Customer On The Edge

That is the question. No, not for the King of Denmark. Not for the Jenny Craig spokesperson, either. We are asking about the size of CRM programs.

A circumstance that I have been encountering with more frequency lately is one where things are summed up roughly as, one big program or a bunch of little ones? The typical situation goes something like this. A client organization is comprised of a number of business units and functions, each of which is looking into some form of customer management tool – SFA, campaign automation, managing contacts, managing service requests. Some groups share customers with others, some groups don’t, and some groups work with all the customers.

Likewise, some of the business units share information about customer activity with other business units. Some don’t, but they should. Customers don’t always call into the correct place and sometimes they get lost and sometimes that get taken care of.

This probably sounds like the poster child for a company that can benefit from an enterprise-wide CRM platform and should become a case study for the infamous 360 degree customer view.

Not so fast. This same company has a history of failed company wide initiatives. Different executives are in different places on the need to make a big investment in a large software program. And, one or two of the business units are on the verge of pulling the trigger, including approved budgets and selected software. Meanwhile some of the other groups are months or even quarters away from making any decisions. Going down the path of a single enterprise program would delay the groups with the biggest pain from getting needs met for longer than will be tolerable.

Sound familiar? What is the answer? Too big, or not too big?

Ten years ago the answer would have been automatic. The IT department would select a CRM platform and begin implementing for the groups that ask first, and maybe even for the groups that did not ask. However, by the third or fourth implementation it would be discovered that the data model for the first group does not fit the next group. Of course, today we avoid this by building a single data model first and then force all the groups onto it whether there is a fit or not. This has caused a backlash and in some cases mutinies where business units abandon the company platform and build their own CRM. And we are back where we started.

Can’t we all just get along?

For organizations with multiple business units and multiple customer types, it should not be a given that a single CRM platform and a single source of customer information is the correct answer. If there is a need and a benefit for an integrated approach, it should be considered. But that needs to be addressed first. Just because it is convenient for IT to support a single CRM software package does not mean it makes sense for the business.

For most of the organizations I work with there are three categories of requirements in these situations. First, there are the common requirements such as the need for a single forecasting model or the need to share a single customer identification number. Second there are best practices that are useful to share, but not mandatory, such as following a similar set of sales stages or using the same codes for service issues. Finally, there are requirements that are unique to business units, such as the need for distributor information in a single geography or compliance differences driven by legislation.

To answer whether a company should have a single or multiple CRM programs will be contingent on the ratio of common versus unique needs. I am not sure there is a single threshold that once crossed drives the decision one way or the other, but it is this ratio that needs to be examined and then the decision made whether there is strong enough need to drive conformance to a single platform or whether the agony of that conformance will outweigh the benefits.

Ultimately, the decision needs to be made by the stakeholders who will benefit from the common approach, but also pay the price of the conformance (and the length of time it takes to get everybody up and running with one approach). Enterprise wide CRM is a challenge, and not enough organizations have proved it to be successful. That does not mean it is not right for your organization, but you do need to go into this with eyes open and make the decision with all the stakeholders at the table.

Posted by Matt Johnson at 05:04 PM | Permalink | Comments (0)

So, why do I keep running into client organizations that, for some reason, believe that e-business is something separate from their other customer interaction requirements represented within their CRM programs?

Working with customers on the web is just one form of CRM, albeit a relatively new one. You should use the web to attract customers and generate leads. If appropriate, you should look at selling products or services over the web. And, whereever possible, you should be using the web to manage service interactions. These are all normal CRM related activities, but performed with the internet as the channel rather than human contact.

However, many of the organizations that I meet with feel they need to have a separate strategy for managing these interactions – a strategy built and managed outside of the CRM program.

The problem with keeping it separated is that it can be sub-optimized if left un-integrated. The web is often the first point of contact from a search. It typically serves as a key point for self service. A landing page typically serves as a platform for e-mail marketing. Monitoring web activity is a fundamental mechanism for lead nurturing. E-commerce sites can serve as a primary order entry source. And, increasingly, the web is becoming the preferred partner communication medium. How could these be separate from your other CRM activities and function optimally?

CRM strategy should encompass every channel of customer contact, whether for acquisition or retention, including partner relations. The web is simply one of the channels that should be within that strategic framework. The web channel can serve as an ability to both extend reach out to the long tail, but also to be the virtual receptionist for your best customer. The million miler wants to have self service access when working late at night from a hotel and wanting to print a boarding pass. Likewise, the once a year flyer should be encouraged to your airline through easy reservation booking on your site.

If you don’t have a web strategy, you need one.

