A Philosophical Look at Customer Relation Management
- By Matt Migliore
Six CRM Gurus Join MIDRANGE Systems for a Roundtable Discussion about the Culture of Customer-Centric Business
In the business world today, definitions of customer relationship management (CRM) are nearly as plentiful as the number of organizations trying to implement it. And, in the midst of their struggle to get a firm handle on what exactly CRM is, most organizations waste a ton of time and money before they realize they have no idea.
In an effort to reveal the pitfalls and uncover some best-practices and maybe even develop a clear definition of CRM, MIDRANGE Systems recently held a roundtable discussion with six gurus from the CRM.Talk online community - a segment of an industry Web site, CRMGuru.com, dedicated to helping build customer-focused strategies. A largely philosophical exchange, the conversation touched upon a wide variety of issues associated with implementing CRM in a modern-day business environment.
It's Not About Technology
MIDRANGE Systems: If an organization is under tight constraints from both an economic and IT resources perspective, what preparatory measures can be taken to increase the probability of a successful implementation of a CRM strategy?
Bill Brendler: I don't think that I see a difference, even if a company is understaffed and were dealing with a smaller group, and so on and so forth. I don't see a difference, in a big way, in the steps that we talk about pretty much. There's got to be some kind of strategy. There's got to be a mindset change. There's got to be a bunch of processes that they look at that go out to the customer. Hopefully, there's not 20 of them, because they're not going to get anything done. And, you've got to make some changes to those processes and re-engineer them. And, you've got to make some change in the organization. You've got to tie the backs to the front. I don't know how to do [CRM] differently, no matter what the size of the company, because those are the things they have to go through to get [CRM] to work.
Dick Lee: While I agree with Bill [Brendler] certainly on the steps, and I think those are the same no matter what size company, what I see in working with midrange companies is a tendency for a small, understaffed IT staff to lay back and not get involved in the values change. Then, down the road, they're presented with a sea change in the way systems are organized to help the company become more customer-centric. And, they dig their heels in and say, "We can't do this ... we're not going to do this."
A mistake that midrange companies often make is not having IT be part of the values change. If IT is on board and understands why things have to change, what has to be done differently, who does the work becomes less important. To me, one of the critical differences in a midrange company is that you typically either have to bring in a systems integrator or rely on a very technically-attuned CRM software implementation team to create the integration rather than having it driven internally.
Mei Lin Fung: I don't see CRM strategy as just the IT implementation part of it. If you've got an IT staff who understands that CRM is going to be an important part of the future, one of the important things to do is actually to find a business champion for CRM somewhere in the organization. And, work together to partner up with them to start to define what that CRM strategy should be, so that the IT staff is not blindsided by things coming out of the woodwork. But, actually, take some initiative to find who's going to pop this stuff out of the woodwork, and start to work with them right from the beginning.
Jay Chang: Part of the reason that IT staffs kind of dig in their heels, and don't want to participate or assist in CRM or any other type of implementation, is that if you look at the types of things that they typically do, their duties are around the day-to-day operations of the company. So, you're maintaining servers, you're making sure that workstations are up and running. I think to a certain extent they feel kind of resentful that they are not necessarily always included in the strategic aspects of the company.
So, if your resources are tight, instead of bringing in a systems integrator that is going to serve to deliver this new capability to the organization, what you can do is bring in folks to replace the day-to-day mundane stuff that the IT folks are doing, because that's contract labor and that's fairly cheap to obtain. Then, you let these folks be part of a very critical part of the company.
And then, along with the business champion, they can go ahead and move that whole strategy forward and become an active participant in the overall goals of the organization instead of kind of following along and basically inheriting something that they were not part of creating.
Dick Lee: In part, I agree with Jay [Chang]. But, I've done some research working in conjunction with Microsoft on issues of defining the differences in IT capabilities between small and mid-market companies, and one of the things that's very pronounced is that the systems integration skill level, in a company - say under $100 million, often under $150 million in revenue - is distinctly lower than when you hit that higher grade.
And, while I think in part that may work with the larger organizations, when you get down into say $50 million to $150 million in revenue - and my experience supports this - you're typically going to need more experience in integrating disparate systems than an IT manager of that size organization typically has.
