Making eCRM work for your business

This story first appeared in Fairfax’s Business Online magazine

James Finlay the CRM marketing manager for Oracle Australia says, “Our implementation team suffered a large amount of pain”. He says the pockets of resistance didn’t crumble until Chairman Larry Ellison took control of the project and cracked a few heads. “In order to get it implemented around the world, it had to be pushed personally by Larry. Along the way a couple of senior people in the organisation had to be dealt with”.

Oracle’s experience underlines the single most important challenge facing organisations wishing to implement Customer Relationship Management systems. Although CRM is often sold by technology companies and regarded as a technical solution, its scope goes way beyond the nuts and bolts of hardware, networks and software. All these components play a role, but at its core, CRM is a business strategy or even a philosophy.

Given the complex technology embedded in CRM systems, it’s easy to lose sight of why an organisation might want to install such a system in the first place. Terry Gatward, e-business manager of Fuji Xerox Australia admits that in the earlier stages, his company fell into the trap of viewing CRM from a technology perspective. He says, “It became too much of an IT project and not enough of a business strategy. Things got back on track when we got the sales managers and our managing director behind it.”

This involved showing sales managers and sales staff the practical benefits of CRM. “Frankly, most of them were frightened that CRM was going to be used as a stick to beat them when they stepped out of line. We also found sales people were happy to use it to extract information, but they wouldn’t put any data in.”

Fuji-Xerox identified sales commission as the key issue. Employees were concerned that by sharing information they would be passing their commission over to other sales offices. Gatward says the company got around this problem by developing a set of rules to determine who gets commission for various sales. “More importantly, we got the sales managers to enforce the rules.”

Putting the right management infrastructure in place is crucial. At Fuji-Xerox the CRM application support team is now part of the marketing department – which reflects its strategic role within the organisation. The infrastructure is still supported by the IS department.

London-based Michael Barnes, a senior program director with the Meta Group agrees that dealing with issues of corporate culture and internal politics is vital. “Mitigating the cultural and political challenges of implementing an enterprise CRM strategy is as important as dealing with technical issues. Our research reveals roughly half of the Global 2000 organizations have or plan to establish a CRM Program Management Office (PMO) this year.”

Barnes says that companies that already have a unified global view of CRM are twice as likely to establishing a PMO as companies who have a tactical approach to CRM. He regards this structure as an important indicator of eventual success. Establishing a PMO is “clearly a realization of the business complexity of getting CRM right.”

Experience gained from working in the banking industry gives Ralph Tomerlin a perspective on the relationship between company culture and CRM. Tomerlin, who is now managing director of eCRM vendor Delano Asia Pacific says that historically many organisations, including banks, offered customers a fixed set of products and had a take-it-or-leave attitude. He says, “In the past your customers would know far more about you than you knew about them. Nowadays you have to compete and your mentality has to change. You can put in a system which lets you know the value of your customers – but it’s what you do with this information once you have it that really matters.”

Tomerlin argues that to make CRM effective companies need to re-educate their staff to be more aware of customer needs and organisational goals. “You need to get into the mind of your employee how to sell, how to upsell and to constantly seek ways of increasing the value of each customer”.

The rational behind this is simple arithmetic. In a bank or a brokerage firm it typically costs $400 to acquire a new customer. This relationship can take years to reach a pay off. Because CRM generally allows companies to focus on selling more to existing customers by meeting their needs, rather than acquiring new ones, it can have a dramatic impact on the bottom line – but for that to happen employees have to be looking at shifting customers to more profitable lines of business.

However, Oracle’s Finlay says it is important not to confuse being customer focused with having a CRM system. “The two are linked but they are not the same – you can’t have one without the other.” Finlay also believes that a company-wide customer-focus culture has to come from the top. “It’s determined by the CEO, no-one else.”

Gatward says Fuji-Xerox’s cultural experience is that some sales people take to CRM immediately, while others are far more cautious. He says, “we’ve got some sales people who love it, they exploit it, using it all the time and they like to talk to you about how it improves their productivity. This is good, we’ve found it really helps to have CRM champions.”

Putting the right technical infrastructure in place is important. Michael Barnes says most companies fail to create a CRM technology ecosystem that includes operational, collaborative and analytical CRM components. “Instead they are purchasing disparate eCommerce and CRM products, services and solutions that do not play well together. For example, e-mail response and Web click-through data collection systems are not integrating into analytical marketing applications”.

Barnes says e-CRM remains essentially a misnomer. “Except for a minority of regular Web users and the more significant business-to-business segment, the e-customer is missing in action. To date, most companies have found that the Internet remains most useful for generating sales leads that can be pursued via more traditional channels. This is changing – but slowly.”

Overcoming the main CRM challenges

• Find a high profile, top-level sponsor – preferably your CEO or Managing Director.
• Maintain a focus on the strategic goals of CRM; don’t get bogged down with technical considerations.
• Show users the practical benefits – address their fears and deal with any aspect that threatens them.
• Develop the right management infrastructure – make sure it meshes with your strategic CRM goals rather than operational issues.
• Create a customer-focused culture so that CRM technology doesn’t exist in a vacuum.
• Build an integrated technical infrastructure so that your CRM components work seamlessly with each other.