Why the Current Doom and Gloom?
Another critical issue that will impact the future direction of the CRM industry is overcoming the industry's current doom and gloom. The dot-com demise along with a deteriorating global economy has, without doubt, negatively impacted the CRM industry's current stability and growth. On the one hand, most executives acknowledge that they need to stay close to their customers during this unprecedented business cycle. On the other hand, executives need to keep costs down; if they do spend on CRM initiatives, they need to see measurable success early on.
The IT Analyst Dilemma
It does not help matters that a number of leading IT analysts (Gartner Group, META Group and others), continue to claim that greater than 50 percent of all CRM projects fail to meet user expectations. I've been in this business for 17 years and have helped more than 300 companies worldwide to implement their global CRM initiatives. To the contrary, my customers claim a success rate for their CRM initiatives well in excess of 50 percent. That is why the doom and gloom figures of leading IT analysts have always troubled me. As explained below, CRM initiatives, if properly implemented, can deliver measurable benefit.
I'm not knocking the leading IT analysts. After all, it is their business to provide general reports of interest to their paying client base. What concerns me is the way that they measure success rates. Let's take an example.
A Mini Case Study
I had the pleasure of working with one of America's leading telecommunications manufacturers. This company decided to implement a global CRM initiative to approximately 4,500 employees worldwide. When the project was completed, I asked the VP of sales and marketing (the sponsor of the CRM initiative) whether the initiative was a success. He put his thumb up, said “yes,” and explained that because of the system, he now had a fairly complete customer profile of his key accounts that could be used by all customer-facing personnel when dealing with the customer. Yet when I went to the CIO of this company and asked whether the initiative was a success, he placed his thumb down and said “no.” He explained that the system was to have integrated several dozen internal legacy and external information sources into the CRM system and that this had not happened due to integration complexity. So, how would leading analysts categorize this implementation, a success or a failure?
Here is where I have my biggest problem with the leading IT analyst figures of 50 percent or more failures. In the majority of implementations that I have been a part of, the company sets clear and measurable metrics prior to implementing the CRM system and then uses these metrics to measure success or failure of the system. This requires discipline but then again, as Peter Drucker, a renown author and advisor on corporate management, reminds us, if you can't measure it you can't manage it.
Getting to Success
For me, success or failure of a CRM initiative does require the company to create a powerful CRM Business Case (see Chapter 10, “Creating Your CRM Business Case”) that:
Sets baseline metrics for those business functions that will be automated (e.g., how much time per week a sales rep spends creating difficult reports, the number of customer service calls that are successfully resolved during the initial customer call).
Sets measurable objectives (“success criteria”) for each of the proposed business functional areas that will be impacted by the system (e.g., reps will save x hours per week by not having to create difficult reports since the system will automatically deliver needed reports to the rep; resolution of customer service calls resolved during the initial call will increase by x percent because the system provides customer service personnel with needed information at the touch of a button).
Measures and reports on the accomplishment of each objective on a regular basis (preferably quarterly and not less than every six months) to the top management team responsible for the ultimate success of the CRM initiative.
While this simple three-step approach seems quite logical, you would be surprised how few companies get this measurement part of their CRM initiative right, or how few companies create a CRM Business Case that incorporates these measurements along with ROI information. By acknowledging that measuring success will differ for each CRM initiative depending on the metrics agreed to by the company, perhaps leading IT vendors would be in a position to refine their current 50 percent failure rate suggestion.