If your web strategy is separate from your CRM strategy, they need to be combined

Most importantly they need to be integrated – not just identifying the preferred channel for each customer segment, but specifying the best combination of channels for all acquisition through retention initiatives. In the old days at Sears & Roebuck the stores were for the city folk while the catalog was for the rest of us. Today, the line is blurred and we must assume that any buyer can demand access to multiple channels for even a single transaction, including your web.

Don’t let that e get separated from the C, R and M.

Posted by Matt Johnson at 10:20 PM | Permalink | Comments (0)

Last week was another first for me. Yes, I had my inaugural taste of fried pickles. Perhaps some of you out there have no experience with this culinary oddity, while some of you might wonder how it is possible that a person with nearly half a century on this planet could have gone so long without such a staple in their diet.

The concept of a fried pickle had never occurred to me. What is most strange is that it is a food item that has been doubly processed. First, the cucumber goes through the pickling, which is typically the end of the road. But, the fried pickle then goes through the whole batter and fry process, an extra set of steps for something that is already supposed to be ready for consumption.

I have run into other food items like this. The chocolate frosted glazed donut comes to mind. Again, this is an ingestible product that has gone through a preparation twice. I always wonder about these – are the glazed donuts stale, so they add the extra chocolate topping to make them appealing again?

Did these fried pickles follow a similar path? Did the vinegar and garlic wear out causing them to require a cooking process as a form of second sterilization? Is this a lipstick on a pig situation – covering up something that is not quite right with something that is a superficial betterment?

Of course you figured out where this is all leading. How many CRM systems have been deep fried in an attempt to make them more appealing? We get asked all the time to get involved with this. The CRM system does not satisfy anybody, but if we just layered an extra topping of analytics it would be just fine. Or is this is a situation where we are deep frying the CRM system with even more capability such as adding lead scoring to an already good lead management.

So, you might ask, was the deep fried pickle good? Actually, it was really good. Just like enhancing lead management with lead scoring is good. But, that situation starts out with an already good lead management capability. Too many times I see the stale glazed donut with a request for adding chocolate in an attempt to improve it.

Admittedly the metaphor gets a bit weak here, so give me some journalistic license. If your CRM system is like a stale glazed donut, please don’t expect that a chocolate topping of analytics or any other pleasant distraction will make it less stale. You have to fix the donut, not disguise it. In the case of the stale donut you simply start over with a fresh donut and cut your losses. This may not be the case with your CRM system. You might not have to put it in the trash compacter – it is likely improvable. But, the point is, don’t try to cover up the problem with a superficial improvement. Fix the problem, and then add more capability.

Enjoy those pickles.

Posted by Matt Johnson at 10:54 AM | Permalink | Comments (1)

I finally got the boat in this week, early enough in the weekend to actually enjoy it for a few hours. It is truly amazing how many variables have to work out each boating season in order to have the vessel afloat rather than in dry dock.

There is the mooring that has to be inspected and then placed on the shore at low tide. Then there are the eleven dock sections that have to go onto the flatbed one at a time, in order, hauled to the launch, and motored into place – God willing and the tide is right. Next, the dinghy and its motor have to be put in working order, which was quite a to do this spring. Of course there is the boat itself – unwrapping the winter cover, chasing out the squirrels, getting things cleaned up. And up to this point we have not even started up the engine to see if it is going to cooperate one more year.

One of these items chooses not to cooperate and it becomes a set back that will ruin the goal of being out on the water for a sunny Sunday afternoon. It takes a lot of perseverance and faith that everything is going to fall into place and the plans one has made for guests out on the boat will be realized. But, to pull it off you have to go forward with confidence otherwise that sunny Sunday afternoon is going to happen without you. Each portion of the plan has to be attended to with the expectation and confidence that all the other elements will also pull through.

Managing a CRM program requires this same confidence. You have to believe once your plan is in place and your gears are in motion that each of the elements will come together. You have to trust your process and you have to trust your team. You have to move everything forward.

He who hesitates is lost.

Being overly cautious to avoid a risk and causing a delay may prove more costly than moving forward with confidence and making an error, especially when consistently over cautious. Needing to get the messaging just right can make you miss a milestone. Getting absolutely everyone’s input can lead to a watered down product. Attempting to boil the ocean by including each and every requirement may lead to nothing accomplished.

Set out with a goal. Build your plan. Trust your process. Adjust with the feedback. Keep moving forward, the rewards are wonderful.

Posted by Matt Johnson at 01:17 PM | Permalink | Comments (0)

Back in the last millennium I was introduced to JRR Tolkein in a literature class as a freshman in high school. The teacher wanted to give us an opportunity to learn a bit about the dynamics of change. The quest at the center of the Lord of the Rings saga was all about the transformation of Frodo as an individual and not so much about all the other stuff going on.