Jay Curry: I looked at your Web site, MIDRANGE Systems, and you guys are really into the AS/400 community and that type of people. In my experience, those AS/400 guys ... I mean they're a little bit ... the whole system is not really the most flexible thing in the world in a certain way. They kind of reflect a - this is pure subjective - but they reflect kind of an old mainframe, old IT, EDP (electronic data processing) department way of doing things. And, when you get into a big change thing like CRM, they may be a little bit more rigid. Pure subjective, I throw it on the table. I'm curious to hear what the other guys think about that.
Jay Chang: I would tend to agree with that characterization, just because I think it tends to be a characterization of heavy IBM shops.
Jay Curry: Yes. I didn't want to say that. But, yes.
Jay Chang: I don't mean to impugn IBM. But, I've noticed that every time I go into a predominantly IBM shop, they're very focused on process and on doing things the same way, so to speak.
Dick Lee: I think there's a real sort of demographic change in IT management within smaller businesses. To pick up on the term, the IBM crowd is trending towards going with larger companies. I found a new wave of people coming into the smaller end of this market. And, I've actually, in my work experience with them, found them to be fairly flexible. The problem that I've found is that they're so busy putting out fires, and dealing with we've-got-to-get-this-working-right-now issues, that they really don't have time to experience some of the more sophisticated aspects of new technology.
Jay Curry: But, Dick [Lee], isn't a part of that that because the AS/400 world is really not always open to the whole Internet-type of languages and integration with the AS/400 system and the mentality that goes along with it.
Dick Lee: I'd agree with you wherever the AS/400 environment exists. But, an awful lot of companies in the midrange that we're talking about have pulled the ripcord on the AS/400 and moved over to more contemporary tools.
MIDRANGE Systems: There are quite a few AS/400-specific vendors that are offering CRM solutions at this time. So, it seems to be something that at least the vendors would hope that these midrange AS/400 shops are considering. And, if [AS/400 shops] are too rigid, would you recommend that in order to implement CRM, they have to come to the realization that they have to change the way they do business?
Jay Curry: Yes
Mei Lin Fung: For the one's that have done implementations in this range of companies (midrange shops), have you found that IT-led initiatives in CRM have succeeded?
MIDRANGE Systems: Actually, I've read that as many as 70 percent fail.
Bill Brendler: I've read that it's even higher. With the number of organizations that I've been in, I can't even imagine that IT would lead this.
Dick Lee: I haven't seen any difference in size of company. If it's led by IT, it's almost certainly going to fail.
Jay Curry: I've been quoting these numbers like we all have. My question is, of normal software projects, how many fail?
Bill Brendler: It's very large, too. I think it's up in the [70 to 75 percent] range also.
Jay Curry: Of course, failing ... is the definition total disaster, or it didn't live up to expectations?
Bill Brendler: My understanding is, it's either failing miserably, or it's wrought with serious problems, and it's just not capable.
A Willingness to Change
MIDRANGE Systems: What would you suggest an organization needs to do to prevent [a CRM implementation] from failing? What would be the first step?
Jay Curry: Dick [Lee] would say read his book. I would say read mine. [Laughter]
Dick Lee: Jim Dickie (managing partner of Insight Technology Group (Boulder, Colo.) has made a point of this in his last major survey. The data showed that the success rate - the way Jim defined success - doubled when a company looked at CRM as a strategic initiative rather than as a technology implementation.
Bill Brendler: The other thing that Jim [Dickie] said is the number one problem [confronting CRM implementations] is resistance to change.
I've been talking - and I still have his stuff up - to a client, who's dealing with a whole bunch of [CRM-related] stuff. And, he says here, "I think the problem is that my line of thought up to this point has been quite linear and within existing conventions. I've been thinking about this issue, and we've been talking back and forth within the context of the offline world only. It's just dawned on me that I have been completely remiss in terms of the impact of the Internet and how CRM," and blah, blah, blah. And, he goes through and he tells me all this. Basically, this guy is saying what a lot of guys are saying. "I don't get this." There's a mindset change that has to happen here.
MIDRANGE Systems: When you say "mindset change," what specifically do you mean?
