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CRM – a real challenge

When profit margins are thin and the future is uncertain, is it wise for your organizations to invest in a CRM solution?

Executive Summary

Companies want to see more growth and profitability than they can achieve with their existing strategies, often CRM solutions are implemented to achieve these desired goals. Evaluators are sometimes unaware it can be a double-edged sword which can make or break an organization. If implemented correctly, the outcome is favorable and reaps sizable profits and sustained customer relationships. But, if a CRM solution is implemented incorrectly, it can create turmoil within the organization – breaks in exchange of communication, conflicting business strategies, lost customer information and more. The lack of support for the solution from users increases as the CRM “solution” becomes a “problem”.

Almost 40% of the CRM implementations in the last decade have failed. This was in most cases due to a lack of necessary resources and an insufficient focus on change management. An internal resistance to change and lack of employee involvement is also often cited as a roadblock. In 2002, CIGNA Healthcare's $1 billion investment in a CRM initiative moved 3.5 million employees from 15 legacy systems to two new platforms. Customer service glitches due to implementation issues caused 6% customer churn the same year.

CRM should not be viewed as an IT tool but as a strategic enabler for organization-wide impact. To avoid a CRM solution from falling short of expectations, a top-down approach is recommended for championing the implementation; involvement of your organization's strategy-makers and sponsorship from top management will ensure a success for this strategic imperative. It is important to develop a CRM strategy and value proposition when implementing a CRM initiative.

Recommendations

  • Make a business case for the CRM initiative, it should not only justify the investment but also assist in tracking and monitoring progress. Prioritize short and long term goals, also set metrics early on in the CRM efforts.
  • Sufficient focus on change management to ensure a seamless transition to the CRM system.
  • CRM initiative should be an enterprise-wide strategic enabler with user friendly interfaces and terminologies that are clearly comprehended by all stakeholders. This will increase user-adoption, thereby providing the necessary customer information for proper analytics and actionable insights.

CRM challenges

Companies around the world have leveraged CRM strategies to gain competitive advantage. As more and more companies rush to implement CRM, precautions must be taken to do it right. The CRM landscape is constantly evolving and changing with the customer environment. CRM initiatives are a change in philosophy and not IT tools, customercentricity should be at the vortex of all business strategies.

In a 2008 report titled 'Answers To Five Frequently Asked Questions About CRM Projects',Forrester's Vice President and Principal Analyst, , presents evidence that under 50% of CRM projects fully meet expectations. Only 28% of enterprises and 47% of mid-market organizations surveyed agreed that their expected business results were met or exceeded, hence, it is essential to identify the key challenges, address risks and build a strategy that can make your CRM fruitful.

CRM companies are always talking about strategy, but, someone needs to take ownership for executing this organizational imperative. Listed below are some practical tips to consider when building effective CRM strategies and implementation plans.

  • Sponsorship from top management.
  • Involvement of all stakeholders.
  • Flexibility in solution for future growth.

Have your organisation's CRM needs outgrown the in-house application?

The moment of truth, a reality check-

  • Can your home-grown CRM create a single view across all customer touch points, channels, applications and functions?
  • Can your home-grown CRM create a single view across all customer touch points, channels, applications and functions?
  • Can your system embrace newer media, add teams, geographies etc. on the fly, without making any code change?
  • Does your system build on the foundation of best practices not only of your industry but also across industries and geographies?
  • Is your system able to implement unified TAT and comply with SLAs that span across multiple departments and systems?
  • Is the outcome of reports just data, or information that provides actionable insights to facilitate better decision making?
  • Are you able to provide decision making with progressively evolving reporting engine support?
  • Are you able to maintain the application with high attrition in your IT staff?

Organization's internal Challenges

Clear vision of business goals

It is important to put a business leader in charge of the CRM initiative, thereby bringing business onboard, this highlights the solution's framework for all stakeholders. A shared commitment is required - across IT and all other parts of the business. Business leaders need to use the implementation as an opportunity to formalize their processes while designing their future CRM blueprint. It is important to analyze the business problems first and then find the most appropriate CRM solution for it.

How do you rate the organization's readiness?

CRM is a strategic initiative – one that requires leadership, strong management and a clear roadmap. Some of the challenges and roadblocks associated with implementing a CRM system are dependent to some degree, on the size and well-being of a business. Hence, depending on an organization's overall growth path, it is important to assess the current challenges that need to be addressed.

