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CRM in the enterprise

A hard-working CRM for you

To make your CRM initiatives work for you, first we need to examine why CRM projects fail and then find the way to get optimum returns from CRM. by Soutiman Das Gupta

Executive Summary

A hard-working CRM for you

Many a CRM mplementation has failed miserably, and remained in enterprise folklore as an example of what not to do. Can you make your CRM initiative provide the optimal output and avoid the pitfalls? How do you measure your CRM initiative's effectiveness?

Power pill

Proper operational CRM infrastructure (strategies, channels and tools) and effective information transfer with existing systems have to be in place. This ensures effective data collection and consolidation. Measurable criteria have to be defined before implementing the CRM initiative. After all, what cannot be measured cannot be controlled.

Businesses don’t buy from businesses, it’s people who buy from businesses. Only those companies that understand this concept will mature into successful customer-focused ones.

Unfortunately, far too many organisations seem to believe that CRM is a magic bullet. According to G Radhakrishnan Pillai, Head - IT, SRL Ranbaxy, “A common misconception often promoted by CRM solution vendors is that CRM is a technology to be purchased by implementing the latest and greatest CRM system your business can afford. This message is a myth that has resulted in many CRM implementations failing to provide any real customer benefits.”

In spite of CRM concepts being explored and explained in the past, companies land up with a process and solution that do not deliver the promised benefits. To avoid such a situation, CIOs must look at the correct strategies for creating and deploying CRM in an enterprise, and make it work its hardest.

Operational CRM is key

At the root of any CRM, success or failure is a well-designed operational CRM infrastructure.

If an organisation’s front-line customer service, sales and marketing employees are not efficient, its CRM initiative is bound to fail. Operational CRM is the source for customer-related information, which is invaluable for an organisation as it can be processed by analytical CRM tools to extract business value.

This aspect of CRM, popularly called the ERP of CRM, provides the primary customer touch points, and allows an organisation to create standard customer profiles, understand buying needs and get first-hand feedback from an organisation’s most valuable asset—its customers.

A badly co-ordinated operational CRM initiative will capture incorrect data, paint an untrue picture of the buyer’s needs, and provide insufficient service and response levels. For instance, improper co-ordination between the personal finance division and the operational CRM unit of your bank will result in your receiving calls and mails asking you to take a personal loan even if you already have one.

Operational CRM needs to be in sync with business units to receive complete and updated information on which it can act. It must also integrate the systems at various customer touch points. A mix of legacy and updated infrastructure is all right provided the systems interoperate to provide a unified view of the customer base.

A dozen ways to fail

Here’s a summary of reasons why CRM projects fail:

  • CRM initiatives are launched without a strategy.
  • The CRM strategy is not integral to the business strategy.
  • The operational CRM is not effective in capturing data from customer touch points.
  • The CRM toolset is based on someone else’s success.
  • Deployment is without regard for enterprise or customer interfaces.
  • There is no customer input.
  • It is considered an IT project and not a business initiative leveraging technology.
  • There are no defined metrics and objectives.
  • It is considered a one-time event.
  • It is assumed that you have a customer-centric culture because you have customers.
  • There is no top-down leadership and employee buy-in for CRM.
  • The organisation tried to implement ‘everything CRM’ at one time.

Why CRM fails

In many companies, good quality customer and business-related data is unavailable due to poor information management systems
Prachi Kanekar,
Research Analyst, Frost & Sullivan

Apart from an uncoordinated operational CRM, here are some other reasons why CRM initiatives sometimes fail.

Explains Prachi Kanekar, Research Analyst with Frost & Sullivan, “In many companies, good quality customer and other data is unavailable due to poor information management systems.”

CRM initiatives also fail due to the following:

Lack of targeted customer profitability management due to:

  1. Fragmented customer data
  2. Lack of data model to capture customer profile
  3. Lack of well-designed customer scoring systems
  • Enterprises are sceptical about the time and cost involved in a CRM implementation.
  • Issues in integrating CRM applications with existing legacy systems to facilitate a smooth flow of information.

From the market perspective, the low level of initial uptake of CRM may be attributed to economic slowdown, which resulted in conservative IT budgets and postponement of CRM purchases.

“It is worth noting that one of the main challenges today is user adoption,” says Ravi Mirchandaney, Vice-president and General Manager, Siebel India Operations. “After a lot of effort is spent implementing a CRM technology, failure to properly plan and drive successful user adoption can put the achievement of intended business results at risk.”

