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The Five Key Differentiators Between CRM Failure and Success
The global survey claims that only 15 percent of current CRM projects are fully successful, but that the success rate can be improved to as high as 80 percent through proper business process methodology and prioritization.
Posted Apr 29, 2004
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The difference between success and failure in CRM projects has little to do with the technology, according to the findings of a survey released by IBM Business Consulting Services (BCS). The global survey, conducted by The IBM Institute for Business Value and part of IBM BCS's three-part series "Doing CRM Right," claims that only 15 percent of current CRM projects are fully successful, but that the success rate can be improved to as high as 80 percent through proper business process methodology and prioritization. According to the survey's findings, the greatest opportunity for improving the outcome of a CRM deployment can be found not in the technological implementation, but in the processes and human factors surrounding it--what Adam Klaber, partner and global CRM leader of IBM BCS, calls "the softer elements of CRM." The survey isolated 16 steps that CRM users take during implementation, and determined the five most common differentiators between successful and failed deployments: developing a value proposition, managing the budget process, change management, governance, and process change--none of which is directly related to the technology itself. Focusing on those five factors can boost the success rate among CRM projects to 80 percent, according to Klaber. By contrast the implementation of technology was the third least impactful step among the 16. "The core technologies are viewed as enablers," Klaber says. "Even if you do it well, it doesn't guarantee success." Steve LaValle, the CRM partner at IBM BCS who spearheaded the study, is quick to point out, however, that technology still matters. "It's not that [technology is] not important, it's just not a risk point. People who succeed and fail are both able to implement technology." Another disconnect between perception and reality, according to the survey, is the importance placed on aligning the CRM project with the needs of the customers alone. Forty-seven percent of respondents said that it was "very important" to align with customers' needs, while only 21 percent thought it was "very important" to align with employees' needs. But, as LaValle notes, "Alignment to employees had the greatest correlation to success."
Not all successful CRM deployments strictly adhere to the survey's findings, however. For survey respondent Bill Bullis, strategy came first--but not of the CRM variety. "We don't have a CRM strategy," says Bullis, president and CEO of the British Columbia Automobile Association (BCCA). "We have a customer management strategy and a CRM tool. There's a fundamental difference there." The BCAA, he says, decided that defining its customers' needs was more important than aligning the CRM tool with those of his employees. "If you look at it from that point of view, the employees' perspective isn't really a big issue," he says. Nevertheless, he says, any CRM tool "has to functionally meet the demands of the employees when they are dealing with those [customers]." The survey also concludes that CRM should be managed at the corporate level with a cross-functional view of the project. About three quarters of the companies surveyed approach CRM from the divisional or departmental level, such as sales or IT, but those companies that take a more holistic view across many business units show a 25 to 60 percent greater chance of success. The survey also concludes that how senior management perceives the value of CRM plays a pivotal role in determining overall success or failure. Although the most common perception of CRM is as a "useful, but not critical" tool, the greatest likelihood for success is found among companies that see CRM as "critical" or "strategic." Affording CRM a lesser level of importance, the study says, "actually detracts from success because it sends the message to employees and middle management that CRM is not a priority." "A lot of these things we intuitively knew were important actually had a much greater impact on businesses [than we'd thought they did,]" LaValle says. Viewing CRM as "a way of life," for example, had a 76 percent correlation with CRM success, where as viewing it merely as a "strategic enabler" had just a 46 percent correlation with successful deployments. Those companies that thought of CRM as nothing more than "an IT tool" had a 21 percent correlation with success, but those that saw it as "useful but not critical" were actually causing harm. "When it's used as 'useful but not critical,' it drives failure," LaValle says, noting the negative 37 percent correlation revealed in the survey. Klaber was quick to underscore what he called "the real good news" in the study's findings: "There is significant value of doing CRM, and some of the key things that enable you to be successful aren't the most expensive things." The study found that more than half of all companies think CRM is at least relevant to improving overall performance, and roughly two thirds of them expect CRM "to deliver revenue growth by improving the customer experience and retention, and influencing the development of new products and services." At BCAA, where customers are considered members, Bullis sees now that CRM was more than merely useful--as a tool, it was central to the relationship between the company and its members, a relationship at the heart of its core activities. "The implementation was so successful because we recognized we were an organization undergoing deep fundamental change," he says. In the end, Klaber says, any company can afford to eliminate the distance between success and failure. "Doing CRM right only costs you a little bit more than doing it wrong," he says, "and the benefits are tremendous." And, as LaValle notes, "it may even cost you less, if you consider the rework of doing it right [the second time]."
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