“If at first you don’t succeed, try, try again. Then quit; no use making a fool of yourself.”
Deployers of CRM software probably know what Fields was talking about.
It’s ironic too, since the concept of customer relationship management software is a simple one. Treat customers well, and you’ll always have customers.
There’s only one problem with that concept. It’s called reality. And the reality is, getting a CRM system right the first time is anything but a sure thing.
The list of companies that implemented CRM systems over the past few years is a long one, with every business manager seemingly wanting what every other one had. But many of those systems are now gathering dust — software converted to shelf-ware — as employees look for simpler ways to do their jobs.
To be fair, CRM rollouts tend to be ambitious projects. Unlike other business programs, customer-care software must often work across several channels, including Web sites, call centers, and retail outlets. Even makers of more robust, mature applications like enterprise resource systems have trouble getting their apps to work in several environments.
Deploying a CRM app the first time often leaves a lasting impression on deployers. Take the case of travel site ByeByeNow.com, which spent $8 million in 2000 on a well-intentioned CRM project intended to meet the needs of travel agents and consumers. Since BBN didn’t want to compete against its travel agents, the E-tailer built a customer service infrastructure that allows consumers several ways to make purchases. Customers could buy from the company’s Web site, a 24-hour call center, or one of its 250 brick-and-mortar travel agency franchises.
“It was a lofty goal,” concedes Wendy Close, research director at technology consultant Gartner Inc. who’s studied the ByeByeNow rollout at some length.
The return on ByeByeNow.com’s $8 million investment? Roughly one-third of the company’s 250 franchise travel agents used the CRM system. Says Close: “Other agents resisted the change.”
To fix the problem, ByeByeNow would have had to say bye-bye to more cash. But apparently, BBN’s venture capital backers balked at throwing good money after bad. “BBN was forced to shut down its call center,” notes Close, “and put the agency franchises on the block.”
Hardly a happy ending. But ByeByeNow is not alone. Monster.com, the online job listings company, reportedly spent $1 million in 1998 on a CRM solution to increase sales-force efficiency by providing “immediate” access to information on potential customers.
“Immediate” was a bit optimistic — the system was reputed to be so sluggish that field personnel couldn’t download data on their laptops. This monstrous dilemma compelled the company to rebuild its entire CRM system from scratch, at a cost of a few million dollars more.
Won’t Touch This
In fact, when it comes to CRM applications, it appears that many corporate managers are inclined to keep trying until they get it right. BMC Software Inc., for instance, launched two CRM initiatives that fizzled before finding its speed with a third CRM system.
“The first two projects were heavily driven by IT,” concedes Jay Gardner, vice president and CIO at the Houston-based enterprise systems management company. “They turned out to be purchases of technology for technology’s sake.”
While the CRM software was made available to the sales force, Gardner says only 25 percent used the stuff. “It became clear that the rest wouldn’t touch it unless there was a decisive and strong move on the part of management to require it, and high-level leadership from sales to carry the ball,” recalls Gardner. “That was the turning point.”
BMC learned the hard way — twice — how to implement a CRM strategy. “The previous efforts had very little involvement from sales management or sales professionals,” says Joe Galvin, a Gartner vice president and CRM research director. “With two failed initiatives and skepticism running high, the likelihood of success for a third attempt seemed remote.”
Galvin says the buy-in from senior officers, along with improved project management, made the difference. “The third time proved the charm,” notes Galvin.
Getting sales in front of the CRM project was also critical to the success of the third endeavor, company CIO Gardner says. “I was at a conference recently,” he recalls, “when someone in the audience said, ‘What if I can’t get my sales executives involved?’ I told him to save his money, then.”
Indeed, experienced CRM deployers point out employees won’t use CRM apps unless they feel the software will help them get their jobs done. “And they won’t feel that,” explains Gardner, “unless they’re involved in the project.”
Managers at BMC also discovered that it’s crucial to change business processes before introducing enabling technology. “We reengineered most of the sales processes and many of the marketing processes prior to relaunching the CRM project,” says Mark Meyer, BMC’s director of CRM.
One for-instance: BMC completely redesigned its sales lead management process before relaunching its CRM system. Previously, the company didn’t have a good way to bring all the leads into one place to funnel them out to the employer who owned the account. “By getting sales involved from the get-go,” says Meyer, “we were able to gear technology to their needs.”
Altogether, BMC involved 175 account managers, customer support staff, and other salespeople in the third CRM redesign. Why the parade? The company’s management wanted to “make sure processes fit what these individuals needed from the system,” Gardner explains.
The business processes were designed around sales roles and their key needs. In fact, Meyers, the CRM guru, actually came from the sales side of BMC. During the third try at deploying a CRM system, he headed a cross-functional team dedicated to making sure the rollout was successful. That group included the director of finance, director of customer support, and several sales and IT executives.
Gardner, the CIO, was held accountable to deliver a return on the project. “Fortunately, we’d learned quite a bit the last two times how to set up meaningful metrics that would match CRM to our business objectives,” he says. “We have 32 different ways of measuring ROI, including cost per customer service call, cost per customer sales lead, and productivity of account manager by geography.”
So far, those metrics are telling a different tale than the first two times BMC tried deploying a CRM system.
For example, it now costs BMC $125 to process a customer order, compared with $800 a year ago. And sales reps are saving on average two hours a week (a 7 percent improvement) getting hold of customers by phone. “Sales reps tell me the time they used to spend putting together sales forecasts they now spend on strategies how to make that forecast a reality,” Gardner says.
Perhaps the most telling metric, however, is the CRM take-up rate. It’s nearly 100 percent.
Dow Chemical is another company that invested millions of dollars in a CRM initiative that didn’t gel for several years. Management at the Midland, Michigan-based specialty and commodities chemical provider plunked down an estimated $50 million to buy Siebel CRM software licenses in 1995 — knowing full well years would pass before it would implement the technology.
Explains Mack Murrell, Dow global director of customer interface: “Our IT strategy is to buy early, then wait.”
In the case of its CRM initiative, Dow management held off implementing the software for nearly four years. Executives at the $27-billion-in-revenue company spent that time making sure business process changes were in place before rolling out a companywide CRM application. “Companies often think CRM is just technology,” notes Murrell. “But it is people, processes, and technology — in that order.”
Close from Gartner says Dow’s strategy is interesting. “They bought all this CRM software cheap because it was new,” she adds. “It would cost other companies twice as much to replicate what they did.”
In 1999, Dow finally rolled out its “One Face to the Customer” CRM strategy. That strategy calls for measuring customer interface costs and activities per contact channel across its global enterprise, a procedure that Close says is overlooked by more than 85 percent of organizations. “They basically want to become the easiest supplier in the world to do business with,” she notes. “They’re still on that journey.”
Indeed, Murrell says only 35 percent of Dow’s global sales force is hooked into the CRM system, though the goal is all of them by 2003. “We’re up and running, with the solution implemented in all our call centers, inside sales and in customer service,” he explains. “The thing we’re working on now is reengineering the entire order management process.
Adds Murrell: “Once that is done, we can glue all of this together.”
The gluing will probably take some time, too.