Is CRM Technology Living Up To the Hype?
Over the last few years the buzz about CRM (Customer Relationship Management) has
grown extensively. It seems that every Sales & Marketing executive is talking about it. A
study conducted by Jupiter Media Metrix found that U.S. businesses spent more than $5.2
billion in CRM technology software in 2001, a number that is expected to rise to $8.7 billion
by 2006. CRM spending has been growing considerably, especially in financial services, retail,
and telecommunications.
Many companies have invested in CRM systems to retain customers who demand more and
better services by the day, but why? Due to recent trends, consumer behavior has changed
dramatically in the last couple of years, and even more with current market conditions.
According to a study made by The Center for Customer Strategy, consumers are less
concerned with minor price differences, but choose companies based on their value-added
services. They want to be able to get what they need, quickly. With tools like the Internet,
it’s now a lot easier for both consumers and businesses to compare offers, and switch over if
their needs aren’t met. This is especially true of high-value customers that produce the most
profit for the business.
Businesses are scrambling for ways to retain these customers, and attract new ones in the
process. So how is CRM an answer to keeping up with these trends? CRM is a strategy (no,
not software) to transform your business to be customer, not product, focused. The CRM
software is just a tool that helps the company carry out this strategy. Depending on its
implementation, it can help your business identify who your customers are, what they need
and anticipate what could want. It allows businesses to tailor offers to their current
customers, building closer relationships that make them feel valuable. It can help eliminate
contact and data overlap between departments and improve consumer service. For example,
Leah Holzman, Marketing Manager of TradeCard Inc, explained how the marketing and
sales departments in her company had problems tacking each others' progress and customer
data. They spent "hundreds of hours managing disparate data across multiple systems. That
is, until they implemented a CRM initiative with the help of Salesforce.com. Overall, CRM
can make your company more efficient and customer-friendly to capture greater market
share, increase customer loyalty, and attract more customers."
So far, CRM sounds like a dream come true. Yet studies show that more than half of CRM
initiatives fail. Despite rising spending in CRM, a survey of 1,200 businesses executives
conducted by the Data Warehousing Institute showed that 41% considered their CRM
project "a potential flop." Only 16% were satisfied with their CRM software
implementation. As one senior marketing executive claimed, "We turned a manual mess
into an automated mess, and as a result we just made the same mistakes faster and more
efficiently."
The problem with these companies is not that CRM automation fails to meet expectations.
There are several reasons why these systems don’t always generate the desired results. And
most times, it has nothing to do with the software. The biggest mistake that a manager can
make is think that once the software is installed, all problems will be solved. To be
successful, a CRM initiative must be a company-wide strategic culture change and process
design. It entails getting all your employees (not only customer service) to change the way
they perform their every day tasks so that the appropriate information is collected and used
in a productive way. The software is just a tool that keeps things organized so that a
successful CRM is easier to accomplish. As any change in a corporate culture, this project
requires complete support from senior management.
One of the most common problems is that data collected isn't used. Great sums of money
are invested in collecting all different kinds of information on clients, yet many times this
information is never analyzed, never used to understand the customer or provide all the
benefits that CRM can deliver.
For better results, a company investing in CRM must first evaluate their current situation.
They should determine what problems need to be solved, and what type of data are needed.
Since implementation is often a complicated process (especially in large companies), it is vital
to get input from all departments. It is also a good idea to include your customer in the
process to get a better idea of what changes will be embraced. Often when a CRM initiative
is left up to the IT department, it is harder for other areas of the company to accept any
changes in processes (which are usually substantial). To be successful, the initiative must
take place throughout the entire company. Employees must be trained to function with the
new technology and processes.
When considering a vendor and/or product, it's imperative that any software, system or
processes implemented are flexible. They can then adapt, along with a company, to
changing times and trends. This is especially useful in growing businesses, where needs
might change as client bases grow and business expands.
No matter what precautions you may take when planning and implementing a CRM
initiative, the only thing that can assure its success for the company are your people. After
all, the whole concept of CRM is based on relationships. And those can't be completely
automated. There is no technological substitute for a friendly voice or face that understands
a customer's troubles and is willing to go above and beyond to provide the best service.
CRM can only help a company manage these relationships to provide a more personalized
service to loyal customers.
Mark Levit: Partners & Levit Advertising: www.partnerslevit.com
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