Fast forward a few decades and finally some decent cinema emerges with hobits, ents, wizards, and orks. It was magnificent. The whole thing came to life, but the story changed a bit. The version on the screen was about good versus evil and a messianic character with long greasy hair. The Shire, however, became real, along with Rivendale and Morder. It was fabulous.

Next, I find myself in London with time on my hands one evening and opportunities in the West End. The problem was that I couldn’t decide between Billy Elliot and Wicked. But, just when I had thought I made up my mind, there was a poster as I travelled up a particularly long escalator on the tube. It was a picture of a beautiful elf princess, looking a bit like the daughter of a 70’s rock star. The Lord of the Rings was playing at the Drury Lane – my plans were settled. – no Wicked Witch of the West.

This is where the story takes a turn. The stage version, which by the way was marvelous, is all about going through the process of change. My freshman literature teacher would have been so pleased. They got it right. There was an prevailing emphasis on what one has to give up in the process of achieving something important and worthwhile.

Naturally I immediately thought about CRM. You must all think that I am seriously nuts.

So, give me some room with this. CRM is truly about taking on a quest. I don’t want to over dramatize this, but it is really true. To be successful, you have to give up certain things. You have to let go of some old stuff in order to have what is new in the CRM vision. For example, most of the time there is a certain amount of independence that may be lost with a CRM program – usually there is some new accountability or discipline involved. Much of the time you have to put in a little extra effort, and sometimes that effort is for the benefit of somebody else initially and does not return as a benefit to you until later in the cycle.

You cannot get to the CRM end point without giving up something. Just like Frodo. CRM is not about a battle of good versus evil. It is about figuring out what works well, and not doing things that don’t work well. Although that is a significant battle, however.

One thing that I have not completely figured out in the comparison between CRM and the Lord of The Rings is the fact that Frodo does not get to reap the rewards of his successful quest. He goes on to something else (something better we are expected to believe). Not sure what the message is here relative to those who lead successful CRM programs.

As a final note, I should state that it is a noble thing to attempt to portray thousands of pages of fantasy within a single production on a stage and the limitations of live performance. The critics have unfairly ravaged the production. As a result, the time is running out for seeing this extremely entertaining, mesmerizing, and ultimately true to the story line stage version of a classic piece of work. Gollum alone is worth the price of admission.

On the other hand, shortly after finally finishing the Trilogy back in the 70’s I had the opportunity to attend a poorly reviewed production of a musical about gangsters, also at the Drury Lane. Chicago came back two decades later as a block buster. If you can’t get to London before the end of July, perhaps you will have another chance to see this CRM metaphor on stage involving little people with hairy feet.

Posted by Matt Johnson at 01:59 PM | Permalink | Comments (0)

The sales guys certainly can make it appealing, but how do you know if renting a CRM package rather than buying it makes sense for you? Software as a Service (Saas) is gaining momentum within CRM and more and more companies I visit are asking if it makes sense for them. It might have been easier to answer this question in the past – smaller companies who did not want to make the investment in a sophisticated package could ease into CRM with a hosted solution without a lot of fuss. But the separation of whether or not it makes sense is getting narrower.

There are some factors to consider if you are looking into this form of CRM for your business:

I believe one of the strongest arguments for going hosted is if you plain and simply don’t have the bandwidth to manage the complexity of a CRM platform internally. Here it is obvious that smaller organizations are likely going to fit here. You may not want to invest in the CRM competency because you want to keep your investments more focused on the core of your business. That is logical.

However, small divisions and functions within large organizations can fit this mold as well. This is most true with those groups who have a different business model and customers than the rest of the enterprise. These folks have been dragged along by corporate IT to conform to the chosen standards, but CRM for everybody else does not fit for them. This is the perfect situation for a hosted solution, which the industry has now labeled hybrid CRM – some folks get on premise and some get a hosted package. This leads to a lot of happy customers for big IT functions.

Another fairly obvious consideration is the length of time a company expects to utilize a hosted CRM system. There has been some conventional wisdom accepted in the past that SaaS is particularly useful for an organization that wants to have a CRM system for the short term, prior to moving to a different system in the long term. There can be many reasons for this need, such as an impending business change or a preference for minimal expenditure. Under these circumstances, a large outlay of investment for a CRM system that will be changed does not make sense. The thinking has been that if you plan to keep the system for less than three years, hosted is the way to go. On the other hand, the cost of renting the software starts to add up after a while and it eventually will make sense to own rather than lease if you want a lower cost of usership. Again, this seems to be around the 3 year mark.