Bill Brendler: This guy doesn't understand that he can actually use CRM to help his company. And, he doesn't understand what CRM is. He doesn't understand what a customer-centric philosophy is. And, he has no clue, because his whole company is so focused on products that they can't get their mind off that. They've been doing that for years.
So, the changeover is to try to get these guys to start thinking about customers instead of products. And, that's exactly what he's talking about. Then to get him to even understand that, boy, all of this stuff really ties into the Internet and it has an impact. Those are the kinds of things I'm talking about.
Jay Curry: I think that the Internet and technology impact is high. But, we're talking about business-to-business companies. The big change is really the sales force. When you put in CRM, it's a sea change for the sales force. And, there you get the resistance to change. I think the real failure comes when companies don't look at [CRM] strategically. There is where the rubber hits the road, and where the change management has to happen, and it's a really tough one.
Mei Lin Fung: I was with [Tom] Seibel, when Oracle was putting in the first sales force automation (SFA) system back in 1988. And, Oracle hit a big bump in 1990 - everybody remembers their financial kind of roller coaster - and it was exactly because they implemented SFA without CRM.
We recruited a lot of new customers, but we had no customer-keeping machine to look after them. And, there were receivables problems, and all kinds of things. But, it actually stemmed from a very, very aggressive SFA project that simply produced all these first-time customers, but had no way to keep them.
Dick Lee: Also, when you're really doing robust CRM that is realigning the company around the customer, the changes that you need to make in systems extend way beyond CRM into the back office. To cite a specific example, in b-to-b, an awful lot of order entry and product-configuration functions shift out to the front office.
I've actually seen as high a level of resistance, if not higher-level resistance, in the back office from finance, accounting, production - areas that have to change the way they think and operate in order to add more value to customers.
I'm running into a lot of problems at the point of contact between CRM technology and back-office technology. And, a lot of skirmishing over who gets to do what along that line.
MIDRANGE Systems: Could you provide some examples?
Dick Lee: Yeah. I'll cite one that I'm working on right now. Who enters a transaction into the system to become an order? Can it be finalized in CRM and sent through straight into the production system? Or, does CRM gather information, put the information into an intermediary in the back office who assembles the final order, checks it, prices it, what have you? And, in most of those situations, there needs to be communication back to sales and back and forth.
From a customer perspective, they don't want to wait for all that to happen. And, when a deal is cut at the point of contact, they want that deal to stand. Part of CRM is providing tools that allow the [sales representatives] to be accurate. But, even after you provide those tools, the back office says that's not the reps' job, that's our job to do this. And, that's where the skirmishing starts.
Searching for a Better Understanding
MIDRANGE Systems: It seems that what I'm getting from the conversation so far is that, in a lot of cases, the failures are due to a lack of understanding of what CRM really is. In short, what do you see CRM to be?
Dick Lee: Developing customer-centric strategies, the implementing of which require redesigning departmental and even individual roles and responsibilities, which triggers the need for process re-engineering, which, in turn, requires new technology support.
Jay Curry: We tend to go back to the founder of CRM, Peter Drucker, who said the true business of a company is to find and keep customers. So, I look at [CRM] as the process of finding and keeping customers and maximizing their profitability and behavior and satisfaction.
Mei Lin Fung: I'll ditto that.
Jay Chang: I would have to agree that that is a very accurate summary of CRM.
Bill Brendler: I, too, say the same.
Bob Thompson: I'm not sure this is a different definition. Maybe it's just a different way of expressing it. I see CRM as a business strategy first and foremost, to develop and sustain profitable relationships - long-term relationships, by the way - and to do that by delivering value and receiving value from your customers.
The reason I emphasize that is, I think too often CRM has been about how do we manage these assets like their factories or office buildings. It's almost mechanical. You know, we want to get more value out of our customers. How do we do that? How do we track it? How do we manage it? Get rid of our bad customers. Get more profitable ones. And, it's all about what's in it for me as an enterprise.
I think the really successful CRM companies are very clever about how they deliver value to their customers. And, it's not just about managing their activities. Nobody likes to be managed. They want to receive benefits. So, I really think CRM should ultimately be about delivering benefits to your customers. And, when you really start drilling down into that, you find that its not just about sales automation, it can lead you anywhere in the enterprise. But, those are things that work out once you understand the value your customers want.
