M Is for Management - A Critical Element in CRM

(Originally published in the September/October 2003 issue of AFSMI's Sbusiness.)

By William K. Pollock and Leo A.P. Moerkens

Most services managers have at least a fair understanding of who their Customers (i.e., C) are, and what kinds of Relationships (i.e., R) the business has with them. However, even the "good" managers are often deficient in their full understanding of exactly how to Manage (i.e., M) those relationships. In some cases, it may be that the manager has the basic understanding - but not the tools - to fully manage the relationships. In other cases, the manager may have neither the tools, nor the understanding, to make it work. Of course, the latter is the worse of the two scenarios, although in either case, it is abundantly clear that without M, there can be no R and, ultimately, there will be no Cs! There is no question about it - services organizations cannot afford to let Management be the weak link in their Customer Relationships (Figure 1).

Figure 1

It may be argued that a well-managed business is all you really need in order to have an R with your Cs - and that a good M, in fact, trumps R and C overall. But, can your business really risk that gamble, or do you need to focus more squarely on your R in order to keep your Cs happy? These are all critical Q&As to consider before going down the CRM path - especially if you want results ASAP.

Based on what we have seen in a number of our past and present client relationships, we believe in order to ensure that a CRM implementation will be as successful as possible, it is critical to lay out a realistic, structured, and formal management plan at the very beginning. There are many components of CRM that will have to be undertaken, each of which will ultimately impact the chances for program success. The only way that you can succeed at all, will be to manage each of the steps, all along the way, while providing easily-accessible and effective mechanisms for team building and stakeholder "buy-in"; knowledge gathering and information exchange; process evaluation, assessment, and (if necessary) reengineering; program monitoring and tracking; ongoing maintenance and modification; and company-wide communications (Figure 2). There are many facets to a successful CRM implementation - and they all have to be effectively managed.

Figure 2

Managing CRM.
Managing CRM is comparable to managing any other aspect of the business - with the one main difference being that successful implementation will be critical for the business' overall survival! If you do not manage the CRM process effectively, you might ultimately still have some customers, and you will definitely have a relationship with them - although it might be a bad one, and one that may not last very much longer! This is why every business needs to pay a considerable amount of management attention to CRM - to ensure that it establishes optimum relationships with its customers that will ultimately bring long-term profitability to the company.

We have seen many companies that have implemented their "so-called" CRM software package and think that they have everything in place to manage CRM. However, most of them have yet to see a desired return on their investment. CRM will only work - and only provide you with a return - if you integrate it into all aspects of your business planning and management. This requires full integration of your CRM initiative into all of the phases of your normal business planning activities - or even better, full integration of your CRM philosophy into the overall business planning process. In order to accomplish this, you will need to approach CRM as an implicit component of managing your overall business. CRM is not an umbrella to be placed on top of anything else - it is an integral part of managing your business.

To improve your chances for success, and to be able to manage the execution better, you will need to start first with your business vision; translate this vision into reasonable and achievable goals and objectives; revisit your business processes; analyze the information needs; and validate the organization as to whether it needs any adjustments (or reengineering) to adhere to your adopted CRM philosophy, and changing business and technical environments. Last, but not least, you will also need to put a measurement system in place to manage the overall execution. Once the appropriate measurement system is in place, you will then need to update it regularly.

The changing world, impacted by advances in technology and the web, creates new opportunities for business managers to re-think their original vision, and adapt to the changing environment. CRM is key in facilitating this thinking, and gives all of us the opportunity to integrate each of the aspects of the business to solely focus them on the customer. The exact outcome with respect to applying your vision will, of course, be greatly dependent on the specific business environment in which you operate. However, we have typically seen that all an established business really needs to do is to review, assess, and adjust its existing vision on a regular basis in order to stay on top of the opportunities, and to improve and grow the business. Examples like the introduction and proliferation of e-business, S-Business, and the shortening of traditional communication lines are good examples of the changing environment that continually requires us to re-think our business vision.

