Making CRM Technology Work

CRM is rarely implemented for the purely altruistic reason of understanding customers better. Improving sales has been a key driver for many institutions' investment in Customer Relationship Management (CRM) technology over the past decade. Companies have based their revenue-building strategies on improving customer retention and increasing their product holdings, on the basis that less effort is required to sell more to existing customers, than it is to win new ones.Therefore, revenue estimates contained in CRM business cases typically rely upon delivering a step change increase in the crosssell ratio.However, evidence from a number of quarters and industries indicates that CRM technologies, on their own, will not generate the results expected. Reports from Gartner Group and Meta Group highlight that:* through 2006, more than 50 per cent of all CRM implementations will be viewed as failures from a customer's point of view* 55-75 per cent of all CRM projects fail to meet their objectives* the majority of businesses implementing CRM systems will underestimate the costs of CRM projects by as much as 40-75 percent.More than just technology?The key to success is achieving the correct balance between the business change levers and the IT enablers. Many investments focus solely on the IT and, while these are undoubtedly critical, to really capture and work the value of the customer base, an organisation-wide effort is required. In PA's experience, achieving a step change in cross-sell targets requires the following:* A clearly articulated customer strategy communicated to each segment of the organisation* An integrated business model to ensure the segments 'fit'* Appropriate reinforcing mechanisms to create a virtuous circle which constantly enhances the process.Let's take these strategies individually and see what each means in practice.1 A clearly articulated and communicated segment-level customer strategyA segment-level customer strategy is the cross-sell road map for the organisation. It clearly articulates the target customers, what are the target offerings/proposition, and how the organisation plans to deliver the results.Without such a strategy, businesses will make little headway in their cross-sell objectives. Essentially, it's a simple process with three clear and cumulative steps:First, identify a range of cross-sell opportunities. This involves identifying a number of segments where there is an opportunity to sell additional products or services. This will be achieved through a needs-based segment analysis and undertaking a gap analysis against what customers already have.Second, prioritise efforts. Many of the cross-sell opportunities identified can simply be ignored because the change in organisational capability reguired to deliver them is too great. Those options that remain can then be assessed and prioritised on a more formal economic approach consisting of potential revenue set off against the investment and ongoing servicing costsThird, build the business case. With a prioritised list of segmented cross-sell opportunities the business case for a programme of work can be built up from the analysis of each option. The resulting business case will detail the priority segments and the cross-sell proposition for each, together with the business change reguired to deliver and the overall economic benefit.2 An integrated business modelMany cross-sell initiatives have relied on CRM technologies as the key enabler. However, significant improvement in cross-sell is possible, at least in the early stages, with only small investments in IT. To do this reguires a balanced business design which focuses on the key elements necessary to deliver against the customer objectives and the business case in the areas of:* Organisation* Processes* Data* Technology.Organisation - It is vital that organisational change management considerations are fully integrated into the overall cross-selling programme. …