Bill Brendler: Robert Rodin wrote a wonderful book called "Free, Perfect and Now." He's the CEO of Marshall Industries (an electronics distributor known as an early-adopter of e-commerce), and it's a wonderful book. He talks about connecting to the customer demands. His whole company is focused on connecting to the customer demands. Every single person in that company is doing that. It took him almost three and a half years to get that company in place to do that.
Jay Curry: The definition, maximizing profitable behavior and satisfaction. If the satisfaction isn't there, then the behavior and profitability also disappears. So, I agree with Bob [Thompson]. But, Bob, you didn't say anything about partners.
Bob Thompson: Yeah that was a huge mistake, wasn't it?
But, that gets right down to how do customers want to receive their value? The reality is, it's all kinds of channels. And, one of the limitations in the thinking of CRM, until fairly recently, has been, well, CRM is about helping customers as long as we're talking to them directly, and its our employees and our sales person, our tele-sales rep, or what have you. So, yes, we'll do CRM as long as we're dealing directly with our customers.
Well, the reality is that customers are now coming into enterprises online. And, they may never talk to someone. Or, at least that may be their intent. They want to just come in and buy something and leave. Well, they have problems, how do you deal with that? If you want to recommend something else, how do you do that? So, some are calling this the eCRM. It's really, how do you deal with customers through this new Internet or online channel?
And, of course, about half of all the business that's done in the world goes through channel partners. They either influence directly or indirectly what those customers buy. So, an enterprise that thinks they are going to manage all these relationships directly is kidding themselves. They really need to think about the intermediaries - the partners. And, the strategy has to - if it's a channel-dependant company - they have to consider how their partner relationships are working, because, if the partner relationships are no good, they're not going to be recommending that manufacturers products, for example. So, it's gotten to be a whole lot more complicated than the early days of just automating sales.
MIDRANGE Systems: So, would it be fair to say that CRM is a really big umbrella under which such things as ERP and EAI reside?
Dick Lee: If you say that in an IT department, you better be wearing your track shoes. [Laughter] I would say you're absolutely right. But, your readers wouldn't appreciate that comment a whole bunch.
Jay Chang: Typically, what I've seen is that the CRM and the ERP efforts tend to compliment each other, if they're done correctly. And, EAI really is just a facilitation tool to allow disparate systems to communicate with each other. I wouldn't submit that CRM is an umbrella under which other things sit, outside the typical front-office functions.
Jay Curry: One thought. When you talk about midrange systems ... even at a big company, like Phillips, there is no Phillips. Phillips is an enterprise. Phillips is a share on the stock market. My suggestion is that most CRM projects at large companies are really midrange projects. You're talking about business units and divisions, and stuff like that. I'd say that the majority of big enterprise CRM projects are really midrange projects. I'm curious to hear what my colleagues think of that.
Dick Lee: I agree with you, as long as the different pieces of the company aren't sharing the same customers. If they are, that opens up a whole new level of complexity. And, that's one area where the organizational culture change issues really pop out. I know that Bill [Brendler] has worked with some multidivisional companies, who share customers who have had a horrible time agreeing to coordinate.
Mei Lin Fung: I'd like to jump in to refer a little back to the conversation about ERP and CRM, and who's on first. [Laughter]
Mei Lin Fung: I actually organized a program just on Wednesday in the net-market makers' area - that means business-to-business exchange hubs. And, the concept of IRP, which is industry resource planning, raised its ugly head. This is the idea that, basically, over the whole industry net-markets are starting to align kind of resource planning between companies in the same industry.
So, in terms of an IT department trying to work out what to do about CRM today, this is a huge and difficult area over which they don't have a lot of control. I think, basically, it's proceed with caution because everything you're trying to do with ERP and CRM in your own company may be blown up or having to be drastically changed as the entire industry goes through IRP.
Bill Brendler: Mei Lin [Fung], I totally agree with you. And, I think that, traditionally, the top IT person in a company is not a great risk-taker anyhow. And, now they're dealing with all the things that relate to ERP, and if the ERP system - I've been helping people implement ERP since 1991 - and if the ERP system is not working very well and then [the CEO is] bringing in something for front-office. It's a real mess. [The IT department] wants to go and hide in their office. They don't want to be a part of it. And yet, they're thrust into it by somebody, who could be the CEO.
