Greg Comrie, director of CRM at North Highland Company, an Atlanta-based management-consulting firm that focuses on CRM says, “NO CHANGE MANAGEMENT POLICY: A lot of companies mistakenly think of technology first." As per his experience CRM initiative should be focused on improving the relationship with customers, altering the ways of doing the business, and changing employee behavior in the process (S&MM, 2002).
According to a report from the Meta Group, 50 percent of companies cite that a lack of cross-functional planning between departments is the leading difficulty in setting up CRM. So the executive management needs to establish cross-discipline teams like the IT and sales manager’s to work together. The same thing applies for other groups like accounting and marketing. And there is no sense in automating what is already inefficient. Further more, the organization needs to eliminate wasteful business processes before diving into new software solutions. Many times companies have a very hard time articulating their needs to their CRM vendors. Therefore it is essential for the company to decide what it needs to get done (S&MM, 2002).
Recent reports from research firms, such as Gartner Group, Mercer Management Consulting, and Meta Group, point out that problems leading to CRM failures are organizational. The software is not faulty; the fault lies with the company in which the technology is being installed.
CRM success requires the seamless integration of every aspect of business that touches the customer-including people, process and technology revolutionized by the Internet. Each component presents significant challenges, but it is the ability to integrate all three that makes or breaks a CRM system.
The above mentioned people, process and technology components are directly taken from Goldenberg Barton (2002). I am extending those three components by taking them as base outline for the study analyzing them using other literature.
Approach of study
My research deals with issues concerned with integration of all three components to ensure that the people, process, and technology mix is right during all phases of CRM initiative. And it will be a comprehensive study on different strategies for CRM success.
Goal of study
Primary audience for my study is a manager or an executive of a firm whose prime task to choose and analyze a CRM vendor. My study will help him go through the experiences of different firms implementing CRM software and analyze who is the best software vendor as per the purchasing company requirements. The paper provides some checklists that a decision maker can go through in the process of choosing CRM implementation.
Key terms
CRM initiative, People, Process, Technology, Decision maker
Note: Throughout the paper CRM software is referred to as tool, product and they all mean the same.
CHAPTER II
PEOPLE
The people component is the most crucial component. Jill Dyche (2002) agrees that treating customers like cattle is the antithesis of CRM and the main goal should be to “recognize and treat each customer as an individual” (p.7). This means that if one customer is dissatisfied, he will give a negative feedback to other customers. According to Dyche (2002) the idea of spreading the problems through word-of-mouth is called viral marketing. Some websites like and are allowing the customers to post their feedback and review others feedback on specific products and services. This creates more problems to the company’s success or failure due to the “viral complainers.” Even Goldenberg (2002) agrees same thing by pointing out viral complainers as “the rotten apple spoiling the lot” (p.13). Therefore, keeping the customers happy is the whole goal of CRM system.
Following is an example of a company that has been greatly impacted by the people component in their CRM initiative (Goldenberg, 2002).
A well known telecommunications company started a global CRM initiative. They formed a super focus group having professionals from sales, marketing, customer service, e-business, and other customer-facing functions. This super focus group was responsible for providing user needs throughout the CRM initiative implementation.
The senior management of the group was skeptical about company’s ability to meet the deadlines of the CRM initiative, so they decided not to communicate or promote the initiative on a full scale to potential internal and external users until the initiative was finished. In initial stage there were small problems in the implementation, which is common in most of the CRM initiatives. Eventually all of these problems were efficiently solved. Yet due to the company’s internal viral complainers, these minor problems became major problems and even the system killers. By the time the company was ready to train the application to all internal and external users, approximately 50 percent of the users said they already knew little about the initiative, and they are not willing to participate in the initiative, and declined the training for initiative. After four months, the company eliminated the initiative and had a loss of $800,000.
This shows that the company should have started a full-fledged awareness program with the CRM initiative to ensure the all the managers and users were kept updated on how the initiative was coming along and how is it going to impact on their regular work lives.
Importance of people component
John Taschek (2001) believes that the people component of CRM is essential, mainly because companies are having trouble keeping their best customers. The average company loses between 20 percent and 50 percent of its customer base every year. These percentages are much greater for technology related companies.
