Successful companies make the application fit the strategy as a best practice, and stay aware of organizational change management needs.
Posted Apr 14, 2005
Seventy percent of CRM initiatives do not meet project goals defined prior to the start of the implementation, according to a study conducted by industry research and consulting firm Best Practices. The study, "Customer Relationship Management: Changing your Cultural Focus from Products to Customers," found that more companies are realizing that success with CRM initiatives is not only determined by selection and implementation of an appropriate CRM system, but also by the capabilities of a company to effectively manage the associated organizational change. "The real value drivers of a successful CRM initiative start with an awareness and appreciation for the organizational issues and employing proven best practices to effectively manage both technology and people," says Jonathan Tanz, director of research.
Information for the study was gathered through extensive surveys and interviews among managers from 14 companies across nine business sectors that included financial services, telecom, retail, travel services, pharmaceuticals, aviation, utilities, construction, and government. Companies profiled included: AAA, Aventis, Boeing, Corning, Eli Lilly, J.D. Edwards, Lands' End, Merrill Lynch, and Raytheon.
Findings revealed that leading companies that have implemented a successful CRM initiative used specific strategies and tactics to mitigate the risks of change associated with CRM implementations. Best Practices found successful CRM implementations used training and communication early on in the process as a tactic to reduce resistance by informing all stakeholders involved, from management to end-users. Other important practices included strong leadership from management, establishing agreed upon customer-focused initiatives throughout the entire organization from the top down, and maintaining an open-door policy for customer feedback. Finally, Best Practices found that successful CRM implementations were not considered a technology issue first and foremost by the companies involved.
According to the study, 67 percent of senior managers acknowledge CRM as a priority, but only 17 percent took the time to engage with their customers to better understand how a successful CRM initiative could benefit them customers and business. When selecting a CRM solution, only 40 percent of organizations incorporate vendor-training capabilities in their decision-making process. Best Practices found CRM initiatives increase upselling opportunities and overall customer retention rates by 50 and 33 percent, respectively, but do not have a significant impact on improving closing rates, at only 17 percent.
"Ultimately CRM is a mindset that places the customer at the center of a businesses' activities," Tanz says. "Successful CRM initiatives are able to ingrain this customer-centric mindset deeply into the organizational culture and business model. CRM initiatives that fail to manage this shift are likely to join the 70 percent of companies whose CRM effort have underdelivered and underperformed."
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