Goals and Objectives.
The next step is to translate your vision into specific goals and objectives for the organization that can be recognized and understood by all of the people who have to execute. At the executive level, with input from the external and internal environments that impact the business, the corporate vision will need to be translated into well-defined and articulated goals and objectives, each of which must be prioritized with respect to their relative importance, assessed interdependencies, and anticipated investments (e.g., of time, resources, and expenditures, etc.).

During this phase you might also need to have some external research conducted to validate the outcomes and, possibly, even a feasibility study to collect enough information to support sound decision-making for moving forward. Ultimately, these goals and objectives will be integrated into the organization's overall (rolling) business plan that will serve as the blueprint for execution and control.

Business Processes.
In most situations, the newly defined (or re-defined) vision, and goals and objectives, will lead to changes in the business processes. This is quite normal because the "old" business processes are generally based primarily on the "old" business situation - as well as the "old" systems with their inherent limitations, and an "old" communications technology. Here is where the best opportunities may be realized with respect to the integration between information and communications technology. Business processes can almost always be simplified, integrated, and accelerated by applying new technology.

This is what drives most of the software companies that market CRM software - they see the advantages of the new technologies, package a product out of it, and try to sell it to you! This is also the biggest potential risk of CRM: thinking that the acquisition of a pre-packaged technology solution, in and of itself, will make everything better - all at a lower cost, and resulting in higher levels of customer satisfaction and loyalty. However, we strongly believe that the use of a pre-packaged CRM software solution that does not enable you to reassess and, if necessary, reengineer your existing business processes, can lead to disaster. Ask any of your colleagues who may have done so, and who are still waiting to see a return on their investment!

Information is the key to successful CRM, and is crucial for the ultimate success of your business. However, any decisions with respect to Information and Communications Technology (ICT) at your organization (i.e., the way information is obtained, processed, distributed, and applied, etc.) will require an in-depth analysis of the business' mission- and business-critical information needs. While most organizations will claim that they do not have all of the information they require to make effective decisions, many also run the risk of suffering from over-information - or worse - mis-information.

The availability of information is virtually unlimited on a global basis with the current technology and, as such, we need to ensure that we are always in a position where we can effectively plan to obtain it, where and when we need it, and ultimately, how to prepare the organization to properly use it. The biggest risk is that, sometimes, the easy availability of massive amounts of data and information, at the customer and transaction levels, create even more confusion and, if not managed properly, may result in arriving at the wrong conclusions. Accordingly, this area requires not only a careful design of the information acquisition structure, but also a sound plan for its analysis, presentation and distribution.

The changing business processes, combined with increased information access and availability, generally results in a new environment that forces managers to re-think the business' organizational structure. For example, with respect to the external business environment, contact centers are a good example of where the right balance between information and empowerment can improve your customer relations dramatically - if designed and implemented well. However, it can also be counter-productive if not designed correctly and implemented in a fragmented manner. In this case, the typical result is that only more barriers are created. In internal situations, we have seen a streamlining in communications resulting through the integration of ICT that eliminates many of the organization's "so-called" administrative steps. Even so, in either of these examples, it is still critical to investigate the alternative possibilities for your business' specific environment and situation, and to design the most optimum solution to address your specific business needs.

This should also lead to a re-thinking of the business' overall organizational structure. Historically we have seen most businesses organize themselves primarily in "vertical" structures, such as Sales, Marketing, R&D, Manufacturing, Service & Support, etc. However, the new thinking now allows us to look at organizational structure very differently, and to think more in terms of Internal, Supporting, and Customer functions along a workflow. This results in the creation of "new" organizational structures that may be much more functional while, at the same time, eliminate much of the sub-optimization behavior of the past, ultimately resulting in lower cost and/or higher profitability (Figure 3).