Taschek (2001) reports that “A study conducted by Bain & Co. Inc. shows that companies can boost revenues by as much as 85 percent if they can retain only 5 percent more of their best customers. A CRM package, in other words, will pay for itself in its first year if it's only 5 percent effective.”
CHAPTER III
PROCESS
Goldenberg (2002) acknowledges that, the process component of CRM is very delicate and improper automation of the CRM business process will harm the CRM initiative. Most companies have process interfaces to interact directly with the customers while buying, paying the bills and using any other services of company’s. This means that, as the product up grade and customer needs change, most of the interfaces need to be changed or upgraded accordingly.
To analyze the process change, a company needs to understand how well the current customer-facing business processes are working. Without realizing the efficiency of current software or processes, a company should not force the management to change the software vendor. Goldenberg (2002) illustrates a scenario of the process change.
A consumer goods company started with a CRM initiative. Creation and automation of the key-account management process is most the critical part of initiative. Instead of creating a proper key account management process using existing software, the company decided to choose CRM software vendors who incorporated a key-account management process. They finally found and purchased the software which had a generic key-account management capability. The manufacturing company trained their professional workers in the use of the software’s key-account management process by purchasing the new software. Their professional workers became very uncomfortable during the software application training due to the complexity of the software’s key-account management capability. They felt that some of the core issues of the key-account management process such as guidelines in choosing a key account and ways to find which persons to join the key-account management team were not addressed in the new software. After having a long debate the company pulled their new software and created their own key-account process using their previous software according to their needs.
This infers that to increase the efficiency of customer-facing processes, organization need to rely first on internally generated processes, properly train the staff on new or modified processes, and only then look into CRM technology as a tool to help make the process successful.
Dyche (2002) asserts that most of the websites have some sort of personalization technologies to tailor messages to individual customers when they access their personal data each time they visit the site. For example, when user logs onto a favorite audio website, the site greets them with “Hi, Joe, Welcome back! We have your new favorite CD’s available for you!” These kinds of technologies enable the analysis of individual customers over time and on different websites where customers have registered. This is achieved by using customer profile entries, previous purchases and web survey responses. For example which product is the customer most likely to purchase and is the customer at risk and thus deserving of some kind of discount or offer to lure and bring him back, a personalized message reflecting the results of that analysis is then provided when the customer visits the website again.
Dyche (2002) observes that, personalization can follow information, if a customer responded for a discount on sports shoes; it is likely that he will be interested in other sports wear. So according to the customer’s behavior data the CRM process should send personalized messages when the user is visiting the website next time. This would give better understanding of customers and their preferences to build effective customer relationship with the company. Analyzing the click stream of a customer on the web will lead to several new tactics to understand the behaviors of the customer. For instance, recording and observing the navigation patterns and, discount based purchasing patterns of the customer; web pages can be customized according to the customer’s use of site.
Hubley (2002) adds that the tracking of customer behavior and recording click path will pose many privacy issues which need to be explained to the visitor on the web. So according to Hubley (2002) the obvious way to avoid privacy pitfalls is to be as honest with customers as possible, telling them when the information is collected and how will it be used and shared. A link to the company’s formal privacy policy should be displayed on all the web pages.
Dyche (2002) reports that the first point of contact for a customer for all products and services is the call center and the following example explains a typical call center process.
In this case the customer is unhappy since he did not receive his plane ticket and he’s due to take his trip the next day. The customer calls the Customer Service Representative (CSR). The profile of the customer is maintained on enterprise data warehouse or CRM server. The database record of the individual customer holds all the calls to the customer center, his travel history, how he books the tickets, his meal and seating preferences and his purchase of partner products. The CSR reissues the ticket and logs the complaint in the system, to track the customer’s information when he calls again. Properly logging the complaint in the process will ensure that the process will analyze the problem and make sure that same problem does not occur in the future.
Some CRM vendors are using the concept of self-service by introducing web representatives called “cyber agents” just like CSR. According to the study conducted by Dyche (2002), cyber agents pull the FAQ (frequently asked question) information requested by users. Many times the cyber agent is given a personality with voice and facial expressions, often greeting the web users with their first names and providing basic customer support. Perkins (2001) shares that, same kind of technology used by Peppers and Rogers Group where they call these “cyber agents” as the “trusted agents” according to Perkins the trusted agent keeps track of customer interests and supports him based on the detailed knowledge of the customer needs.
