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Planning for a CRM initiative

CRM is more than buying a box of software and installing it onto a server. CRM requires a good, long look at business processes and objectives.

 In a recent poll, we asked users to identify the main reason why CRM projects fail. "Lack of proper planning" was chosen most often, garnering 38% of reader votes.

CRM is more than buying a box of software and installing it onto a server. CRM requires a good, long look at business processes and objectives and defining what it is that your organization wants to do with a CRM initiative, according to those on the front lines of implementation.

"In a CRM initiative, one of the main things companies need to be aware of is that CRM is not a solution; it is not a software product; it is a strategy and solution to increase relationships with customers to build one-on-one marketing, increase revenues and profits, leverage customer retention, reduce the churn rate (and) provide better service by identifying customers," said Rodney Cole, CRM program manager and architect at CLD Solutions, a Dallas-based consultancy.

"Start with your business objectives of the product or service the company is selling, figure out where it is in the lifecycle, and determine which phase of CRM to focus on," said Ram Reddy, president of Tactica Consulting Group in Troy, Mich. For example, the company should determine whether it wants to focus on acquiring customers, retaining customers or upselling and cross selling to customers, he said.

"First, you have to have a business model," Cole said. Then, the company needs to set corporate goals and get executive sponsorship for the initiative, he said.

"CRM refers back to strategy. It has to be linked to corporate goals and objectives," Cole said.

Once a company determines its CRM focus, it can then start looking at CRM technology, Reddy said. "Without that, it's like putting the cart before the horse."

"Most companies struggle with who owns the customer," Reddy said. "CRM technology tries to get the organization to own the customer, and putting in technology where the whole organization serves the customer is a recipe for disaster."

Cole advises companies to get input from the sales team and the customer service department, as the organizational culture will have to adapt to the new technology.

"Sales and marketing should be part of the decision-making process, but if (the CRM initiative) is owned by sales and marketing, CRM is nothing more than a glorified sales force automation tool," Reddy said.

The company also needs to ask itself some questions going in to a CRM initiative. Cole asks questions at the executive level, such as what the mandate is, when the initiative should be implemented by, and who the key sponsors are, in addition to finding out if a steering committee is in place and how much work his firm needs to do, he said.

The IT department should be a facilitator of the technology, both Cole and Reddy said. IT should assist with implementation, training, support and data maintenance, but should not be the sponsors and initiatives of CRM initiatives, Cole said.

"They should participate (in the software selection)," Cole said. "The IT department can make sure the vendor being considered is definitely within corporate technical standards," he added.

"It is strictly a support role," Reddy said. "It should be the business side that determines how to take advantage (of the CRM initiative) and enhance revenues."

The CEO should own the CRM initiative, Reddy said. "Delighting the customer is a great statement, but if the CEO says to improve the customer acquisition rate by X% or increase the customer retention rate by X%, the entire organization can rally around" those goals, he said.

On the other hand, to get executives behind a CRM initiative, they need to be shown the benefits of the system in terms of return on investment (ROI), Cole said. He advises showing top-level executives how much money the company will be making and saving by using a CRM system, as well as identifying revenue growths, margins and shareholder value. "That's what the executives want to see," he said.

Companies tend to make mistakes when planning their CRM initiative. For example, one company wanted to start with an e-CRM initiative, and e-CRM is an extension of CRM, Cole said. "CRM and e-CRM are two different things," he added. The mistake that the company made there was not building a strong foundation for the CRM program, such as integrating the back office with customer service, according to Cole. The company allowed its customers to order off its Web site, but that information was not tied into the customer history, he said.

Another mistake is not having a data warehouse, according to Cole. Without having a data warehouse, analyzing customer information becomes difficult, he said.

"The biggest mistake is to look at technology first," Reddy said. CRM "should be driven by the business problem, by what pain for the customer are we trying to make disappear."

It is important to remember, in planning for CRM, that it is an ongoing process that needs continuous enhancement and improvement, Cole said. A company also needs to have some sort of measurement system in place to realize how the technology is adding value to the organization, he said.

"Planning is critical to be derived from business drivers," Reddy said. When it's time to implement the CRM system, it requires a cultural change. If a company has clearly articulated business goals and the employees know why the company is doing CRM, the initiative has a better chance of success, he said.

"Without a clear message, just putting in a CRM package will not get you anywhere," Reddy said.



CLD Solutions

Tactica Group

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