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Who's really failing?

Is the dreaded CRM failure rate over-hyped?

My comment at a recent conference that CRM failure rates are being "massively overhyped" by industry analysts garnered a fair amount of interest, which is good, because this is an extremely important subject.

First of all, let me be clear -- I have no issue with Gartner or any of the other analyst firms. I spent more than six years in the research industry myself (at the Yankee Group) and have a great deal of respect for the value that these firms can provide.

Having said that, the analyst business -- like many businesses in the high tech marketplace -- is in pretty dire straits these days. And desperation breeds desperate tactics, such as sensationalizing these so-called "failure" rates to scare prospective customers into buying your reports, or creating problems to "solve" where none really exist.

We've all heard the high failure figures from Gartner, but the Morgan Stanley CIO Survey Series for example, provides a much different, and perhaps more realistic statistic for CRM failure: as of last December they pegged the percentage of CIOs dissatisfied with CRM at around 6%.

But my point is not necessarily to debate who has the better numbers (although I'd advise you to trust those with the most clear, well-defined methodology for creating those numbers). Rather, let's simply talk about common sense. Start by asking yourself a few simple questions:

  • Are our customer relationships stagnant, or are they dynamic?
  • Can we guarantee that we will continue to gain new customers and keep existing customers without changing how we do business with them?
  • Does technology play a role in how we interact with and understand our customers?
  • Do we want our IT department to be in charge of our customer relationships?

For the vast majority of you, two things probably become crystal clear:

1. Customer relationships are evolving, dynamic and are only becoming more so. This is true, by the way, whether the economy goes up, down or sideways.
2. Technology plays a critical, but supporting role in how you manage your customers.

The conclusion that generally results from this exercise is that CRM is too critical to allow fear of failure to enter the equation. Thus, we must focus on learning how not to fail -- because avoiding the topic altogether is certainly not an option.

Succeeding with CRM doesn't require you to spend a lot of money on analyst reports, nor does it require you to hire a Big 5 firm to figure out a complex, highly risky strategy. As a matter of fact, it's worth mentioning here that in my mind, you should never get "strategic" assistance from any company that has a stake in the implementation of that strategy. And you should never take a "technology-first" approach to CRM -- this is the most oft-cited reason for CRM failure, but it is important enough that it's worth repeating.

What success is all about, quite simply, is doing the right thing for your customers. And where do you find out what the "right thing" is? Not from industry analysts, nor major CRM vendors, and not from expensive consulting firms, but from your customers. Just ask them! Because in today's market they -- not you -- are increasingly "managing" the relationship. I fully agree with the suggestions of eliminating the term "CRM" altogether, and replacing it with something that describes more accurately what is really going on -- like Customer Managed Relationships, or CMR.

The other key to success is starting small and working incrementally. Succeeding with CRM (or CMR) doesn't have to be a multi-year, multi-million engagement. Everyone stubs his/her toe a few times when getting started, but if millions of dollars are at stake, that toe is really going to hurt. So start by doing the little things that your customers want, which will have the greatest impact on both their loyalty and your bottom line, and which will demonstrate to your company that this "CRM stuff" really does work.

This needn't be a difficult exercise. Rather, what your CRM strategy becomes is a prioritization of the long laundry list of things you can do for your customers, which will have the most immediate and measurable impact. Create that list, prioritize it in accordance with your corporate goals, and execute it – step-by-step, trying not to do everything in a "big bang". Big bangs often explode; small steps seldom do.

For instance, take the knowledgebase that you already have on your products and put it online – such self-service capabilities are simple, cost-effective, and can provide massive, demonstrable savings in call center expenses. Roll out that Sales Force Automation (SFA) project to your salesforce – and only to your salesforce, without spending huge amounts of time and money trying to turn it into a "360 degree view" of your customer across your entire enterprise. Give your customers the ability to check order status and place replenishment orders online, without feeling the need to implement complex "personalization" rules and trying to turn every customer visit into a cross-sell, upsell experience (which usually does more to turn customers off than on -- particularly when all they want to know is when their order is going to arrive).

You get the point, I hope. In the end, CRM (or whatever you want to call it -- we certainly need a new term) is important enough that we should not run from it for fear of "failure". Those who are working to frighten us into thinking this is "hard" are either pitching technology or pitching fear; ignore both pitches. I assure you that if you take a common-sense, business-directed, incremental approach, your chances for success are greatly increased.

Reinventing how you do business is always difficult and fraught with challenges. Yet, regardless of the state of the economy, the relationships your business has with its customers will continue to evolve and demand that you evolve with it. In the end, regardless of whose statistics you believe, you don't have a choice. Standing pat will eventually lead to a failure statistic on which everyone can agree: 100%.

Chris Selland founded Reservoir Partners in October 2001, with a successful track record in developing and implementing customer-focused marketing strategies and building high-impact, highly visible brands. Selland most recently served as vice president of marketing at eSupportNow and, prior to that, vice president of e-Business Strategies at The Yankee Group.

Click here to listen to Chris's recent webcast "A roundtable discussion: Discovering the real value in customer self-service"

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