An elegant technology solution and best-in-class business processes will not be successful if users and their management do not fully embrace and use the new system. See box: A dozen ways to fail.

After a lot of effort is spent implementing a CRM solution, failure to properly plan and drive successful user adoption can put the achievement of intended business results at risk
Ravi Mirchandaney,
Vice-president and GM, Siebel India Operations

Ensure optimal benefits

Here are a few things that can help get optimal benefits from a CRM initiative:

Create a co-ordinated, customer-focused business strategy: An organisation should have business strategies that promote CRM across functional boundaries. The lack of a single customer view across business functions makes it difficult for the organisation to move far from the traditional product focus.

Have a CRM-friendly organisational structure: Organisational structure in customer-focused organisations needs to promote cross-functional co-operation. Independent business units, disparate marketing and sales organisations, and diverse customer care centres can inhibit the ability to determine and perform next promotion or service activity for the customer.

Build a customer information environment: Customer information is the keystone to a successful CRM strategy. It’s important for the operational CRM to be alert and capture information at the beginning. This information must provide a single customer view and must be the same across the organisation to facilitate both operational and analytical uses.

“These require a robust technology architecture that integrates multiple channels and mixes with operational legacy applications with call centre systems and data warehouses,” opines Krishna Kumar, Head of Technology Management, iSeva Systems.

SME market inhibitors

The market inhibitors for the spread of CRM among SMEs are:

  • Lack of information
  • Relatively lower number of CRM success stories
  • Poor IT infrastructure
  • Low awareness of benefits
  • High cost of implementation
  • Lack of customer orientation
  • Lack of user training
  • Absence of a clear long-term strategy
  • Implementation without clear understanding of business need or metrics
  • Quality and availability problems for customer-related data
  • No synergy or common view among operational teams, strategic marketing and IT

Success factors

A successful and hard-working CRM initiative should be a simple but powerful structural solution that can help organisations overcome accountability issues that crush CRM efforts.

Companies should make both business and IT teams responsible for its CRM initiative. The responsibilities should cover the design process, change management, and technology implementation. However, there are many factors that can make or mar a CRM initiative; these vary from one organisation to another.

Subhomoy Sengupta, General Manager, Applications Sales, Oracle India, explains, “A CRM initiative should help an organisation generate more leads, convert a high proportion of them to customers, retain customers longer through enhanced service and ensure more profitability from the customers through the effective promotion of additional products and services.”

In effect, the success factors are:

  • Increase in revenue
  • Increase in customer satisfaction and decrease in complaints against customer service levels
  • Increase in the predictability of forecasts
  • Increase in sales force productivity or decrease in the time to close a deal
  • Decrease in the cost of a sale
  • Ability to get a single view of a customer

Measuring CRM

“Most companies are not able to measure the success of their CRM solutions because they are not sure of the business metrics required to be measured in the first place,” says Frederic Moraillon, Director, Marketing, Business Objects, APAC.

Pillai comments, “A good CRM strategy should be followed by measurable criteria defined before the implementation.” So while these companies realise that CRM has changed their business, they can’t measure the success because the metrics was not defined at the start.

For instance, the success of CRM at a bank’s retail business unit depends on the rate of revenue growth, yield per customer, rate of decrease in customer complaints and rate of customer acquisitions. So the metrics must be defined before the CRM solution is deployed in a business unit.

In this way, every business unit, from operational to the back office, must create well-defined metrics for measuring performance a day before CRM. Any improvement in performance over time (week, month or quarter) can be quantified and considered the measurement of success of a CRM initiative.

CRM truths about THE Indian SME

  • About 5 percent of Indian SMEs have adopted CRM.
  • An average Indian small enterprise (SE) transacts business with 216 customers and 17 vendors per month, consequently creating the need of software such as CRM that can co-ordinate/automate these interactions.
  • A usual Indian medium enterprise (ME) deals with 456 customers and 37 vendors each month, creating a need to effectively manage the interactions with these business partners.
  • CRM usage is relatively higher within the professional business service sector.
  • Adoption is highest (13 percent) among larger businesses with 500-999 employees.
  • More than three-fourth of the SMEs use a home-grown spreadsheet, while larger businesses use customised solutions by their ISV/VAR/software developer.
  • Most of the MEs have adopted CRM in the last 15 months.
  • While Indian MEs are mostly B2B-centric and about three-quarters of their revenues are derived from customers in other business sectors (small, medium and large), more than half of the revenues of India SBs are generated from consumers indicating a B2C-focus.

