Over the years—in fact, since even before CRM was known as CRM—the industry’s objectives have remained fairly consistent: Seek better profits by better understanding and better serving customers. There have been only two basic changes: Approaches for pursuing CRM objectives have evolved, and enthusiasm for CRM itself has oscillated. Today’s approaches—specifically, an appreciation of strategy and the emergence of cloud-based technologies—are enabling reliable achievement of CRM’s enduring objectives. The result has been renewed enthusiasm for CRM.
As described in the 2004 report CRM Done Right, academics and gurus spent the early 1990s popularizing theoretical—and inspirational—visions of how managing customers strategically would improve relationships, sales, loyalty, and profits. Acceptance of these theories later that decade led to a CRM-productization boom, mostly in terms of technology. The term “CRM” came to represent a prepackaged solution that was applied to an organization and/or a distribution channel. The theories, in tandem with the proliferating technologies, generated anticipation and excitement.
By the early 2000s, excitement had faded to disappointment. CRM implementations were failing all too frequently to achieve CRM objectives—by some accounts, as often as two-thirds of the time and at the cost of millions of dollars. “CRM” became a bad word. [See “CRM Is No Longer a 4-Letter Word.”] Rehabilitation began in the mid-2000s with analysis of what had gone wrong and remarkably consistent conclusions: Despite having become synonymous with technology or software, CRM was not actually about either one. It was about strategy, processes, and change. Failing to define a customer strategy, align processes, and attend to organizational change made unlikely the achievement of CRM objectives.
Especially in large organizations, executives need to translate the CRM vision into a value case—one that includes operational metrics to be monitored and realized via the system itself. Moreover, executives must remain engaged, via a governance structure that enables informed, effective decision-making.
Executives also need to explain and promote change within the organization. After all, the reps in the field are not going to be diligent in entering opportunities in a new application if the management chain is not diligent in monitoring and managing the pipeline from within that same application. In this respect, technology had little to do with CRM successes or challenges.
And yet technology remained central to an organization’s ability to launch (and achieve the objectives of) a CRM initiative. CRM could succeed when undertaken in the context of an explicit strategy and an effective governance structure, but the technology of the day remained complex. Projects therefore remained lengthy, costly, and risky.
By the mid-to-late 2000s, an alternative appeared: CRM applications delivered via software-as-a-service (SaaS), allowing rapid deployment of rich functionality under a subscription-based payment model. Originally positioned for smaller organizations, the leading packages evolved, developing enterprise-scale viability.
As SaaS gained mindshare, CRM became exciting again. Organizations, even large ones, were running fast-paced, low-cost projects—and were experiencing success in driving organizational value. The vast bulk of the uptake was for sales force automation, but lately SaaS has moved into marketing, customer support, and even field service. We are in a period of renewed CRM dynamism.
As we embrace today’s platforms, however, we should not ignore the lessons of the past. At least in larger organizations, neglecting customer strategy, process design, and organizational change may doom any CRM objectives. Indeed, given today’s options for getting the right applications to the right users both inside and outside the organization, those who embrace the new without assessing their options may come to regret the impulsiveness. Excitement has returned to CRM—and deservedly so—but to avoid a new era of disappointment, organizations must heed the lessons of the past.
J. David Lashar (email@example.com) is an associate partner in the CRM practice of IBM Global Business Services and the leader of the IBM CRM SaaS Center of Excellence.