CRM: Moving Beyond Technology to Realize Real Returns

A new study shows that 70 percent of CRM initiatives fail to meet project deliverables as defined prior to the implementation

A new study from Best Practices shows that 70 percent of CRM initiatives fail to meet project deliverables as defined prior to the implementation

Chapel Hill, NC  April 8, 2005  According to a study conducted by Best Practices, LLC, 70 percent of customer relationship management (CRM) initiatives do not meet the project deliverables as defined prior to the commencement of the implementation.

The benchmarking study, "Countdown to Customer Focus: A Step-by-Step Guide to CRM Implementation," reveals that organizations are recognizing that the success of CRM initiatives is not only determined by strategically identifying and selecting the appropriate CRM system (based on the organization's business needs), but also by the capabilities of the organization to effectively manage the associated organizational change.

"The real value drivers of successful CRM initiatives starts with an awareness and appreciation for the softer organizational issues and then employing proven best-practices to effectively manage both technology and people," stated Jonathan Tanz, Best-Practices' Director of Research.

Companies profiled by the research firm for the study included Lands' End, AAA, Merrill Lynch, Aventis, Boeing, Raytheon, Corning, Eli Lilly and JD Edwards.

The study showed that leading companies with successful CRM initiatives use specific strategies and tactics to mitigate the risks of organizational change associated with CRM implementations. For instance:

Focus On The Customer
While 67 percent of senior managers acknowledge CRM as a priority, only 17 percent took the time to engage with their customers to better understand how a CRM initiative could benefit them.

The Dodgeville, Wis.-based direct merchant Land's End, for example, said it now shares its strategic CRM plans with its customer-facing employees, stressing the imperative to always put the customer first. In addition, pilot groups of front-line employees are used to test small CRM-related projects, so senior management can understand what works best for the company's customers.

Understand The Benefits And Limitations Of CRM Systems:
CRM initiatives increase up-selling opportunities (+50 percent) and overall customer retention rates (+33 percent) but do not significantly improve closing rates (+17 percent).

Use Training To Manage Organizational Lethargy:
An effective tactic to reduce organizational resistance is to create training programs that inform and influence all stakeholders to integrate CRM metrics into their organizational functions.

As the pharmaceutical firm Aventis, based in Bridgewater, N.J., worked to implement a new customer-focused system, the customer relationship management team realized that all key CRM program stakeholders wanted and needed regular updates. To ensure sufficient updates, Best Practices reported that the team established a monthly newsletter to ensure ongoing updates. The newsletter communicated the CRM system's value and shared information on the pilot project and other activities. Additionally, the monthly newsletter has information on how CRM will change the business.

In the study, Best Practices commented that as more and more members of a company interact with customers at different stages in the customer relationship lifecycle, it's imperative organizations be able to share customer information throughout the enterprise.

"It's no longer just the doctor and the rep," observed a European-based business unit vice president for Aventis, quoted in the study. "The sales rep used to feel like an owner of the doctor, but now the information and the analysis is for everyone to access, and it's all shared."

Make Informed Decisions When Selecting A CRM System:
When selecting a CRM solution only 40 percent of organizations incorporate vendor-training capabilities in their decision making process.

To download the full text of the white paper, visit Best Practices LLC.