BACK TO THE DRAWING BOARD
With CRM installations, practice makes perfect.
By Russ Banham

As WC Fields once said: "If at first you don't succeed, try, try, and try again. Then give up. There's no use being a damn fool about it."

Companies that have rolled out customer relationship management software know what Fields was talking about. It's ironic, too, since the concept of customer relationship management (CRM) software is simple: treat customers well and you'll always have customers.

There's only one problem with that concept - in reality, getting a CRM system right the first time is anything but a sure thing.

The list of companies that have implemented CRM systems during the past few years is a long one. But many of those systems are now gathering dust - software converted to shelfware - as employees look for simpler ways to do their jobs.

To be fair, CRM rollouts tend to be ambitious projects. Unlike other business programs, customer care software must often work across several channels, including websites, call centers, and retail outlets. Even makers of more robust, mature applications like enterprise resource systems have trouble getting their applications to work in several environments.

Deploying a CRM application the first time often leaves a lasting impression on the deployers. Take the case of travel site ByeByeNow.com, which spent US$8 million in 2000 on a well-intentioned CRM project that was meant to meet the needs of travel agents and consumers. Since ByeByeNow.com didn't want to compete against its travel agents, the e-tailer built a customer service infrastructure that allowed consumers to make purchases in several ways: they could buy from the company's website, a 24-hour call center, or one of its bricks-and-mortar travel agency franchises.

"It was a lofty goal," concedes Wendy Close, research director at technology consultancy Gartner, who has studied the rollout at some length. The return on ByeByeNow.com's US$8 million investment? Roughly one-third of the company's 250 franchise travel agents used the CRM system. Says Close: "Other agents resisted the change."

To fix the problem, ByeByeNow.com would have had to say bye-bye to more cash. But apparently its venture capital backers balked at throwing good money after bad. "It was forced to shut down its call center," notes Close, "and put the agency franchises on the block."

Hardly a happy ending. But ByeByeNow.com is not alone. Monster.com, the online job listings company, reportedly spent US$1 million in 1998 on a CRM solution to increase salesforce efficiency by providing "immediate" access to information on potential customers.

"Immediate" was a bit optimistic - the system was reputed to be so sluggish that field personnel couldn't download data on their laptops. This monstrous dilemma compelled the company to rebuild its entire CRM system from scratch, at a cost of a few million dollars more.

Ask Sales First

In fact, when it comes to CRM applications, it appears that many corporate managers are inclined to keep trying until they get it right. BMC Software Inc, for instance, launched two CRM initiatives that fizzled before finding its speed with a third.

"The first two projects were heavily driven by IT," concedes Jay Gardner, vice president and CIO at the US-based enterprise systems management company. "They turned out to be purchases of technology for technology's sake."

While the CRM software was made available to the sales force, Gardner says only 30 percent used the stuff. "It became clear that the rest wouldn't touch it unless there was a decisive and strong move on the part of management to require it, and high-level leadership from sales to carry the ball," recalls Gardner. "That was the turning point."

BMC learned the hard way - twice - how to implement a CRM strategy. "The previous efforts had very little involvement from sales management or sales professionals," says Joe Galvin, a Gartner vice president and CRM research director. "With two failed initiatives and skepticism running high, the likelihood of success for a third attempt seemed pretty remote." Galvin says the buy-in from senior officers, along with improved project management, made the difference. "The third time proved the charm," he notes.

Getting sales in front of the CRM project was also critical to the success of the third endeavor, says BMC's Gardner. "I was at a conference recently," he recalls, "when someone in the audience said, 'What if I can't get my sales executives involved?' I told him to save his money then."

Every Metric Tells a Story

Indeed, experienced CRM deployers point out that employees won't use CRM applications unless they feel the software will help them get their jobs done. "And they won't feel that," explains Gardner, "unless they're involved in the project."

Managers at BMC also discovered that it's crucial to change business processes before introducing enabling technology. "We reengineered most of the sales processes and many of the marketing processes prior to relaunching the CRM project," says Mark Meyer, the company's director of CRM.

One example: BMC completely redesigned its sales lead management process before relaunching its CRM system. Previously, the company didn't have a good way to bring all the leads into one place in order to funnel them out to the employer that owned the account. "By getting sales involved from the go," says Meyer, "we were able to gear technology to their needs."

Altogether, BMC involved 175 account managers, customer support staff, and other sales operations people in the third CRM redesign. Why the parade? The company's management wanted to "make sure processes fit what these individuals needed from the system," explains Gardner.

The business processes were designed around sales roles and their key needs. In fact, Meyer, the CRM guru, actually came from the sales side of BMC. During the third try at deploying a CRM system, he headed a cross-functional team dedicated to making sure the rollout was successful. That group included the director of finance, the director of customer support, and several sales and IT executives.

Gardner, as CIO, was held accountable for delivering a return on the project. "Fortunately, we'd learned quite a bit the last two times about how to set up meaningful metrics that would match CRM to our business objectives," he says. "We have many ways to help measure ROI, including cost per customer service call, cost per customer sales lead, and productivity of account managers by geography."

So far, those metrics are telling a different tale than they did the first two times BMC tried deploying a CRM system. For example, it now costs the company US$125 to process a customer order, compared with US$800 a year ago. And sales reps are saving two hours a week on average (a 7 percent improvement) getting hold of customers by phone. "Sales reps tell me the time they used to spend putting together sales forecasts they now spend on strategies for how to make that forecast a reality," says Gardner.

Perhaps the most telling metric, however, is the CRM take-up rate: nearly 100 percent.

Wait State

Dow Chemical is another company that invested millions of dollars in a CRM initiative that didn't gel for several years. Management at the US-based specialty and commodities chemical provider plunked down a couple of million dollars to buy Siebel CRM software licenses in 1995 - knowing full well years would pass before it would completely implement the technology. Explains Mack Murrell, Dow global director of customer interface, "Our IT strategy is to buy early, then wait."

In the case of its CRM initiative, Dow management held off implementing the software companywide for nearly four years. Executives at the US$27 billion (in revenue) company spent that time making sure business process changes were in place. "Companies often think CRM is just technology," notes Murrell. "But it is people, processes, and technology - in that order."

Close from Gartner says Dow's strategy is interesting. "They bought all this CRM software cheap because it was new," she adds. "It would cost other companies twice as much to replicate what they did."

In 1999, Dow finally rolled out its "Customer Interface Initiative" CRM strategy. That strategy calls for measuring customer interface costs and activities per contact channel across its global enterprise, a procedure that Close says is overlooked by more than 85 percent of organizations. "It basically wants to become the easiest supplier in the world to do business with," she notes. "It's still on that journey."

Indeed, Murrell says 2,000, or about 70 percent, of Dow's customer-facing employees are hooked into the CRM system, though the goal is all of the sales force by 2003. "We're up and running, with the solution implemented in all our call centers, inside sales, and in customer service," he explains. "The thing we're working on now is reengineering the entire order management process." And, he adds: "Once that is done, we can glue all of this together."

The gluing will probably take some time, too.

Russ Banham is a contributing editor at CFO.