It's an extraordinarily difficult place to be for them, because they're just not traditionally able to cope with or understand all the things that have to happen. Especially, when this really is a business process. This is for the business people. And, it's not an IT program. Then, it becomes real sketchy to them. [IT] just doesn't think in those terms.
Jay Curry: They also know its 70-percent failure rate. They don't want it.
Bill Brendler: Yeah, absolutely. And, there are a whole lot of [IT managers] that have been whacked because they got involved. It's kind of interesting if you look at the teams that were put together in some of the companies, who have implemented some of this. They're no longer with the company. There's a lot of stuff there about that.
Jay Curry: What we've discovered is the key thing is that if consultants don't implement this and top management doesn't implement it, then the rank and file says, "lay low, this too will pass." And, it's the poor guys, the sales manager, the call-center manager, the marketing manager - this is the implementation team - and we have found that the most important training in the whole thing is change management for these poor guys, who are between a rock and a hard place.
Dick Lee: Going back to what Mei Lin [Fung] said, I see some danger in focusing towards the industry or toward supply-chain issues initially when you're doing CRM.
The tact that we take with clients is that we're going to design systems, processes, and initially business strategies around the customer. And, when you start to redesign information systems in front office and back office to add value to customers that answers an awful lot of questions. It resolves a whole lot of issues. It creates an objective standard that's not IT first or CRM first or ERP first or what have you.
I was just in a session with a client the other day, who's just about to implement a new ERP system, which at the end of the meeting got back-burnered, because we discovered that the CRM system was going to replace about a third of the ERP systems functionality.
Bill Brendler: It's really possible that some of these companies don't even need an ERP package. The front office could probably take care of a lot of this stuff.
The Need for Leadership
MIDRANGE Systems: One of the hot-buttons for our readers that I'd like to get back to is that the IT managers are put in a position to drive CRM projects, but they don't really have the power to drive them. If an IT manager is confronted with this by a CEO - to drive this project - would it be wise for them to let the CEO know that they really need their support to drive it from an overall organizational perspective?
Bill Brendler: If they don't get that, they should quit.
Jay Curry: Say to the CEO, you drive it, man.
Dick Lee: I have a client who did exactly that. The IT manager was assigned the project. She kicked it back to the CEO, very wisely, and said, "You're leading. I will cheer the team and coordinate things, but you're leading." She was very smart, and it's having some very good outcomes.
MIDRANGE Systems: So, support from upper-management would be a primary factor in achieving a successful CRM implementation?
Jay Curry: It's the number one factor. I once talked to a colleague, who said I have two problems with CEOs. Some don't go into [CRM] fast. But, the real dangerous ones are the CEOs that say, "We're going to do CRM!" And, he's all excited, because he went to a lunch or something, and somebody else had it. So, he's over-enthusiastic, and he starts it up, and then he drops away. And, that's really the kiss of death. Somebody who doesn't care from the beginning, then you know what it is. But, it's the over-enthusiastic startup guy, who then takes his hands off and leaves it to the IT people and other people to die with it.
Dick Lee: Bill [Brendler], offer him your description of CEOs ... the 80-percent pathology factor.
Bill Brendler: Well, if you put 100 CEOs up against the wall and offered them money or power, what would they take? They'd take power.
If you looked at the rest of it, they were all over-achievers. A large number of them are very serious problems and come from very bad backgrounds and have difficulties getting along with a whole lot of people. And, they really don't know anything about establishing relationships.
In fact, the companies that are the worst at actually making CRM work are the ones where the CEO is terrible at making a relationship happen with their employees. Because they can't make that relationship happen with the employees, they can't make it happen with the customers. It's very obvious, and you look at it, and then you go to their team, and they're very dysfunctional.
The biggest challenge I see is walking into this senior management team that's extraordinarily dysfunctional, and they want to put in CRM. And Dick [Lee] has been there 52 times already. And, he knows exactly how excruciating and perilous that is. How do you get this dysfunctional group of people, who are running this company, to come around and actually do something significant and functional. And, that's a real challenge.