Importance of Process component
The whole idea behind this component is nothing but, effective process automation to meet and resolve customer problems and offer them new services or products as per their buying behaviors stored by the different processes.
CHAPTER IV
TECHNOLOGY
The technology component is the most overwhelming due to the rapid growth in technology. Goldenberg (2002) reports that the prime issues related to technology is dealing with CRM software vendors
There are several competent, financially sound CRM vendors (Goldmine, Onyx, SalesLogix, Oracle, People soft, Vantive, Clarify, and Siebel to name a few). Most of these vendors address a majority of the CRM user requirements. But the question is: how well do they deliver what they promise? The answer to this question is not simple. Dyche (2002) illustrates the following scenarios.
In one case, a leading CRM software vendor claimed its software seamlessly integrated with all back-office systems. After purchasing the software the company realized that integration was very complex and required very expensive ($200,000) piece of Enterprise Application Integration middleware to effectively integrate to its SAP back-office system.
In second case, a leading CRM software vendor claimed that all CRM system users need to purchase the base module for customer service, if users are going to exchange data between the marketing, sales and customer service functions. Luckily the purchasing company understood that this was not necessary as regardless of the base module used, all functions could easily share data from the common database. The purchasing company ended up paying $150,000 for software of no use.
In another case, one database software vendor claimed their emerging CRM software initiative will have the best comprehensive functionality for CRM. They actually fooled many potential buyers who waited months for the promised functionality to arrive. The promised functionality never arrived and at last, under pressure from a variety of sides including analysts like ISM, the database vendor finally admitted they would be unable to offer the promised functionality.
All the above scenarios show that whenever dealing with CRM software vendors, one has to remember that these vendors face incredible competition from analysts and venture capitalists that may force them to hide the truth from time to time. Understanding this and then making them demonstrate their promise in real time is very important. At the end of this article I presented a checklist of questions that need to be answered before choosing any vendor.
CHAPTER V
CRM SOFTWARE VENDOR SELECTION
Following are the different checklists; a decision maker should go through in order to select a best CRM vendor.
Functionality requirements
The first step in CRM selection is defining what functionalities the software should fulfill. After defining different functionalities the prime question that a decision maker to ask is “Is there a CRM tool that can perform each of these core functions?” If the available products offer all the functionality, the next question that comes as “is the functionality available or does the product requires some level of customization?”
Dyche (2002) confirms that it is most likely that whatever tool best map to the required functionality, not all may do the same way. For example, One CRM product may use some type of algorithm to compute some task (affinity analysis to score product recommendations) and other may use different algorithm (ex. Regression algorithm). This way one can map the strength and weaknesses of the tool (software product) as per the required functionality.
After recognizing the functionality requirements comes the question of what is the best way to find the CRM vendors. After doing the literature search I found that the following would be the best places to find a CRM vendor.
- Vendor workshops and seminars
- Trade fairs of CRM products
- Research firms such as Gartner and META group
- CRM consultation agencies
- Publications and newsletters
- CRM websites and focus groups
- Corporate partners
Technical requirements
Even though functionality requirement should be prime requirement to consider in choosing right CRM tool, According to different literature reviews, a decision maker has to list following technical requirements to ensure that the product will work in the respective company specific environment.
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Interoperability and compatibility requirements: These requirements will test the ability of the new tool to integrate into the company’s existing technology infrastructure from software, hardware and networking perspective. According to Dyche (2002) the new software should support for existing operating system like Windows 98 or XP, Should be able to connect to the existing data warehouses, should be able to communicate with other existing applications and support all the industry specific open standards. Sullivan (2001) emphasizes that support for up gradation for legacy applications is very important while selecting new software as compatibility and support for functionality can be complex.
- Accessibility and processing requirements :
Dyche (2002) suggests that the new software should be able to handle enough data as per the needs of company. It should be able to pose limitations to the non company users. The decision maker has to check the transaction limitations, password encryption techniques. He should also make sure that there can be proper synchronization among the processes. Siebel Systems (2002) admits the above by saying that decision maker has to not only check the above requirements but also make sure that there is enough functionality to back up the data on regular basis.
