Great Expectations

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Numbers can be cruel. Especially customer satisfaction numbers in a product category populated by dissatisfied customers. Customers today have high expectations of CRM vendors and their multifunction software products. And according to the nearly 1,300 respondents who participated in the study "Multi-Function CRM Software: How Good Is It?" those expectations simply are not being met.

In fact, the CRM industry scored a composite 63.13 out of a possible 100 in customer satisfaction. That is what customer satisfaction experts would call an "airline-level" score.

Who exactly are these people to say that the CRM industry needs an overhaul? More than 30 percent are company CRM team leaders and executives, 29 percent are industry consultants and about 20 percent are users. Although the respondents hail from companies of varying size, nearly 70 percent have rolled out CRM to some extent, another 19 percent are considering a CRM implementation and about 10 percent are developing an internal solution. According to the survey, 81 percent of respondents use CRM software primarily in one of the "core four" functional areas, with 26 percent using it for field sales, 24 percent for marketing, 23 percent for call center service and 8 percent for call center sales.

These customers are displeased with the overall performance of CRM software and are unhappy with all of the major vendors. When measured against each of the key satisfaction criteria identified by customers, major vendors--including FrontRange Solutions Inc., Onyx Software Corp., Oracle Corp., PeopleSoft Inc., Pivotal Corp., SAP AG and Siebel Systems Inc.--scored from mediocre to poor. Those key criteria were functionality, price satisfaction, ease of implementation, customer focus and support.

While these findings may be startling, it is important to put them into perspective. World-class products and services routinely achieve Customer Satisfaction Index (CSI) scores in the mid-80s and low 90s in this type of survey. Average performers typically generate CSI scores in the high 70s to the low 80s. Those latter scores can be a warning to businesses that it is time to closely inspect satisfaction issues before customers start heading for the competition. But the real trouble typically starts with scores in the mid-70s and below, which most often require immediate remedial action. Scores in the 60s or below often send employees scurrying to competitors and boards of directors running to turnaround experts. These are the score respondents bestowed upon the CRM industry's biggest players.

SalesLogix ranked highest of the eight systems rated individually with a 65.99, followed closely by Onyx at 65.54 and Pivotal with a score of 65.51. PeopleSoft fared slightly worse with a rating of 62.93, followed by Siebel at 62.6. Oracle bottomed out at 58.07, just below SAP's 58.57 and FrontRange's 60.02.

With such poor scores the question is: What is keeping CRM software companies afloat at these levels? Simply put: Customers lack more satisfying choices. When an entire industry is operating at low levels, customers have few options but to use the best of a bad lot.

The Truth Revealed

These low satisfaction scores belie a rosier picture painted by the vendors. In fact, respondents debunk vendor claims of high customer satisfaction. Siebel, for one, tries hard to convey the impression that nearly all of its customers are happy while it finished fifth. Other vendors claiming high customer satisfaction clearly are blowing smoke. Not one vendor rated above 66 in overall satisfaction. Customers are least satisfied with ERP-related systems. Oracle and SAP's Vantive, the two ERP vendor systems, rated poorly in comparison to freestanding systems.

The survey shows an overall dissatisfaction among respondents, but it also uncovers specific problem areas. Of the five customer satisfaction factors participants identified as most important--functionality, price satisfaction, ease of implementation, customer focus and support--customers were least happy with ease of implementation. But lest proponents of providing less system customization to meet customer-specific requirements jump on this dissatisfaction or try to use it to justify forcing customers to stick closer to out-of-the-box functionality, as customers are adamant about not accepting generic solutions.

What customers want are simpler implementations and software adaptable to their specific requirements, without sacrificing functionality. That is about wanting vendors to end their bells-and-whistles race and focus on flexibility rather than feature count. But as one savvy industry pundit notes, "If they put a lid on the bells and whistles, then they can't charge such high license fees." The data demonstrates that problems with pricing, customer focus and ease of implementation are intertwined.

Vendors are loading up systems with features, only a small percentage of which customers actually use, and charging high license fees for their unnecessarily elaborate software. As more functionality is added, these feature-laden systems become more difficult and more expensive to modify. And they become harder and harder for users to operate, as well.

