Senior executives seeking expert advice on the merits of customer relationship management could be forgiven for developing multiple personalities.
With your optimistic hat on you might quote figures from analyst IDC that claim European companies will spend $50bn on CRM software in 2005, an increase of 26% per year over the preceding five years. As a pessimist, you’re more likely to point to estimates by rival analyst Gartner saying 65% of CRM projects fail, and that, by 2003, four-out-of-five will fall short of expectations.
But if you’re just confused – and we can’t blame you if you are – IDC sums everything up by stating that 50% of European companies rate CRM as critical for their business, but that one third aren’t remotely interested.
Nevertheless, CRM is essential for any company with customers, and there are quite a few of those.
CRM has been one of the hottest corporate IT topics of the past two years, but attitudes have cooled as some early implementations failed to deliver.
Most botched projects boil down to two causes – rushing in head first without considering the business implications, and too much focus on software.
CRM means changing the way you work to focus business processes on customers, or what Gartner calls: “Moving ownership of the customer up to the enterprise level and away from individual departments and channels.”
The vision is that CRM enables companies to integrate their customer contact points to give customers a seamless experience. Customer-facing staff provide a better service when they have an up-to-date picture of every interaction, whether it is by retail, direct mail, web sites, telephone or face-to-face selling.
Typically for the IT industry, the initial hype from suppliers and consultants about the enormous potential benefits of their products led to unrealistic expectations. But CRM is a young technology and real-life experience of how to make it work – and more importantly how to make it pay – are hard to find. “Calculating an exact monetary value on customer relationships or retention is difficult,” says IDC senior analyst Rasika Versleijen-Pradhan. But early adopters have learnt valuable lessons, and they provide a blueprint for others on how to ensure success and payback.
At credit-card provider Barclaycard, for example, increasing competition means customers expect more and want products tailored to their needs, says technology director Jennifer Allerton. Because of this, Barclaycard is introducing software from Chordiant. But Allerton says CRM is about more than technology. “It’s a huge cultural change and a different way of doing business. It’s like having a heart operation while you’re running a marathon; a complete transformation,” she says.
Barclaycard’s CRM project is a long-term business change initiative. The first phase, due for completion in October, will speed up credit card application processing, moving it from a nine-to-five operation to a 24×7 business. “It’s a multi-year plan to move across the company. The initial part is about re-engineering internal processes and subsequent phases will improve levels of service,” says Allerton.
And, while Barclaycard is at the forefront of CRM adoption, Allerton is aware that the technology is still relatively immature and you have to tread carefully. “The old days of modifying the software package are gone. It’s about tailoring your work processes to take advantage of the functionality. Keep it as ‘vanilla’ as possible and avoid customising,” she says.
Another early adopter, Deutsche Bank, believes the key to CRM is to make sure the right information reaches the right employees. Its CRM system collected so much information that employees were overwhelmed. The bank then added a reporting tool from Alphablox to its Siebel CRM software to filter out unnecessary data. “Data was thrown at users and they had to sift through it. Now they can control what they need,” says global management information systems coordinator Edwin Ball.
Deutsche Bank is investing “multiples of millions” in the project. But Ball is aware systems often become redundant after five years or so – which makes for, potentially, a huge waste of time and resources.
Ball thinks many CRM installations fail because they don’t look at all aspects of how a company deals with its customers. The problem is worse for a multinational organisation such as Deutsche Bank where different divisions in different countries deal with the same customers. CRM is one way of making sure everyone is aware of what others are doing and can present a consistent sales story. “You have to ensure you are looking at the overall relationship covering clients, products and geographic markets,” he says.
Consignia, AKA The Post Office, is the undisputed heavyweight of CRM in the UK. Where it might once have been perceived as a slightly stuffy, bureaucratic organisation, deregulation has heralded a leading edge approach to its information systems.
Consignia’s CRM initiative is arguably the largest in the UK, part of a #200m investment in improving services to its 28m customers and the 19,000 branches that make Consignia Europe’s largest retailer. On 18 December 2000, the first users went live on the project, which is codenamed Spice (Securing the Post Office’s Integrated Commercial Environment). So far 1,200 of Consignia’s staff are using Siebel’s CRM software, with a further 2,800 to be introduced by April next year.
The project has been split into three phases: redesigning Consignia’s customer-facing processes; introducing a standard software infrastructure to support these processes; and deploying them into 14 business units.
The project was kicked off by Spice programme director Jean Irvine, now retired. She explains that the objective is to give customers the same experience of Consignia through each of its channels – web, phone and high street – and through all of its brands, including Post Office Counters, Royal Mail and Parcelforce.
“The principle for Spice is to have a single, consistent view of the whole customer within the business,” says Irvine. “We didn’t have this because our 130 legacy systems were oriented around our brands. We look at Consignia from the customer back in,” she says.
Mindful of horror stories about failed CRM projects, Consignia thoroughly researched the project before it began. “Front office projects have failed to deliver because they failed to take people into account. Sales people are more creative, and less used to IT. In the back office, people are used to systems,” says Irvine.
Still, lessons have been learned. “We underestimated the scale of change in the way of working,” she says. “With hindsight, we would have spent more time with each business unit looking at how they have to change. We had theoretical views but we didn’t fully understand its implications. We adjusted the roll-out to take advantage of that experience.”
But Consignia is now confident that its employees understand that CRM means more than just another software package. “People have seen CRM as a systems change, but it’s a business change,” says Irvine. “They are realising this means we can transform our business.’
She offers three tips for others embarking on what she calls the “CRM journey”. First, choose a flexible software application. “There are many specialist, point solutions, but they won’t integrate,” she said. She also feels that you should be ready to learn from your experiences and build change management into the project from the start: “Everyone must understand the vision and communicate it in the same way.” And finally, remember IT is meant to support the business, not the other way round. “Gain business ownership early on. CRM doesn’t rule business units,” she says.
With such complexity, it is easy to get it wrong, move to quickly, confuse your employees and customers. Mistakes have been made, but the blueprints for successful CRM application are being drawn. We will just have to wait and see whether CRM is worth the cost.