- Graphical User Interface(GUI) requirements :
SCN Education (2001) acknowledges that catching the interest of the online visiting customer and making him buy the service is the prime goal of GUI developer of a CRM website. Dyche (2002) insists same thing by saying that the new software package should be able to render graphics, should allow the customizing tools and provide good help screens to provide user friendly atmosphere to the customer.
- Provision for task enabling features :
According to Siebel systems (2002), any CRM software should be able to
different task enabling features. Dyche (2002) says that the software should have the ability to develop a process or functionality which can have the email responses redirected to specific customer service representative according to customer needs. The Siebel systems (2002) emphasizes same thing by saying that software should support the functionality to understanding the customer behavior and list the prognostic profiling of the customer. Robert, et al. (2001) and Dyche (2002) agrees that the software should have the ability to automate task and provide workflow management capability.
- Availability and performance requirements :
Dyche (2002) insists that the new software should be able to generate immediate responses to the online help queries and facilitate universal time zone capabilities to support the users across the world. Robert, Deanne& John (2001) also acknowledges by saying that this kind of performance requirements will foster the customer relationships. And to provide efficient Customer Relationship Management the website should be running round the clock 24-by-7 and should have trouble shooting tools to alert the technical administrators for any problems.
After recognizing functional and technical requirements, the decision maker should come up with a small list of potential vendors for his CRM initiative. Dyche, (2002) lists out some of the following interview questions that need to be asked to a CRM vendor.
- What are the major functionalities offered by the software product?
- If certain functionality is not available with the product, would they be able to build the functionality?
- Does the product dealt with similar customer information amount as decision makers?
- Does the software support full functional relational databases, data warehouses and data mining
- Is migration from one application to another predefined? If not, is the vendor going to build all the extensibility features?
- What sort encryption does the product use (64-bit or 128-bit)?
- Are there any limitations on data handling?
- What type of retrieval and documentation functionalities the vendors provide?
- Will the vendor provide data model documentation that explains all the data? Because most of the times vendors keep their data models confidential, to make the purchasing company buy additional product licenses to access the CRM data.
- What sort of implementation support does the vendor provide? And how much time would it take for any normal implementation?
- What type of reliability guarantee the vendor offer?
- Does the vendor support the development process?
- How many other companies are using the product in the area related to purchasing company and how successful are they?
- Ask for the reference phone numbers and name of the companies that are already implementing the product.
If the purchasing company is satisfied after listening to the answers for the above questions then the decision maker should request for evaluation copy of the software to test and confirm the functionality of product offerings. Prime evaluation goal of decision maker should be to verify that the product will deliver profits that or equal to the cost or more.
CHAPTER VI
CONCLUSION
For success of any CRM initiative proper mix of people, process and technology is essential. This study gives basic understanding of the above components and a naïve decision maker will get good knowledge to deal with the competent CRM vendors in the market. The goal of this study is to give a brief idea of what are the market facing problems on CRM and what makes good decision maker to implement CRM software successfully.
Glossary:
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CRM initiative: Choosing and implementing the CRM software is known as CRM initiative.
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Decision Maker: Could be any corporate executive or a manger whose responsibility is to choose a CRM software vendor
REFERENCE LIST
Goldenberg, J. Barton (2002). CRM Automation. Prentice Hall PTR.
Jusko, Jill (2001, July). What is CRM? Industry week, 250, I10.
Taschek, John (2001, October). How to avoid CRM failure? Retrieved October 10,
2002 from http://www.eweek.com/article2/0,3959,18524,00.asp
Dyche, Jill (2002).The CRM Handbook. Addison-Wesley Pearson Education
SCN Education B.V. (Eds). (2001). Customer Relationship Management: The ultimate
guide to the efficient use of CRM. Hottguide.
Sales and Marketing Management-S&MM (2002, January 1). CRM: The failures are
your fault. Retrieved November 16, 2002 from the World Wide Web
Sullivan, Tom (2001, February). Software selection process. InfoWorld magazine.
Robert, M., Deanne, M., John, A. W. (2001). Emerging Technologies
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World Wide Web
Siebel systems (2002).Implementation best practices: Ensuring Customer success
Retrieved December 11, 2002 from World Wide Web
Perkins, Bob. (2001). The Truth about CRM Software Satisfaction: Leveraging the
Economy of Trust. Retrieved November 11, 2002 from
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