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Problems Commonly Encountered in Successful CRM Implementation
Posted By Ceci On 23 June, 2010 @ 9:50 pm In Edition 33,Marketing | 28 Comments
By: Rogerio Domenge y Philippe Bisson
Implementing Customer Relationship Management (CRM) as a business strategy is a major decision that implies making changes to corporate culture, the attitude and way a company operates, and that affects everything from its processes and people to its goals and responsibilities.
CRM seeks to improve a company’s performance by optimizing its relations with its market segment(s), which, in turn, requires knowing, understanding and anticipating the needs of existing and prospective customers. However, implementing such a business strategy demands time, know-how, experience, risks and costs. Not only should the customer be at the core of all the company’s strategies, but a personal and personalized relationship should be sought with each. This is the business model, which is defined as “a representation of a firm’s underlying core logic and strategic choices for creating and capturing value within a value network.” (Shafer, et al., 2005).
The key element of CRM is the value proposition the company develops for the customer, which is the result of an external (customer) and internal analysis (that takes into account the company’s limitations and capacities). The value proposition establishes the set of features the goods or services the company is going to offer to one or more types of customer will have and crystallizes the value, benefits, costs and risks it represents for customers. The value proposition should “communicate what the company expects to do better or different than its competitors for its customers” (Kaplan & Norton). It is the overall concept that attracts the customer and that aims to convince the latter to purchase the company’s goods or services.
External and internal factors (see Figure 1) come into play in the identification and creation of a value proposition. Demand, as an external force, is based on an understanding of the customer’s needs, gained via in-depth, regular and systematic analysis (Bligh & Turk) that asks questions such as: Who are my customers? What do they want? What do they need? What do they hold to be most valuable?, while seeking to make the products and/or services offered as personalized as possible by means of messages and offers.
Figure 1
Building a Value Proposition
From an internal perspective, the goal is to offer a value proposition based as much on an understanding of the customer as on the company’s resources and capacities. Some questions that need to be asked in this context are: What is the value proposition? How will it be offered? What resources and capacities are required? How will capacities -processes and roles- be deployed and crystallized? (Bligh & Turk).
Kaplan & Norton identify four main types of value proposition, which will have direct implications on the design of process and during the implementation phase, depending on specific goals for each customer type:
The successful implementation of CRM, as an integral system, should take into account a series of activities (Figure 1), which will vary according to the four types of value proposition discussed. Below are some of the problems commonly encountered when implementing CRM and suggestions as to how to correct situations that may hinder or limit its success:
Problem: The company is unfamiliar with the customer and his needs.
Design, build and use a simple, direct information system that facilitates an understanding of the customer by systematically and periodically identifying his needs. Two main types of activity can be discerned in such a system:
Problem: The company doesn’t offer products/services of value to the customer.
Design a simple, easily identifiable value proposition for the customer that adequately meets his needs. The value proposition should take into consideration both the customer’s previously identified needs and the company’s limitations in terms of capacities and resources. The customer’s consumer experience (goods or services) will be based on the value proposition and made up of a series of processes that crystallize it.
Problem:The company lacks information on new and past customers.
Design, build and use customer information cards to help identify new customers and follow up on regular ones efficiently and effectively. This will require a system in which information can be inputted and consulted with ease, to ensure it is used and kept updated. Any commercial software package should be sufficient to maintain this card index system, while its level of sophistication will depend on the company’s needs, resources and capacities. The idea is to keep a systematized record of each customer’s activities that requires a minimum of technology and/or training.
Problem: The company treats all customers the same, regardless of their differences.
Clearly identify the different types of customer your company serves. This is a practical measure that will allow you to personalize the value proposition for each category, avoid generalizations and offer special processes or propositions for each type of customer. For example, you could take into account different levels of customer discernment, satisfaction, conducts, professional profiles or economic strata, to name just a few. There are many ways of classifying customers, but the new unit of measurement is “customer lifetime value”.
Problem:The company lacks “fresh”, systematic information on its customers that could be useful in redesigning the value proposition.
Conduct a study that explicitly measures employees’ and managers’ capacity to relate to and obtain information, with a view to assigning them certain types of customer, times, moments in the process and actions conducive to the collection of the information needed to better monitor the customer and detect changes in his needs or behavior patterns. This information will serve as a basis for redesigning the company’s value proposition.
Delegating responsibility for company-customer relations solely to the PR director can be exceedingly inefficient and ineffective, as can a lack of realistic information on which to base the value proposition. Instead, the PR director should conduct a capacity study of employees and managers and delegate accordingly.
Generally speaking, it’s a good idea to actively involve employees who come into direct contact with the customer -so-called front office employees- instead of waiting until the last phase in the process, when, say, they are paying their bill. This is because customers are more likely to be short on time and concentration at this phase, or may simply be eager to leave.
Some examples of this type of situation include:
Problems with implementing CRM can be attributed to one or more causes: lack of understanding of the global concept CRM and its derived strategies represent; lack of clear goals and the means by which these will be achieved at each phase in the process; more direct operating or practical limitations stemming from failure to properly manage the CRM process; a lack of commitment; or inadequate training of the people involved.
Only by identifying and clarifying the causes of deficient CRM implementation can the problem be corrected or solved. Tackling some of the main problems encountered during the implementation phase can serve as a basis for a diagnosis or, at the very least, a better understanding of the situation, thereby enabling the company to come up with a series of corrective actions that result in a successful CRM system.?
References
Bligh, P. y Turk, D. (2004). CRM Unplugged: Releasing CRM´s Strategic Value. Estados Unidos, John Wiley & Sons, Inc.
Brown, S. y Gulycz, M. (2002). Creating a CRM vision: Tips to optimize CRM performance. Estados Unidos, John Wiley & Sons.
Kaplan, R. y Norton, D. (2004). Strategy Maps. Harvard Business School, 82(2).
Shafer, S., Linder, J. y Smith, H. (2005). “The Power of Business Models”, en Readings in Crafting and Executing Strategy. Business Horizons, 48(3).
Woodcock, N. y Williams, D. (2003). Improving marketing effectiveness. CMAT.
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