Eeny, Meany, Miney, Moe... Bringing Logic to CRM Selection

Reprinted from The Triangle Technical Journal

First, the bad news… If your Customer Relationship Manage-ment (CRM) system implementation fails, there is no one to blame but yourself. And with the average cost of a CRM package hovering at $125,000 and implementation failure rates of 50 to 70%, it is not an investment decision to be made lightly. Shopping for a CRM solution can be like walking into a car dealership on a Saturday morning. Oh, the choices…they're all so shiny and chock full of options. And the vendors, we can't forget the vendors — so knowledgeable, so helpful — and of course, they only want us to have the optimal technology solution for our organization and *wink-nudge* a little extra functionality thrown into the mix never hurts. But ultimately, the selection decision rests squarely on your shoulders, and it is imperative that you make an informed one with eyes wide open.

One of the biggest myths about CRM technology is the idea that any company can install it and expect results. But CRM is not just about technology — it's about a new way of looking at your organization. It is a comprehensive approach which provides seamless integration of every area of an organization that touches the customer - mainly marketing, sales, and service - through the fusion of people, process, and technology. And yes, a CRM application can enable effective Customer Relationship Management — but only if an organization has the right leadership, strategy, and culture. It's no secret that successful CRM is about putting strategy before software.

So how do you know if your organization is ready for a CRM application? First and foremost, it is important to view a potential CRM investment with an open mind. If your CRM application is simply viewed as a software purchase, then you are already well on your way to failure. A CRM system cannot work unless the data it harnesses is used strategically to better serve your customer. Therefore, true buy-in is required throughout the company — from the CEO to the receptionist.

Next, the ease with which a CRM system can be absorbed into your organization is tied directly to the maturity level of processes in customer-facing functions. Your process maturity levels can be determined by using the following scale developed by Watts Humphrey of the Software Engineering Institute:

Level 1: Processes are “anything goes" and lack even rudimentary predictability of schedules and costs.

Level 2: Processes are stable and repeatable. There's rigorous management of commitments, costs, schedules and changes.

Level 3: The organization has defined the methodology and can consistently apply it to standard metrics. At this point, advanced technology can be usefully introduced.

Level 4: The organization now has a foundation for continuing process improvement.

For obvious reasons, companies not yet at the repeatable process stage will find it difficult, if not impossible, to succeed with a CRM system. If your organization has not mastered Level 2, then a CRM solution is not for you. Instead, your organization should focus on basic process definition and automation. Implementing a CRM system on top of chaos will only lead to more chaos.

According to Computerworld magazine, questions to consider when determining your maturity level include:

  1. Customer Maturity: Is the same unique customer identifier used in at least two of the following systems: sales, ordering, billing, customer service?
  2. Process Maturity: Do you have repeatable processes in Marketing, Sales, Order Management, Billing, and Customer Service?
  3. Systems Maturity: Do you have a data warehouse that consolidates information about customers and products? Do you have an automatic interface between sales and order management and between customer service and sales/order management/billing systems with no double entry required?
  4. People Maturity: Are the employees of your organization sufficiently motivated to embrace CRM concepts and tools?
  5. Start-ups: Is your company less than 2 years old or still in start-up mode?

An answer of “yes" to a majority of the questions (with the exception of number 5) would indicate that your organization is ready to consider a CRM investment. But to be successful in your decision-making, there is still more to be done.

As you move into evaluating CRM technology, there is simply no substitute for allowing a structured list of requirements to dictate your technology decisions. The key question to ask when defining necessary functionality is — What aspect of our customer-focused processes do we need to support with technology? The data you collect, analyze and report on should directly support your business objectives. After you've defined functional requirements, rate the importance of each against the needs of your customer and the goals of your business. Then map these functions to the CRM technology candidates that can perform each of these core tasks.

As you narrow your product choices, you must investigate further to determine how the remaining solutions measure up. It is imperative to consider such issues as: Is the function available out of the box or only through customization? Can you do without a particular function? Are you willing to change your process to follow the tool's workflow? What is the product's overall usability? By comparing the strengths and weaknesses of your CRM options against your most critical business requirements, you will be able to further whittle down your product choices. At this point, it's time for your IT managers to address the technical issues, such as compatibility and response times — eliminating those products that are so misaligned with your existing technology infrastructure that the cost of implementation would exceed any benefits gained.

Having reduced your CRM options down to the 'short list', it's time to talk to the vendors. Be sure to have a structured set of questions developed prior to the interviews. Significant ones to include:

  • What major CRM functions does your product suite provide?
  • In cases where you don't offer certain functionality, do you partner with other vendors? If so, who?
  • How much is it really going to cost (i.e. customization, personnel, equipment, training, ongoing support, annual upgrades)?
  • How many other installations of your product are there in our industry? With who? How long have they been fully operational?
  • What is your product's average implementation time?
  • What is your implementation methodology?
  • What is your company's quality philosophy?
  • Does your company or a partner provide implementation help? If a partner, who?
  • After development begins, what do you see as your ongoing role with our project?
  • Is your product Web-based?
  • Has your product dealt with customer data volumes similar to ours?
  • Has your product dealt with transaction volumes similar to ours?
  • Can you provide us with at least three client references for similar projects?
  • Does your software work with our existing relational database or data warehouse product?
  • How do you migrate data to/from your product into other tools?
  • Do you allow end users to extract data so that they can use it locally?
  • Can you provide a published data model?
  • Is there a development toolbox that includes industry or functionally oriented templates?
  • Does the product provide data mining or other advanced analytics?

Selecting the right CRM solution is no easy task. Before you make your final investment decision, you need to have a clear sense of how much it is going to cost and how long it is going to take to implement. That means asking tough questions. After all, you need to make sure the vendors you are considering are responsive to your needs. If you can, see if they will let you use the system for a trial period without making a long-term commitment. So what's the good news you ask… It is that there are some very good products and services out there to help you maximize your organization's potential through better customer management, targeted selling efforts, and focused customer retention. All you have to do is find the right one for you.