Smaller and mid-sized organizations

  • No “One” process: The biggest challenge is to get consensus on the Sales process due to a lack of documentation for current processes and procedures. The same process is perceived differently by the assorted stakeholders that are involved. The ideal time to correct this situation is during implementation of the CRM solution. It is important to prioritize management of a business process first, to maintain agility for the CRM solution.
  • Understand the Cost/ Benefit equation: Many small businesses also focus on the total expenditure to implement and operate a CRM solution, without evaluating the Opportunity cost of not embracing one. Most often they walk away despite their pressing needs.
  • Low to No Accountability: Most of the companies that implement a CRM solution assume that their staff will "get to it", that's a recipe for failure! having a manager who will monitor, collaborate, educate or provide visibility to problems is critical to the solution's integration and success.

Large enterprises

  • People issues :Any process change or new process in a large enterprise is a challenge. The CRM initiative must be led by a 'core group' of influential people from the top management
  • Change management:A nother challenge is getting people to do things that are different from their current tasks and responsibilities. It is very important to gain an enterprise-wide buy-in and manage employee expectations. Employees' busy schedules need to be reorganized to undergo training and practice with the new system.
  • Management issues: CRM executives and top management should be involved, it is critical to achieve the goals and objectives of the CRM solution. The CRM committee appointed or the CRM manager should actively participate in all aspects of the implementation from its inception to the solution's deployment. Responsibility should be given to the appropriate people and followed up to ensure they carry it through and thereby avail of all the possible benefits from the CRM system.
  • Technology issues: Business processes lie at the core of any CRM solution, hence selecting the process that needs to be automated and choosing the appropriate solution can be a big challenge.

Challenges with an organization's current assets

In most companies, investment in IT is need based. With time, this buying pattern results in acquiring multiple systems that fragment customer data. Complex IT architecture is likely to undermine CRM technologies, especially if the implementation is enterprise-wide. Some organizations also have home grown CRM Solutions that usually solve a specific 'current' problem. As the organization grows, newer problems arise and the application becomes more of a roadblock than an accelerator for progress. In-house systems may meet your past and current needs, but are they future-proof?

Eco-system Challenges

Right Product

While short-listing CRM products, it is vital to analyze the overall capabilities of the product, in addition to the 'need driver' modules for managing sales, marketing and services. The expectations from a CRM system multiplies with the maturity of an organization. As a rule of thumb, consider flexible and systematic CRM products that offer multiple modules with a futuristic roadmap, that will enable businesses to span horizontally, as requirements evolve.

Two features are not born equal

With manifold CRM solutions available today, another big challenge is to compare their product features. Features are solutions that normally fulfill a stakeholder's needs. An accurate analysis is essential to discover what business problem is actually solved. Evaluation of features must be done collaboratively to understand the depth of solution provided.

Roadmap of need for directional spending

One of the biggest challenges faced by companies trying to implement CRM systems is the cost associated vs. return on investment that companies hope for. The expected results could take years to be seen in full effect as the new system takes root. It is imperative that the organization have a long-term commitment to the CRM project and be willing to invest the required amount of effort, time and money for the solution to deliver the desired results.

Evaluation challenges

Customer Relationship Management (CRM) is a concept or strategy to solidify relationships with customers. CRM initiatives have their own challenges with an organization's ecosystem. The success of CRM implementations relies heavily on the alignments of strategy, processes and technology to efficiently manage customers, all customer facing departments and partners. To solution your complete customer relationship problem effectively, typically these skilled people are required:

  • Consultants: people who understand the domain, hence the business as a whole will help in analyzing its current and proposed business workflows and processes before choosing a CRM product.
  • Product Specialist people who are CRM product experts and correctly understand its complete functionality , can help in providing solutions for the most complex CRM landscapes.
  • System Integrators: people who accurately understand the CRM solution's capability and optimize it best to match with business requirements.

Conclusion

The most commonly cited roadblocks for CRM implementations are insufficient focus on change management, lack of resources and improper involvement of stakeholders.

On the other hand, quantifying the projected ROI and ensuring proper backing from top management for the CRM initiative, ensures involvement of all relevant stakeholders and employees. This creates a CRM solution with higher user-adoption rates and the ability to adapt as per the organization's future expansions and growth.

Ensure vital business objectives like improving customer experience, creating collaborative products/ services, retaining and expanding the share of existing customer base and increasing customer acquisition rates are incorporated when aligning your business with the CRM strategy.

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