"We don’t do CRM here,” the prospective client told me.

"Oh,” I replied, a little surprised that there were any financial services companies left that didn’t practice CRM in some form, “then why have you asked us to come talk to you?”

"Well, you guys do a lot of other things we do here like database marketing, segmentation, web personalization and sales and marketing automation,” she replied.

"I see…we think of all of those things as part of CRM. Do you define them differently?”

She shifted a little uneasily in her seat, lowered her voice and looked nervously towards the open conference room door as if a corporate spy might be listening, “Okay, we’re trying to do CRM here, but we don’t call it that, we call it RGM for Really Good Marketing*.”

Keeping Your Project on the Right Track
CRM (Customer Relationship Management) hasn’t become a bad word in every organization, but the above scenario is becoming more-and-more typical. Why?

So many different things (sales automation, database marketing, e-commerce, email marketing, service automation, data mining, etc) eventually became lumped into the term CRM that it became so complex, so expensive and so time-consuming that it left behind it a trail of frightening war stories. As a result, the term CRM has become so broad that it has become almost useless. Too bad. It’s a good term.

The first sign that your CRM project (whether an existing or new project) might be in trouble is if you’re calling it CRM! It’s far better to determine what you are specifically trying to do in the short term, and name the project accordingly. If you describe your project as CRM internally, it is almost certain that no two people in the company will have the same expected results for the project – and therefore many people will think of it as a failure no matter what you deliver.

The specific area of CRM that you’re working on in the short-term depends on your particular business situation. But briefly, there are three functional areas of CRM: information (databases, data management processes, technology tools), analysis (segmentation, reporting, data mining, predictive modeling) and communication (marketing, sales, service, web). Each of these functional areas needs to address the three Ps of CRM: planning (goals, ROI targets, project plans), processes (definition, automation, checks and balances) and people (change management, organizational structure, internal communications). Your job is to dig deeper into each of those areas and decide what area will provide the greatest short-term return while helping you take an evolutionary step towards CRM in your organization.

Instead of trying to use CRM to enter uncharted territory, use it to solve known problems or improve on areas that have already been identified as important to your business. If direct mail is an important part of your lead generation process, focus on a more disciplined and automated direct mail process to keep the pipeline consistently full of leads. If past customers are outnumbering annual sales, then work on a customer database that can be used for retention and cross-selling. If catalog marketing costs are rising while revenues remain flat, consider testing a predictive model designed to reduce marketing costs by delivering catalogs to only those prospects who are likely to buy.

What do all of these varied approaches have in common? They create a measurable return for the business, they are built on direct/personalized customer interactions, and they leverage customer/prospect data to improve relationships.

Pre-Pilot, Pilot and Rollout
Most companies want to rush straight from identifying a need to rollout of a solution. A perfect example is a mid-sized business that invested $200,000 developing a sales and marketing system. The system failed to perform, and the project was scrapped.

A systematic approach involving one or two vendors in a pre-pilot, pilot and rollout program would produce far better results (or, worst case, result in the project being cancelled when only a fraction of the full project budget had been spent).

In the pre-pilot phase, your vendor helps you implement an existing project (i.e. a scheduled mailing or reporting project). Their expertise adds value to the project, and the project helps the vendor become familiar with your goals, processes and data.
In the pilot phase a long-term solution is envisioned, and a short-term (less functional) approach is developed. After a 3-6 month timeframe, the success or failure of the pilot is demonstrated. Problems are identified and worked out. And a firm proposal is developed for a long-term systematic approach that combines process, data and communication to deliver the solution envisioned.

Assuming the pilot is successful (i.e. meets defined goals, produces a profit), you then move to the rollout phase. This phase combines what you have learned in pre-pilot and pilot phases. You, and your vendor(s) apply what you have learned about information, analysis and communication to develop a long-term solution. Note that “solution” does not mean “technology” but includes the ongoing planning, sales and marketing processes, and people management required for success.

We recently helped a new client handle a sales reporting project. This distribution company was preparing for their annual retailer conference, and wanted to increase usage of their web-based ordering system. Depending on each retailer’s characteristics (Internet connection type, number and type of orders, etc), a different sales process was required. To segment and report on clients in preparation for the event we had to bring together data from 15 different internal systems, and understand the underlying business processes. During this pre-pilot project, we were able to contribute to the immediate marketing needs of the company. But perhaps more importantly, we are now in a much better position to help them build a pilot marketing database.

