Steps

Nine steps to help your company build a customerrelationship management strategy:

1. Form cross-functional teams that represent the whole enterprise and are driven by the CEO.

2. Have these teams jointly develop a strategic CRM vision.

3. Make sure this vision is based on customers' needs.

4. Analyze CRM strategies of current and potential competitors.

5. Identify the capabilities needed to provide superior customer value.

6. Assess the capabilities you already have.

7. Identify business process changes, such as by mapping customer flow.

8. Build a change management plan. Figure out how employees are set up to deal with customers, what changes are necessary, how much training is required, what capabilities exist, whether people need to be added to the company or whether teams need to be built.

9. Implement CRM.

Source: Brendler Associates Inc., Austin, Texas

Copyright © 2001 IDG Communications, Inc.

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