MIDRANGE Systems: Would it be fair to say that it's going to be very difficult for an organization that's not close-knit to actually achieve CRM?
Jay Curry: It's not a question of close-knit. It's a question of leadership - leadership and drive. Legitimate desire, for instance, to pay attention to customer-satisfaction numbers. Ah, we've got these numbers, and they file them away, but nobody's doing anything with them.
When Xerox, bless their souls, was rewarding managers on customer satisfaction numbers, and things like that, leadership was really driving things like that. [Xerox was] institutionalizing the need for happy customers, for instance.
Bill Brendler: I think to add to that, they better start thinking about being very human-focused, because their front-line people are the key to making [CRM] work. And, if they're not dealing with that in some way in terms of the culture, [the CRM implementation] is going to fail.
Technology's Role in the Implementation
MIDRANGE Systems: We keep talking about how CRM is an organization of business processes. What role does technology play in a CRM initiative?
Dick Lee: A fundamental role, I think, is when you re-align the company around the customer you create the need to be an informed seller. And, managing the information that keeps you informed is very difficult from a technology standpoint. And, it requires facilities that aren't found in any type of system that's been out there before CRM came along.
Jay Curry: Oversimplification, but good CRM technology allows you to talk to the customer in a way that he understands. And, just as important - inside the company - allows different people to talk about the customer. There's marketing, sales and service. They have to share information about the customer, so they can deal with him in a coordinated way.
Dick Lee: I'd spin that around 180 degrees, and say that the greatest value of a CRM system is it allows you to listen to the customer.
Jay Curry: Touché.
Jay Chang: The basic benefit of CRM is that you're talking about the same customer across all of those different functions. You don't have a view of marketing's customer, versus sales' customer, versus customer support's customer. They're all the same customer.
Bill Brendler: The other part is that more people can now interact with the customer. For instance, there are more individuals within the company, now that are able to interact, because they have a lot of information. I mean USAA (a worldwide insurance and financial services association) in San Antonio is a perfect example of this. They profile each customer, and [the profile] goes to almost every single person in the company.
It's an awesome process that they go through. Everybody has the same profiling information. So, the customer calls in, and somebody who's not on the front line can jump in and immediately take over and actually handle the customer. It's brilliant how they did it and in terms of the culture, too. So, it's much more. Instead of just a few people, it's a larger group.
Mei Lin Fung: CRM is sort of like the muscles and the body and the blood vessels, but you still have to have the brains that are telling the whole entity what to do. I think that brings in the whole area of CRM analytics.
You don't just need sort of human organizational alignment, but financial organization alignment. And, without that it is just lip service. Why should you spend so much more money to keep customers satisfied? You need to know when you can empower the front-line people to make the right decisions that involve commitment of resources and effort and so on.
So, a CRM effort that is only technology based or even just sort of organizational-change based, is not enough without the essential fuel, which is for the profit motive. And, along the way you need to make decisions, which align with that. Without that attention, it's doomed to failure.
Having Realistic Expectations
MIDRANGE Systems: It seems to me that CRM is something that can easily get out of control and end up hurting an organization more than it helps them. What sort of advice can you offer an organization for keeping a CRM strategy in control, and taking an organized approach toward it?
Jay Curry: There are metrics. You have metrics like customer profitability, and customer behavior, loyalty numbers and satisfaction numbers. IT allows you to measure a lot of stuff, even the fuzzy stuff you can put numbers on, like customer focus inside the company. That type of thing. There are metrics you can set up. And, a good CRM system will facilitate coming up with some numbers to give guidance to the program.
Dick Lee: I've never seen a CRM strategy go out of control. I've certainly seen the implementation of the strategy go out of control. Now that we're past the point of confusing CRM with software, at least most people are - the single biggest cause of implementations going off the road is that companies ignore the organizational, cultural impact of doing this. And, if you want to keep something from going out of control, take some of the money you're going to spend with CRM consultants and spend it with [Bill] Brendler. [Laughter]
Bob Thompson: My feeling about this is that it all comes down to the expectations that the company and their business executives have. And, if you start out expecting that CRM is something you can do in a short timeframe, I think odds are probably 100 percent you're going to be disappointed. If you look at it as this might take us many years and we're never going to be done, but, we can get there in some steps and see some benefits along the way.
