Logo
BodyBGTop
Great CRM Hinges on Great Business Processes
Author and researcher Jim Dickie defines four levels of sophistication into which most companies fall, which determines their readiness for successful CRM projects.
Posted Aug 8, 2000
Page 1



I am often asked about the success rate for CRM projects.

Based on our (Insight Technology Group's) latest round of CRM project reviews, the "one-third factor" is holding fast: One third of CRM projects generate great results, one third create minor improvements and the final third produce no improvements at all.

The next question I get is, "How can you tell up front which third you will ultimately end up in?"

You can often get a very good feel for how ambitious your CRM plans should be by first taking a serious look at your existing CRM processes--the way in which you market to, sell to and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.

Over the past eight years, I have reviewed over 1,600 CRM initiatives, and I have seen a trend emerge regarding the relationship between the maturity level of a company's CRM processes and the types of CRM systems that company is able to implement. I now classify companies into one of four levels of CRM process development. I find that a company's level of maturity often dictates the level of CRM technology it can successfully absorb.

Level One: Ad Hoc
Anarchy prevails in an organization at the level one stage of CRM process development. Account managers tend to view themselves as CEOs of their own unbound by a structured methodology for working with customers. There may be a suggested sell cycle, but it is used haphazardly at best, based on the whims of the individual salesperson.

Being a level one organization does not mean you are a failure, it simply means that results are unpredictable. In this type of company, leads get generated, sales get made and accounts are serviced. However, sometimes lead conversion rates are 20 percent, sometimes they are 1 percent. Sometimes deals close in three days, sometimes in one year. Sometimes customer satisfaction ratings are near 100 percent, sometimes they are in the pits. The problem is nobody can explain why these things happen.

The success of a level one firm is not dependent on CRM processes--because there aren't any! Instead, it is based solely on the skill levels of individual marketing, sales and support personnel.

If there are no CRM processes in place it is impossible to implement a sophisticated CRM system, as there is nothing to automate. A firm at this level of maturity would be best served by providing its people with CRM tools that focus on increasing individual efficiency (contact managers, word processors, presentation systems and e-mail) versus organizational effectiveness. Such companies need to do a lot of work on process definition before they try to expand their CRM technology plans.

Level Two: Replicable
A level two organization is one in which things are pretty much under control. The salespeople hit their numbers regularly, future business is forecasted with a fair degree of confidence, customer satisfaction is within an acceptable range. The key attribute of a level two organization is that it achieves its success not through sophisticated CRM process methodologies, but rather through solid management.

Level two companies are driven by "tribal folklore"--the belief that, "If we keep doing the best practices of the past, we will keep hitting our numbers in the future." These types of companies tend to be successful, but only as long as there are no major changes in the way business is done in their marketplace.

This type of company can successfully implement a more advanced CRM system than a level one firm. Since there is a recognized way of doing business, such tools as opportunity managers, forecasting systems, configurators and help desk systems can be implemented to help improve operations.

Level Three: Focused
A level three organization is one where the CRM processes have become a way of life for the company. Every employee in marketing, sales and support has the "bible" for how things need to be done--not only the accepted way of doing things, but the only way to do them.

Because these processes are so ingrained into daily operations, they can be analyzed and improved. This type of company is rarely caught off guard by changes in its marketplace. It can detect very early on when product requirements begin to shift, when competitive strategies are becoming more effective or when customer satisfaction is just starting to decline.

This type of company is an optimal candidate for a more sophisticated CRM system. Processes are so well disseminated throughout the enterprise that these companies can successfully absorb technological innovations such as marketing automation systems, sales coaching systems, interactive selling systems and systems for marketing, sales and support performance analysis. These companies will probably also have no trouble implementing e-business extensions to their CRM systems to allow channel partners access to the tools.

Level Four: Dominant
Level four is where we all want to be. A firm at this level has solid CRM processes that are optimized by the most sophisticated CRM systems. These companies also are strong believers in gathering and continually analyzing metrics about their performance. They have a solid understanding of how they sell, how their customers buy and how they need to service clients to create long-term loyalty.

Level four firms are constantly questioning the status quo. They ask themselves such things as: Why do 30 percent of the people who visit our Web site abandon their shopping carts? Why do 15 percent of our A leads never get followed up? Why do 23 percent of the orders we process have errors? For these types of companies, CRM systems are not an option--they are a necessity. Implementing CRM is the only way level four companies can get the information they need to analyze and improve their performance.

A level four company is in a position to implement, not just great CRM systems, but great e-business systems as well. These companies' knowledge of how they, their channel partners and their customers do business gives them the insights they need to determine how to best leverage technology to optimize their operations going forward.

What's Your Level?
To get a feeling for how successful your CRM systems will be, first do a realistic "gut-check" on what type of organization you have. If you find yours is a level one firm, and you are currently planning to implement a very sophisticated eCRM system, chances are you will fall flat on your face. You are talking about running a four-minute mile when you can barely walk around the block.

Pick the level of CRM technology your organization can successfully absorb today. If you don't like the level of maturity of your CRM processes, then work to improve it. Once the changes have occurred, then upgrade your CRM systems to match your new level of process performance. Make "Crawl, Walk, Run, Sprint" the mantra for your CRM technology evolution and you will find your success rates improve significantly.

Page 1
To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
Search
Popular Articles
 

BodyBGRight
Home | Get CRM Magazine | CRM eWeekly | CRM Topic Centers | CRM Industry Solutions | CRM News | Viewpoints | Web Events | Events Calendar
DestinationCRM.com RSS Feeds RSS Feeds | About destinationCRM | Advertise | Getting Covered | Report Problems | Contact Us