It turns out that CRM can provide real, significant value, but it has to be implemented in partnership with a cultural commitment.
To get value from CRM, use it to empower people - not to keep tabs on them.
As pitched by vendors,customer relationship manage-ment technology is a control freak's dream. CRM systems promise executives every last excruciating detail on sales-force activity, customer service transactions and customer behaviour. Vendors also claim CRM systems will provide executives with an X-ray of organisational activity, giving them the control they crave over every action inside the company while delivering a clear view of the sales pipeline for the next quarter. What executive could resist such a tempting promise? But CRM - when implemented primarily to satisfy control-hungry executives - will fail. Indeed, most CRM systems are failing. That's because no amount of information, no matter how detailed, will ever make customer interactions controllable.
So, is CRM good for anything, or have all those companies that implemented the technology just wasted their money? It turns out that CRM can provide real, significant value, but it has to be implemented in partnership with a cultural commitment. This means that executives have to loosen the reins of control; they must see CRM as a tool to empower frontline workers and not as a means for keeping tabs on salespeople.
Signs of Success
There have been a number of successful CRM implementations, and they often share the same four elements. Companies that have implemented CRM to their advantage use the system to meet key customer needs. Those companies also derive in-depth analysis of customer costs and potential profit from their CRM systems. In addition, CRM works best when used to link information from disparate business units or eliminate information silos. And finally, CRM is successful when companies redesign organisational incentives and structure to empower those employees who are closest to the customers.
One company that has successfully implemented customer relationship management, albeit in a defensive manoeuvre, is Fidelity Investments. By the early 90s, Fidelity had grown into the largest and most successful mutual fund company in the world. Upstart Charles Schwab, however, created OneSource, its one-stop fund supermarket. Fidelity was flabbergasted.
Schwab was stealing customers by putting itself between the customer and the fund providers. CEO Edward Johnson, the son of Fidelity's founder, felt that OneSource was not just a clever service but a harbinger of a fundamental shift in customer behaviour - from product-centric to relationship-centric.
To counter Schwab's move, Fidelity didn't begin by purchasing CRM technology; the company started with an extensive analysis of customer needs as they related to a fund supermarket. Then Fidelity changed the very basic concept of customer from that of "fund owner" to "household". This seemingly simple mind-shift necessitated an activity-based costing effort to discern the true cost-to-serve for each household segment across Fidelity's service channels. Fidelity switched its metrics as well. Instead of concentrating on whether the number of accounts or customers was on the rise, Fidelity began looking at the total value or worth of a customer if she were to have all assets under management.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.