Let’s use the mid-sized business with the $200,000 failed project as an example of the math for this. They could have invested perhaps $15,000 in a pre-pilot phase, bringing in a vendor to help them implement an initial marketing project. They could have then invested perhaps another $20,000 - $30,000 in a pilot system. After 3-6 months, if the pilot was working as expected, they could have invested $150,000 in the rollout of the final system. The overall budget is as low (or lower) than the failed budget price because by helping in the pre-pilot phases, the vendor can later significantly reduce the time required to gather business requirements and develop the final solution.

Some will argue that this approach might take longer to implement. They’re exactly right. The above firm was able to implement their failed solution in 15 months. Using the pre-pilot, pilot, rollout approach, they may have taken 3-6 more months to complete the project. But not only would the project have had a better chance of success – the firm would have also had a usable pilot database within the first 6-9 months (instead of waiting the full 15 months).

Don’t expect vendors to be too supportive of this approach. They prefer to have long-term projects with a guaranteed budget. You will need to demonstrate the long-term potential value of the pre-pilot and pilot approaches before they will commit resources to the effort.

There is a side benefit to this approach. CRM involves so many specialized areas that it is tempting to select a variety of firms to help you (agency, data processing, consulting, integration, analysis, software, etc). But selecting too many vendors leads to steeper learning curves, miscommunication and other issues. The best approach is to choose one vendor who can handle data, technology and analysis (usually a consulting or integration firm); and a second vendor who can interpret analysis, develop marketing campaigns and handle marketing production (usually an agency). An alternative approach is to use a “general contractor” who can select and manage the appropriate resources for your specific project.

Balance Profits and Customer Value
CRM is ultimately about improving business profits – and the means to this end is by making the experience better (i.e. more personalized and relevant) for each customer. It is a balance of the business’ need for profitability with the customer’s desire to be served better.

But too many businesses place too much weight on one side of the scale. Either they overemphasize profitability goals, and CRM simply becomes another way to try to wring another nickel out of the customer’s wallet. Or they focus exclusively on service and the CRM program is canned because they are bleeding profits. The best way to stay focused on balancing the CRM scale is to articulate a simple vision and benchmarks.

The vision is a short story of an “ideal” customer relationship – written from the perspective of the customer. This becomes the playbook that is distributed to the team. It is the responsibility of the players in the business to make it happen.

Benchmarks are the measures of success that you gather in the pre-pilot, pilot and early rollout stages of your selected project. The business goal is to improve on those benchmarks while living up to the vision. Naturally, there will need to be some give and take on both sides.

More sophisticated measurements and scorecards can be developed later. But vision combined with benchmarks is an easy method for getting started.

Summary and Helpful Hints

(1) Don’t call it CRM. Determine what area will provide the greatest short-term benefit and focus on that. Set priorities and focus on a few things at a time.

(2) Dig deeper. Understand which components of CRM should be priorities for you. Vendors can help, but you are in charge of your vision and plan. And someday, when vendors are gone, you’ll need to understand your own processes and data.

(3) Use pilots. They help you and your vendors get up to speed, understand your own needs, reduce your risk and ultimately will give you a better result.

(4) Only use one or two vendors. A disjointed team means many individuals trying to assert the value of their specific expertise or risk losing their piece of the pie. And with so many self-interests driving the process, who would be looking out for the larger, more important interests of your company and your customers?

(5) Articulate the bigger vision. Keep your implementation efforts focused and short-term. But keep your vision clear and long-term. Use an idealized story from the customer perspective as a starting point and allow the business to decide how it will profitably make it happen.

* Based on a true life story. Some acronyms have been changed to protect the innocent.

This article, written by Customer Connect president Geoff Ables, was originally published in the DMA Spotlight. Article is © 2003, Customer Connect Associates, Inc. If you have any questions regarding your relationship marketing goals or would like to partner with Customer Connect, e-mail Geoff at ables@cust-connect.com, or call us at (704) 947-5653.

Visit the GEM Archive >