Source: AMI Partners

CRM for THE SME

A common misconception often promoted by CRM solution vendors is that CRM is a technology to be purchased by implementing the latest and greatest CRM system your business can afford
G Radhakrishnan Pillai,
Head - IT, SRL Ranbaxy

In the current business environment, SMEs are also shifting their business strategies from product-oriented to customer-oriented approaches.

“Unlike large companies, SMEs do not possess sufficient technology know-how, resources and IT personnel to implement a CRM programme. As a result, most SMEs cannot afford such expensive products that are offered by traditional CRM vendors,” observes Girish Krishnamurthy, General Manager, India, Talisma Corporation. See box: SME market inhibitors.

That said, these organisations also have the urge to improve their bottomline, gain marketshare and enter a larger playing arena earlier dominated by the large enterprises. According to Swati Sasmal, Senior Analyst at AMI Partners, “The need for CRM among SMEs is driven by factors such as competition, better customer service levels, market globalisation and high global adoption.”

CRM hope

In spite of the market inhibitions, there is a lot of scope and hope for the use of CRM in SMEs.

“SMEs need CRM strategies and technology that are easy to install with little technical resources and permit integration with existing applications. Scalability and reliability are necessary so that the solution offers a low cost of ownership,” adds Sengupta.

In the past, large software vendors have offered scaled-down versions of their enterprise software. However these ‘stripped down’ applications often have a limited user ceiling and do not address the evolving needs that SMEs embarking on an expansion path typically would have.

However, SMEs have to adopt specific business strategies. These have to be based on the specific business needs of the organisation which may be typical of the geography and industry vertical.

Comments Kanekar, “Users in the Indian SME segment prefer to deploy modular solutions with features that suit their organisations specifically instead of a full-scale CRM solution. CRM solution on open-source technologies will be likely to be sought to deliver a low-cost solution.”

The ASP and the hosted applications model for CRM are expected to gain popularity with the SME segment, as they are scalable and do not require any hardware or software investments.

An elegant technology solution and best-in-class business processes will not be successful if users and their management do not fully embrace and use the new system

A strategy example

Take, for instance, the case of an SME—a toothpaste manufacturer to be specific. It wants to compete against the well-established MNCs and large private enterprise.

The company can gather data from market survey and tele-calling teams on a simple spreadsheet. It does not need sophisticated tools used in call centres, but can use software that has strong analytical abilities with, say, five user licences. This analytical tool helps identify segments in the target market that needs specialised products.

The tool may identify males in the age group of 18 to 45 who smoke and have stained teeth. There may be another segment of women aged 18 to 40 who need fresh breath, as they have to socialise and go to office. There may be children aged between five and eight who don’t like the taste of the company’s products.

So the company, instead of manufacturing another brand of toothpaste, introduces specific products. It brings out ‘tartar-control’ toothpaste for male smokers, ‘diva extra-fresh breath’ toothpaste for women and ‘little champion strawberry-flavoured’ toothpaste for children. This way, the organisation can spend only on the CRM module which provides a strategic benefit.

CRM boosters

The need for CRM among SMEs is driven by factors such as competition, better customer service levels, market globalisation and high global adoption
Swati Sasmal,
Senior Analyst, AMI Partners

With the evolution of CRM software and processes, many new technologies help organisations get better benefits from their investments. This is not to say that technology is everything, but when supported with processes and people will create a winning combination.

VoIP – The ability of a single network to transmit data and voice will dramatically reduce costs and simplify management.

Web Services and Services Oriented Architecture – Companies should develop business programmes to help them extend their application functionality by incorporating other third-party applications through Web services. These provide more adaptable and flexible applications so that the applications can change more dynamically in context to a business process.

Some of the open standards to watch are Speech Application Language Tags, Simple Object Access Protocol and Extensible Markup Language.

Speech Applications – Self-service applications, with the aid of VoiceXML, can help organisations, especially call centres, cut costs and service customers well.

Outsourcing – An outsourced application-delivery model will help an organisation build a customised and scalable CRM infrastructure without large investments.

Wireless connectivity – Allows mobile professionals to stay connected, improve productivity and close deals.

Presence technologies – Technologies such as RFID and POS can locate customers and help tailor messages that may help extend a business relationship.

Open-source CRM – Shared source code allows flexibility and faster product evolution.

CRM analytics and Business Intelligence (BI) – Front-line CRM users would not like to wait for an analyst’s report or a report generated by the IT department. Give them analytics and BI in their regular applications.

Soutiman Das Gupta can be reached at

soutimand@networkmagazineindia.com

 
     
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