Much of that is happening to justify high license fees, which are the primary source of CRM software vendors' revenue, with development services to adapt software for customer requirements a distant second. In fact, many vendors see themselves in the business of selling licenses and regard their development resources as a scarce commodity that has to be stretched to support as many license sales as possible. Meanwhile, that is not at all what customers want.

Based on the survey results, customers are looking for a development model for doing business on the part of vendors, rather than a license-sale model. Customers are unwilling to sacrifice customization to make life easier and more profitable for vendors. They want systems with more of the functionality they need and less of the unneeded functionality that adds complexity and creates implementation difficulty.

Does that mean customers are trying to stretch the boundaries of modern software development with their wants? No. Smaller vendors such as Optima and J.D. Edwards-owned YOUcentric already have developed powerful solutions that customers assemble from granular modules to fit their requirements. In these cases, customers just get what they need and are spared working around and paying for what they do not need. The bottom line is that this is a business model issue, not a technology barrier.

The irony is that CRM software companies are not practicing customer relationship management. For many respondents, the buyer-seller relationship barely qualifies as a relationship. Among the single most important attributes to customers of good vendors is walking away from the selection process if the software is not the right fit. Customers are getting sensitized to "push" selling techniques that pit vendor salespeople trying to make sales goals against customers trying to get the best solution for their needs. Thus, according to customers, the very solution selling CRM software is supposed to support is largely absent from the CRM software selling process.

Where Do We Go From Here?

Several CRM software vendors, Oracle and PeopleSoft in particular, have been making noises about offering less customization than what they previously offered. That would take the industry, or at least these two and potentially other vendors, down another notch or two. But any vendor that strays in this direction will pay the price--perhaps the ultimate price--unless the rest of the industry follows suit.

So where is the CRM industry headed? Just scratch the surface of the data to uncover what it will take to make customers happier. Among the most obvious conclusions is that CRM software vendors must stop selling long enough to listen and really hear customers. They are going to have to make the transition from technology- and sales-driven organizations to relationship-driven organizations that listen and respond to customers.

Vendors need to stop selling licenses and start selling solutions. Software developers should focus more on adaptability to meet individual customer requirements and less on stuffing as many features as possible into out-of-the-box functionality to justify high license prices. Sellers need to recognize that the very factor most responsible for high customer interest in CRM--the ongoing transition from historically seller-driven markets to tomorrow's buyer-driven markets--is affecting the CRM software market just as it is affecting almost every other market in sight. The CRM software industry is getting swept up by the changes CRM software is designed to support.

Customer Responsibility

While it is true vendors have to work hard to boost satisfaction among their users, customers need to shoulder at least some of the blame for their own dissatisfaction.

Despite what should be universal knowledge that starting CRM with software leads to certain failure, some companies decide they want to implement a CRM solution and immediately call in a bunch of software vendors. The same applies to customers who believe they can start CRM by reengineering work processes--notwithstanding the fact that they have not developed the customer-centric strategies that create new work flow, which in turn defines what the new work processes need to be. Good vendors will tell such customers they are not ready, but most cannot resist the prospect of closing a sale and egg these customers on.

Customers need to take some responsibility for what will become their intense dissatisfaction with whatever product they buy, while vendors need to remember the obvious and CRM-like concept that cutting deals that leave customers complaining will cost them in the long run. If the industry is to see a change, customers will have to take more responsibility for being ready for technology before they contact vendors and more resolute in sticking to their guns about getting what they need. That will be challenging for both the vendor community and its customers.

Indeed, a turnaround will happen because it gets back to the fundamental reason for implementing a CRM solution. CRM vendors will lose customers if they do not make the shift--especially after a new competitor develops a customer orientation before they do. All it is going to take is a couple of CRM vendors that better satisfy their customers' needs before the whole industry is forced to shape up. Those that do not will disappear. The vendors needed to lead that change will emerge, either from the present roster of major players, from the up-and-comer list, or even from out of nowhere, as a well-heeled new entry sees a growing market with a dysfunctional supply side ripe for picking.

[This article includes excerpts from the study "Multi-Function CRM Software: How Good Is It?" by Dick Lee, David Mangen, Bob Thompson. HYM Press 2001. Excerpts reprinted with permission of the authors.]

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