Despite persistent growing pains, customer relationship management is here to stay.
More than 80 per cent of Canadian mid-sized and large companies have invested in CRM projects, running at $800-million in 2002 and with estimated annual growth of 15 per cent, the Canadian Marketing Association says in a survey to be released next week.
So far, it says, only 6 per cent of the 159 CRM users surveyed in nine industries have seen a positive return on their investment. And although 54 per cent say they expect to see it in the next few years, close to 40 per cent can't say when they will see positive returns from the system.
CRM is a catchword for a variety of business activities and computer systems, all designed to improve relationships between companies and their customers. At its simplest, it helps to keep track of sales to specific customers. The dream is to allow organizations to better understand the needs and preferences of their key customers to serve each one according to their value.
Just over half of all the CMA survey respondents say they apply CRM to give preferential treatment to their best customers. Of course, much that passes for preferential treatment -- such as Second Cup's ink-blotter punch cards and Rogers Telecom's "VIP" plastic -- may not really make anyone feel all that special. (How many of these things do they really think we can shove into our wallets?)
In reality, very few customers get truly personal treatment (Amazon.com's amazing level of personalization is the exception that proves the rule.)
Big-ticket purveyors who have the most to gain from loyalty -- such as Bell Canada, banks and car companies -- still seem plagued by systemic customer service failures, as I can attest from recent experience.
Why is CRM so hard to pull off? The now-tarnished dazzle of CRM, a recent fad hyped in the marketplace by software vendors and consultants, belies its mongrel origins.
It is a hybrid of at least three long-in-the-tooth (and therefore proven necessary) business systems.
One is the humble customer database, comprised of records that well-organized companies have always kept.
A second is the call centre, which emerged in the 1970s -- banks of telephone operators sitting in front of display screens ready to take your flight reservation, sofa order or newspaper vacation stop.
Third, and more recent, is sales force automation: giving hawkers computers to make them smarter and more productive. Internet e-commerce and those maddening phone voice menus ("Press one for English . . .") are variations on CRM with a very special feature: The customer does the work.
The origins of CRM define its central problems. Pre-existing "legacy" databases, call centres and sales automation systems may be creaky, but they work, and employees are used to them. Getting organizations to change their ways and computer systems to work together -- all more elegantly -- is another matter. It's hard, time consuming and expensive. And it doesn't always pan out. Only 60 per cent of the CMA's survey respondents have succeeded in combining old and new customer information.
All CRM projects depend on technology: first, to capture, sort and mine customer information; second, to prompt customer service personnel with relevant information at the point of need -- or, even better, to anticipate the need; third, to produce the Holy Grail -- a consistent experience -- no matter what product or service the customer wants or what channel (face to face, phone, on-line) the customer uses. Only 23 per cent of those surveyed claimed to be offering a "very consistent" customer experience. Telecom and travel companies especially said they excel at consistency, and financial services companies were the readiest to acknowledge their failings.
Technology is a necessary but insufficient condition for CRM success.
Peter Drucker said in 1954 that the main task of a business is to create a customer. To feel truly special, I -- as a customer -- experience a company's personality and values in the way that it handles our conversation. If CRM is the medium, it should be designed with this in mind. And you would think that in most companies, the chief executive officer -- the individual who embodies a company's persona -- would take a personal interest in designing this conversation. No such luck.
Only 12 per cent of respondents said the CEO is leading the organization's CRM initiatives, though 27 per cent attributed leadership to the executive team. In most companies, the CRM leader is the vice-president of marketing (41 per cent) or sales (25 per cent).
But if CRM is relegated to a single functional executive, the values that the conversation conveys may miss the mark. Think about great customer companies such as IBM and Amazon. You know the CEO is an architect of the dialogue.
Of course, a CEO is not a ventriloquist. Employee engagement is crucial for the success of a CRM conversation.
The good news is that 50 per cent of respondents believe their employees strongly support the CRM strategy and most others are somewhat supportive.
The bad news is that only 20 per cent are "very well equipped" for it, with two-thirds only somewhat equipped. Why? Not enough education and training, information sharing, business process or culture change. For example, a retail company with a strong customer focus and openness to innovation made quick progress in its CRM initiatives. But in another, middle managers defended their organizational silos.
Also critical are a clear plan and a set of success measures. But half the survey's respondents couldn't say when their company expects to achieve its CRM objectives. This can be a costly oversight: Gartner Group, an industry research firm, says that the three-year price to automate one salesperson ranges from $28,000 to $40,000 (U.S.); setting up a call centre is about $35,000 per agent.
Throughout the CMA survey, it seems about half the companies are roughly on the right track -- planning CRM from the top, leading change and tracking results. Is the cup half full or half empty? It depends on which firm you belong to. David Ticoll is a business strategy consultant and co-author of Digital Capital: Harnessing the Power of Business Webs . email@example.com