Customer relationship technologies took root in the early 1980s, with the introduction of personal computers. The launch of ACT! in 1986 was one of the first big milestones in the era of CRM. Not long after, Siebel, Goldmine, and other firms launched their flagship products, thus announcing the birth of enterprise CRM. If you look back 30 years, you will see how CRM technology has transformed to match our understanding of the customer.
Today CRM is a mainstream concept across organizations large and small. A recent Gartner report noted that CEOs see CRM as their number one technology-enabled investment in 2012. As the foundational understanding of customer needs is changing in favor of a rich, multichannel experience, companies face the challenge of determining whether their existing technologies and processes can effectively compete. While the market pushes companies to re-invent approaches for managing customer-centric processes, large organizations are often reluctant to change. Such hesitation is largely driven by four factors:
- Existing CRM investment. Over the past three decades, a large number of enterprises embarked on highly complex, multiphase CRM deployments. For these organizations, the very idea of abandoning such an investment can be disheartening. What is often overlooked is an inquiry into whether an organization has already effectively realized a return on such investments—or is even capable of doing so.
- Incurred technical debt. Technical debt refers to the gap created by the misalignment of needs, processes, and technology throughout the solution's lifetime. This represents all the work that needs to be done to minimize misalignment rooted in the past in order to be effective in the present and future.
- Business reactivity. Most organizations (as well as individuals) are highly emotionally reactive in the way they make decisions. They make changes only when they can no longer maintain the status quo, and the pain is intolerable. Solution and process handicaps are not given proper attention until the escalation chain arises.
- Lack of sponsorship. Financial systems have the support of a CFO. Supply chain and logistics are sponsored by a COO. HR systems have PeopleCare. CRM processes run across many functions throughout the customer life cycle, from marketing to service. Who advocates for and sponsors the customer?
Working under the combined weight of the aforementioned factors is like trying to move a mountain. Organizations are sandwiched between these internal obstacles and the external marketing pressures that demand customer centricity.
However, it is possible to move away from the old modes of managing customer interactions and adapt new ones. Following are the key steps to navigating this process:
- Understand the problems. Initiate your inquiry by looking at the challenges and problems the business faces. Ask yourself: Do we know who our customers are across all service lines? Are we able to effectively drive cross-sell and upsell revenues? Are any of the problems the organization is experiencing further handicapped by the existing CRM solution set or absence of it? Understand metrics around the problems. What is the cost of acquiring or losing a customer? Where does my revenue come from?
- Evaluate opportunity costs. Previously, I mentioned that reactivity is one of the major obstructions in effective decision making. Assess what the risk and cost to your business would be if the status quo were to be maintained. Monetizing this will help justify financial decisions needed to address the problems at hand.
- Identify solutions. As you research solutions, do not limit your assessment to the technology only. The success of the technology as the enabler of business success is intertwined with the process effectiveness and ability to properly define and consistently track key metrics that measure organizational effectiveness.
- Think big, start small. Too often we delay our decision process for fear of the potential size of the task. No one wants to open a can of worms. Truth be told, we can take small steps in the right direction, keeping our eyes on the larger vision all the while. On the technology front, there are many choices available that do not include hastily discarding your legacy solutions. You can easily introduce smaller pieces of the solution and technology within the fabric of CRM while still allowing it to play well within the overall existing architecture. Once this is accomplished, the answer to the question of whether to completely replace or augment the CRM innovation will be clear.
- Monitor progress. Create a consistent feedback loop, monitoring key process indicators around your CRM and related processes. Continuous feedback will help modulate your approach throughout the life cycle of your efforts and maximize the returns.
CRM evolution is imperative in the modern marketplace. We need to start embracing the new paradigm, or the new paradigm is going to embrace us. Such innovations within an organization can be done in an elegant fashion, gradually bringing everyone along. By understanding the problems and opportunity costs and by developing solutions in an agile, step-by-step way, businesses will be able to successfully re-invent their relationship with the consumer and reap the returns of their innovation by utilizing a strategic, methodical approach to change.
Dmitri Novomeiski is the leader of CRM solutions at Hisoft Technologies. He has held internal and consulting roles in the CRM industry over the past 14 years.