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Hard Lessons from CRM Experience: Six Mistakes to Avoid


by Richard Barrington

Contents
Introduction......................................................................................................................................................2 Six Problem Areas in CRM..............................................................................................................................2 1. Lack of strategic goals......................................................................................................................2 2. Data problems...................................................................................................................................2 3. Too much, too soon...........................................................................................................................3 4. Lack of adoption...............................................................................................................................3 5. Inappropriate technology..................................................................................................................3 6. Excessive customization...................................................................................................................3 Case Studies: Overcoming Early CRM Hurdles...............................................................................................3 Conclusion........................................................................................................................................................4 Sources..............................................................................................................................................................4 About the Author...............................................................................................................................................5

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Introduction
Many business professionals consider customer relationship management (CRM) the new frontier in marketing. Despite widespread integration of CRM technologies across the globe, companies are still learning how to adopt and adapt new CRM applications, and how to choose systems that best align with their respective business needs. While some businesses have ventured into CRM territory unscathed, others have stumbled and been forced to re-evaluate their strategies to avoid repeat mistakes. Whether theyre rolling out a new technology or trekking across the Oregon Trail, the first pioneers who venture into uncharted territory often encounter the most resistance. In the early years of CRM, for example, the most forward-thinking and ambitious companies faced the most critical issues, many of which can still pose serious problems today. Nevertheless, when todays executives evaluate CRM applications, they have the advantage of learning from the various miscalculations of those who came before them.

Six Problem Areas in CRM

Specific CRM mistakes are too numerous to mention. After all, implementing a CRM system is both a significant technology project and a disruptive change in business processes. However, most CRM errors can be grouped into six major areas: 1. Lack of strategic goals. CRM software should be thought of as a tool for implementing a strategic vision, not as a substitute for that vision. CRM goals should be centered on increasing profitability by getting more out of customer contacts. This can include better targeting of customers, improved customer retention rates, increased cross-selling, and more efficient handling of customer inquiries. Companies can also increase profitability with their CRM system by analyzing metrics. By quantifying customer data, an organization can calculate a return on investment for its CRM system and refine its marketing strategy if needed. Without these goals, a CRM system is little more than a simple repository of customer data. 2. Data problems. Data problems come in a variety of forms. Some data simply may be inaccurate or out-of-date due to poor recordkeeping, while the rest may be meaningless because of poor organization, processing, or accessibility. The lack of good analytics can make it virtually impossible to turn raw customer data into valuable information that sales teams and management can use to make informed business decisions. Finally, data security should be a substantial part of any CRM plan, no matter how small or how large the company using it. The more (and better) data a company assembles, the more it has to lose. 3. Too much, too soon. The exciting potential of a CRM system sometimes gets the better of an organizations planners, causing them to implement too ambitious a program all at once. Unfortunately, this can overwhelm the companys technical

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staff and place unrealistic demands on its technology infrastructure in the process. An incremental approach can allow a company to build toward a more ambitious CRM application via a series of manageable steps. 4. Lack of adoption. One of the most common frustrations with CRM systems is getting the technology in place only to see little or no user adoption. To help avoid lackluster acceptance, roll out the new program to all departments of the organization. This may slow the start-up a little, but can make implementation much more effective in the long run. It is particularly imperative that the sales team is on board with the CRM application. While easier said than done, start by getting to know some of the teams pet peeves--whether its time-consuming reporting, a lack of product support, or not enough marketing initiative--and then position the CRM system to them in terms of how it can solve these problems. 5. Inappropriate technology. Most CRM systems are not inherently good or bad, just misused. A hosted CRM solution, for example, may be ideal in one case but burdensome in another. Also, a platform that works well at limited volumes may fall apart when growth or merger and acquisition activity changes the scale. 6. Excessive customization. In the excitement over the potential for constructing detailed customer profiles and automating the most complex work processes, an organization may go overboard and add too many custom features. Excessive customization can slow implementation, disillusion users, and make the system harder to synch up to upgrades in the CRM software. A little discipline goes a long way when prioritizing which features a company needs and which features may be more suitable five years down the road.

Case Studies: Overcoming Early CRM Hurdles


The following CRM problems should not be interpreted as criticisms of the companies involved. In fact, many of these companies encountered these problems because they were the very first ones to adopt such an extensive customer relationship management system. In essence, these case studies illustrate how the pioneers of CRM uncovered and overcame the initial hurdles of their maiden voyage into the world of customer relationship management. As befits a technology company, Absolute Software saw ample opportunities to customize its CRM system. However, during the first round of system upgrades, some of the non-standard components became less effective and eventually had to be scrapped. Going forward, Absolute opted for a more flexible platform that allowed for easier upgrading and smoother adoption by their sales team. When First Union bank acquired CoreStates, it did not allow adequate time for data conversion or training to handle the transition of CoreStates customers and employees onto the First Union CRM system. Customer service suffered as a result, and nearly 20 percent of CoreStates customers moved

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to a competitor. This too much too soon dilemma forced First Union to place customer service and CRM integration at the forefront when planning future mergers. When automaker Mazda wanted to implement a detailed customer loyalty program, it found its disparate databases unable to adequately correlate the necessary information. For example, their vehicle database was organized by vehicle identification number, while their marketing database was arranged by customer name. This led to extensive data overlap. To combat this issue, Mazda put more emphasis on data integration and cleansing when it undertook its next round of upgrades. Sometimes the medium is just as important as the message. Computer maker Dell tried to reach students via a promotion on its Web site, only to find that its target market was much more likely to be reached by text message. Although Dell quickly adapted their mobile campaign strategy, that initial hurdle is an example of problem area #1, a lack of strategic goals. Retailers TJ Maxx, OfficeMax, Barnes & Noble, and BJs Wholesale Club are just a few of the companies that have been victimized by theft of customer data. In many cases, this was accomplished by hacking into data via the Internet, highlighting a risk of hosted CRM solutions. At the same time, the theft of laptops containing sensitive information show that having the data on-site is no less risky than hosted CRM.

Conclusion
Ultimately, the problems and case studies identified in this white paper do not represent failures, but illustrate how companies of varying sizes have battled, successfully, their own CRM difficulties. Subsequent buyers of CRM applications can learn these same lessons, and, hopefully, without the cost of first-hand experience.

Sources
BTN Magazine, The Ten Biggest CRM Mistakes CIO.com, April 1, 2004, Customer Relationship Management (CRM) -- Banks Fight Customer DM Review, July, 2002, Customer Relationship Management: Practical Tips for Successful Implementation Inside CRM, 5 CRM Mistakes Smart Companies Make... and How to Avoid Them Microsoft.com, Make the Most of Customer Relationship Management (CRM) SearchCRM, June 17, 2008, CRM Case Studies TechNewsWorld, August 6, 2008, Feds Throw Book at 11 Customer Data Theft Suspects ZDNet, March 18, 2002, Six Mistakes That Will Sink Your CRM ZDNet, May 19, 2002, Why integration will make or break your CRM plans

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About the Author


Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.

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