The likelihood of success in a corporate CRM implementation can be improved from less than 15% to as much as 80% by the careful prioritisation and selection of key CRM approaches and business processes, according to a global survey published by IBM Business Consulting Services.
Interestingly, more expensive aspects of CRM (customer relationship management) such as technology implementation and data integration proved to be of secondary importance for CRM success compared to other aspects such as human-oriented steps that typically require a more conservative, incremental spend.
Why CRM succeeded
IBM's global survey, which was conducted to understand the attributes and strategies that characterise successful CRM initiatives, found that the two approaches most consistently cited as requirements for success were "change management" (e.g. training employees to use CRM processes, tools and policies) and "process change" (e.g. involving employees in the process of designing and changing CRM activities). When done correctly, these steps drive commitment to CRM throughout the company, which most often translates into sustained value.
Why CRM failed
The survey also highlights some key faults which can cause CRM projects to fail or prevent delivery of the expected ROI. In most such cases, the survey found that most companies were relying too heavily on technology systems as a global 'cure-all' or were down-playing the importance of senior management buy-in (which usually leads to luke-warm adoption and buy-in at employee level).
For those companies struggling with CRM, the study suggests that having the correct focus and commitment can significantly improve a CRM initiative's performance. But while the requirements for success seem clear, acting on them is no small task, which may explain why many companies seem to have difficulty implementing them. According to IBM, fewer than 15% of global companies currently believe they are fully succeeding with their CRM initiative, and another 20% - 30% are having only limited success.
CRM is being redeployed
The survey also revealed that a radical redeployment of CRM initiatives is underway, with many companies expecting CRM to help improve their performance and grow their business.
More than 50% of the companies surveyed said that CRM is "relevant" or "highly relevant" to improving performance from a shareholder value perspective. As many as 70% are also expecting CRM to deliver revenue growth by improving the customer experience and customer retention, and by influencing the development of new products and services.
"This report illustrates the value of CRM and the lessons learned over the past several years that have enabled companies to become much more successful," said Philip Grosch, partner and Canadian CRM leader for IBM Business Consulting Services. "Increasingly, business models need to be built upon the virtues of flexibility, real-time responsiveness, and a laser focus on the customer. A successful CRM strategy is at the heart of this business model."
The survey was conducted from late 2003 to early 2004 by the IBM Institute for Business Value, a division of IBM Business Consulting Services. The survey questioned 373 senior-level management (or above) decision makers from a variety of small, medium, and large enterprises. The full findings are available in a report entitled 'The CRM Global Study: Doing CRM Right'. The executive summary of the report has been made available on IBM's web site as a 24-page PDF document.
Other interesting findings from the survey included:
- CRM should be run at the corporate level or with a cross functional perspective. Nearly 75% of companies manage it at the functional level, such as marketing, sales, IT or customer service. Only 25% of companies run them from the corporate level, where a senior level team typically spans multiple functions and business units. When corporate units or cross functional groups run CRM, there is a 25-60% greater chance of success.
- Senior management in more than 35% of companies impede CRM success by portraying it as "useful but not critical". When senior management views CRM as critical or strategic, this attitude is a major contributor to overall CRM success. But viewing CRM as useful but not critical detracts from its success because it sends the message to employees and middle management that CRM is not a priority.
- More than 75% of companies do not realise returns on CRM initiatives because they do not fully utilise CRM after it is implemented. Only 14% of employees fully use CRM, due in part to companies under-estimating the value of stakeholder alignment. The companies that are most successful proved to be those that aligned CRM objectives with the priorities of their employees. Surprisingly, aligning CRM objectives with the priorities of customers is a close second - yet only 21% of responding companies view employee alignment as very important to CRM success.