I find this 3-year price break perfectly logical. However, I have seen too many companies that first try out CRM and then change it radically, that they would have been better off renting for a while prior to jumping in the CRM deep end. If you really are uncertain what you want, but you know you want to have CRM quickly, I believe it is much more affordable to rent for a bit and then buy when you really know what you want.

A third factor that is gaining some ground is the notion of integration. Are you attempting to plug your CRM system into many data sources to have the best picture of your customer? If so, you may want to invest the needed integration effort in an on premise solution as the limitations of what you can do with a hosted package may impede your integration requirements. The vendor sales folks will surely argue the point, but we wary on this factor.

There is a fourth factor that seems to have resurfaced as a critical consideration and that is the notion of data security. I have had many clients who plain and simply were unwilling to store there confidential client data in a data condo complex side by side with others. This factor has some interesting dynamics going on in the market place at the moment. On the one hand the one leading vendor maintains their multi-tenant approach is completely secure. On the other hand, the other leading vendor has offered a single-tenant service to quell the concerns and now offer a more secure solution. Is this service being offered just to satisfy the perception of a potential security breach or is there a potential for a security breach? It is not entirely clear to me, but I raise it for your consideration.

The final factor that I raise for consideration is whether you are looking for a full suite of features to satisfy a broad range of requirements across the enterprise or whether you need a simple solution for a few set of common requirements. Certainly the hosted solutions started out simple, but they have evolved and are becoming quite sophisticated. The differences are narrowing in this case and you might not want to rule out SaaS just because you feel that you have a sophisticated set of demands. However, the one area that remains unsatisfied is a broad set of industry tailored solutions across the different vendors. Many of my clients have ultimately ruled out hosted CRM because they would spend more money than they preferred customizing packages to fit the look and feel of their business processes. The on premise options do hold an edge in this regard.

So, do your homework and don’t get overly influenced by a flashy demo touting the bells and whistles that you may or may not require. Determine the criteria that you need to satisfy and carefully compare the options before you buy (or rent).

Posted by Matt Johnson at 07:24 PM | Permalink | Comments (0)

I recently stumbled across an article by the CEO of a performance management firm that made a declaration, which caught my attention. Making a point centered on the basic premise of their business approach, the article proposed that you can achieve improved performance through one of only two approaches:
- increase output while keeping cost steady
- drop cost while keeping output steady
The CEO also conceded that there was a third approach formed essentially as a hybrid of the two above. This executive then went one step further to hint that the hybrid approach was preferred.

Perhaps it is a character flaw, but when I read an article that makes a strong statement about a certain way of doing things being the best, I tend to reflexively examine whether this is true and then look for reasons to support or refute the claim. I just can’t help myself. In this particular instance I came to the conclusion that the assertion made by this corporate leader was incorrect on at least two points.

First, I think there is a fourth option – increase output significantly by making changes that increase costs less significantly. And, I also reasoned that the better answer to which option is best is, like most things in business, it depends.

As a consultant it has been ingrained into my head through expansive training to answer, “It depends” to a myriad of business questions. Further, that training has often included as a chief illustrator of this answer the infamous S curve.

Picture if you will the ubiquitous business chart with investment on the horizontal axis and return on the vertical axis. Under many circumstances when we examine the relationship between investment and return a curve forms that takes the shape of the letter S. At first when you increase investment the return slowly rises. Eventually as you pour more investment you reach a critical threshold where the return rises more sharply. Then after yet more investment the rate of return drops and further additions cause diminishing returns. A classic S curve chart.

Chances are there are reasons why you will be able to improve throughput with some additional investment – but it completely depends on where you are on the S curve. When you are on the bottom half then this is the option for you. If you are on the top half, going after more output with extra investment may not give a favorable payback. Taking cost out seems like a more reasonable approach.

However, this increase-the-investment solution option is best when you have the ability to go after more market share. On the other hand, if there is no more market to go after, pulling cost out may be your best bet while maintaining output and share. This is a popular approach in a declining market (although it perpetuates the declining market when everyone does the same thing all at once.)

Now, if you find yourself on the bottom of the S curve but you can’t get any working capital from lenders, then that hybrid approach mentioned above starts to look attractive. Take some cost out, and then go after a little improvement in output by reinvesting the savings. Repeat as needed.

So, the bottom line in this case is that there are a number of options for improving performance should that be something you would like to have happen with your marketing, sales or service teams. How you go about achieving that performance should be contingent upon a number of factors best considered prior to embarking on that performance improvement initiative. Good luck and stay tuned for a lively discussion on another favorite, the O curve.

Posted by Matt Johnson at 01:10 AM | Permalink | Comments (0)