Figure 3

Last, but not least, in this process of implementing CRM, is measurement - you cannot manage it if you don't measure it! As stated earlier, in order to make what information is available to whom and when, it is critical to focus the organization on the required tasks and execution. Similarly, by creating a "dashboard" at different levels and for different functions, you can create a focus that will help your managers to identify specific areas to act on as early as possible.

A careful design is also necessary to ensure that an appropriate and complete measurement system is created to help in managing the business. An incomplete or inadequate system will typically focus the organization on only single aspects and will not lead to the desired overall results. The system also needs to be designed to support different functions in the organization at all key strategic, tactical, and operational levels. A comprehensive system that is balanced and complete is critical for success, but requires a great deal of thinking and preparation. The worst situation we have seen in our practices were measurement systems that were "reactive", or based on problems that required immediate or short term solutions, without looking at the whole picture and creating a balanced and comprehensive measurement system.

All of the efforts you put into building your CRM program will become worthless if it is developed in isolation, and not communicated completely and effectively to every level within the organization - as well as to your vendors, partners, and customers. If any of the parties involved in the change process do not clearly understand what you are trying to accomplish, and how you are planning to get there, you will simply be setting yourself up for failure! Communications and education are critical, not only during the execution phase, but also in the earlier planning phases. You will be amazed at how much valuable information you can obtain from the input and feedback you receive from your employees during the planning phase while, at the same time, creating stronger "buy-in" for the further changes that will need to be implemented.

Let's look at each of these "M" aspects, and see how they tie in directly to your customer relationships (Figure 4):

Figure 4

Our conclusion is that to be able to manage CRM effectively is dependent on how well you have designed, implemented, and applied the overall system. It requires a careful balance between your business processes, ICT tools, and organizational aspects that is only possible if you have first developed a clear vision, and set goals and objectives based on the CRM principles.

We have seen many companies implement "so-called" CRM systems as a technology solution and failing because none of the other key components of the organization were addressed or changed. In these cases, only marginal improvements can be realized at best, and there is likely to be an exceptionally long ROI period as well (despite the pre-calculated time that was initially anticipated in the preparation and sales cycle). The risk of approaching CRM primarily as a software technology solution vs. an integral business solution is even greater because it often leads to the wrong choices of technology, thereby limiting the chances for success even more - if not altogether!

We realize that we have not been very specific in some of the aspects of managing the CRM process. However, because of the divergent characteristics that define different markets and business environments, it is our experience that there is no single, standard "roadmap" for this journey, and that you will have to do your homework yourself - or through the use of outside market research, consulting, or implementation support - in order to be successful.

You can't buy C, R or M at the A&P, nor can you get a license to practice CRM at the DMV. CRM must come from within - from the CEO down, and all throughout the organization. Sometimes you need to go "outside the box" to find all of the elements that will make it work, and you'll almost always need some outside help to get started, or for design, configuration, and implementation support. CRM isn't for the mild-mannered, nor is it strictly for the progressive over-achievers. It is for every business that has customers, employees, partners, vendors, stakeholders, stockowners, or any combination thereof. However, while it is for every organization, it will only work effectively for those organizations that really know how to M, in addition to R'ing their Cs.

The authors of this article have also written AFSMI's new book entitled, "CRM Preparedness: Results of the AFSMI CRM Preparedness Survey". For more information on the book, or to purchase a copy, please visit AFSMI's website at www.afsmi.org.

William K. Pollock is president of Strategies For GrowthSM (SFGSM), the Westtown, Pennsylvania-based services consulting firm specializing in strategic business planning, services marketing, CRM consulting, market/survey research, and customer satisfaction measurement and tracking programs. Bill may be reached at 610-399-9717 or via e-mail at wkp@s4growth.com.

Leo A.P. Moerkens is president of Hands-on Management Consultants, Inc. (HoMC), an international management consultancy firm that assists clients in developing and implementing operational business improvement programs. Leo can be reached at 203-888-1671, or via e-mail at LMoerkens@Hands-onMC.com. HoMC's website is accessible at www.Hands-onMC.com.

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