If Not CRM, What?

Customer relationship management has failed to deliver, but customer interaction management might be the key to business transformation.

Is CRM dead?

From Waters Financial Technology Intelligence

May 1, 2005

Just like the doubts about enterprise resource planning and other technologies that have risen and fallen from the heights of technological stardom, this question is often born from irate IT buyers who want to close the books on a costly IT misstep. Or this question can be reflective of a technology that has reached a critical stage of its evolution and, in a profound way, has failed to deliver.

In the case of customer relationship management (CRM), it's difficult to refute that CRM has received some near-fatal blows by failing to deliver on most, if not all, of its promises. In fact, research firms such as Gartner and META, have gone so far as to say that anywhere from 50 percent to 80 percent of CRM implementations have failed to meet expectations.

But if you define CRM in the truest sense of the term (i.e., a set of business processes focused on enhancing customer relationships rather than enterprise-wide complex software systems), then CRM is still very much alive. It will continue to remain alive as long as businesses have customers. But as it is currently envisioned, there are some fundamental flaws to CRM's approach to solving business problems, the largest being that the industry seems to have lost sight of the fact that the "C" in CRM stands for "customer."

CRM has failed at the ground level. But does that mean that CRM is dead or does it need to grow up? Or is it time for companies to take a closer look in the mirror with regards to what they are really trying to accomplish with a CRM system?

CRM has been marketed to enterprises under the guise of simplicity; you can buy a technology and it will take care of your problems. In reality, companies became embroiled in long, internally focused implementation processes where they often lose sight of the ultimate goal—improving customer relationships—and also fail to realize ROI because business needs and technologies have already evolved. Also inherent in the promise of CRM has been the ability to use customer data to improve a company's processes and products continuously. But that promise has not emerged either.

What many companies in search of a one-stop-shopping, magic bullet CRM solution often overlook is that the customer-level objectives they seek cannot be obtained through technology alone. If a company's business processes are broken from the beginning and are not oriented around the customer experience, CRM tool and software implementations are almost guaranteed to fail. Business processes should dictate the tools and not the other way around. After all, a company with a convoluted, internally focused business model that implements a convoluted, high-maintenance CRM solution, will create nothing but an expensive and time-consuming headache. Sadly, this is a lesson that many companies have had to learn the hard way.

The failure of CRM, then, is the result of two misconceptions: that technology can fix your business problems and that you will know how to leverage the information they collect.

Finding the Right Approach

So, given that the historic approach to CRM has proven untenable, what's the best approach? Industry analysts recognize that there is more than technology at stake when assessing such programs. Organizations need to implement customer service best practices. "It isn't the technology—it is how companies transform the way they provide service by leveraging the technology," says Forrester Research analyst John Ragsdale.

Many CRM tools and software solutions focus on customer call avoidance rather than communications channel migration and integration. The largest mistake of any customer-focused initiative is to try and avoid transactions with your customers. From the purview of the end-user there is one channel—they have a need, and you need to fill it. The longer it takes and the more channels they have to cross, the more your customers will become disgruntled.

In their efforts to balance revenue creation, competitive advantage, customer satisfaction, operational improvements, and cost containment, enterprises must view critical components of the business from end-to-end, as links in a chain. This viewpoint enables them to apply tighter management controls, produce more meaningful analytics, and gain efficiencies. This same principal is true when viewing customer interaction management, where critical components include all possible customer touch points within the realm of the business. Primarily, these touch points include phone, e-mail, chat, and Web through agents, employees, sales, marketing, and self-help. This end-to-end view of the customer support chain plays a critical role in transforming operations and advancing a positive customer experience, which is the primary goal of any well-conceived CRM system.

So instead of avoiding customers, the appropriate approach is an iterative one built from the perspective of the customer and based on improving business processes. Here's how customer interaction management or CIM, which is emerging from the ashes of CRM, can be the customer-centric and process-centric way to save money, increase revenues and create happier and more loyal customers.

A Five-Step CIM Program

The following steps can get your organization on the path to customer interaction management in a way that substantially increases your ability to meet your organization's goals.

Step One: Identify customer-level objectives and understand user preferences. Eliminate silos to create a customer-centric path to multi-channel support.

Step Two: Analyze current business processes and workflows to assess efficiency of customer interaction channels. How do you do business today? Who are the people that move through your workflow segments? How is each interaction channel currently used? What are channel capabilities and costs? Technology cannot replace good business practices.

Step Three: Align channels and service models. Map common tasks to the preferred channel and related environments for each user type, and then focus on filling gaps such as service levels on certain channels, or creating incentives for one segment of users to move from an inefficient or poor-performing channel to another.

Step Four: Create a transition plan. Begin moving users from one channel to another, or shifting the role of agents or other customer support staff to optimize the customer experience. This often requires incentives, agent training, and a change in management strategy.

Step Five: Design the tool and measure and plan for continuous improvement Integrate existing systems. Add capabilities incrementally in a "transition to transformation." In other words, make sure it is a journey rather than a destination. Identify important business analytics that will be tracked and reported to help make better business decisions, such as improving products and identifying new revenue opportunities. Apply analytics to monitor user acceptance, customer satisfaction, the effectiveness of various channels, and the ROI for each customer interaction

The Quest for Continuous Improvement

The last two points are critical. They help transform your organization into a truly customer-focused operation. What kinds of data should companies be collecting, and how? As users search and browse a company's Web site, send e-mails, submit queries, chat with live agents, and phone the call center, important patterns, trends and feedback emerge.

By leveraging that data, organizations can ensure a unified support experience across a multi-channel service interaction environment and communicate more clearly and establish a better relationship with their customers. Knowing what users want and need in real-time is how companies can maximize their customer service investments. Having this data also helps companies improve products and services, reduce costs by making support channels more efficient, and identify new revenue opportunities to maximize ROI. Such information can include survey results, content hole reports and gap analysis, ROI reports, call deflection reports, average hold time reports, average time-to-resolution by channel, and click-through reports.

Rather than trying to buy efficiencies in the form of a CRM tool and hoping for the best, companies need to find the right approach to continuously improve and evolve.

D. Blake Cahill is vice president of SafeHarbor Technology Corp., a customer support solution provider.

by D. Blake Cahill

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© Incisive Media Investments Ltd. 2005

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