So, you have a strategy. You have a vision. You know it's going to be hard. You know it's going to take time. And, you're willing to learn and grow along the way. Then, you might define that project as a success. And, somebody else, who expected it all to be done when they put in the package will have made the same first step, may even have the same vision, and they'll think that project was a failure. So, getting the expectations right and understanding that it doesn't happen overnight, to me, is a critical thing.
Bill Brendler: In Robert Rodin's book ("Free, Perfect and Now"), in the beginning he talks about the fact that [upper management] had to go out and dialogue with the people in his company. He did this so personally. He actually trained people how to dialogue. They basically taught the top-management group how to go out and interview people without becoming evaluative - to make sure where they're coming from, and to kind of go over, here's what we're trying to do, what's your thought, and so on and so forth.
He talks about this entire thing for the basis of the book, why this was successful. It's an enormous communications project they did. And it worked, because everybody was involved. Everybody had a say so. Everybody felt like they had a piece of this thing. And that's what he talks about. He said that this will not work unless you get those people out there understanding all the aspects of this and getting the expectations right. Not only from the setting of the expectations, but the leadership.
What Jay [Curry] was saying, we need leadership. Leadership is trying to get these people corralled and focused and on their way down this same street, reading off the same sheet of music. And, that's what this guy did. It's amazing when you see that happen - because in all aspects - every time I've seen that happen, it works. It's successful.
Jay Curry: One of the real problems of CRM is its turning the Queen Mary around. It's a long-term thing. And, the CEO has to do it. But, he's being driven by did you make this last quarter. So, he's in between a rock and a hard place, also.
Bill Brendler: And, Bob [Thompson] hit it right on the head. If he doesn't think of it that way (as a long-term project), and he has to get off of hitting those quarterly numbers, which is unfortunate because he really does have to do that. But, the fact is that [Robert Rodin] did it. He can talk to you about how he did move away from the quarterly profit and moved into this arena. To me its that kind of thing that has to happen here. Otherwise, [CRM] is not going to work.
Jay Curry: We're all doomed.
MIDRANGE Systems: Yes, it seems like we've taken an awful negative tone here. What are the benefits of implementing CRM? What benefits can be expected to be realized? Why would a company want to take the chance?
Mei Lin Fung: Company survival. The companies that are looking after their customers the best are going to keep them. And, the ones who are not looking after them, as well as they could, are going to lose them to those other guys.
I want to touch back to that sort of doom and gloom scenario about short-term profitability. Wall Street does look at company's short-term results. But, the reason they do it is because they match the current short-term results against the plan, which the companies have articulated. The problem is not short-term outlook on behalf of the Wall Street analyst, it's that the CEOs in the companies are not sticking to their plans, and they're not delivering to their promises.
That causes the problems. I don't see a disconnect between the way the markets value companies and good CRM solutions. I just see that CEOs need to understand better what they're trying to do and articulate it better and understand what it costs to move the Queen Mary around in the opposite direction.
CRM is like a heart transplant. It takes time. It takes effort. But, if Wall Street sees that a company is on track with its plan to do this, they will not punish the company.
Jay Curry: If they publish the customer satisfaction numbers together with the profit numbers and you show an upward trend in that, they could be OK.
Mei Lin Fung: That's right.
Dick Lee: To pick up on the first part of Mei Lin [Fung's] comment, I think it's really important to understand why we're doing CRM despite all of these obstacles we've been talking about. And, it's not because we have new technology. It's even less because the Internet came along.
We had a huge change in the economic environment. It was basically a switch in the supply and demand curves starting back in the 80s. And, the net of that is, customer expectations and customer demands on us are going up, steadily. And, we have to meet them or customers are going to go elsewhere.
In essence, we don't have a choice about CRM because it's basically a response to what customers want. And, if we don't give it to them, they walk. Regarding the expectation piece, one of the things I think companies have to be really careful about is this is a moving target. What is adequate today, or what will work today with customers may not be adequate two, three years from now. So, we're just going to keep cycling around trying to get better and better working with customers.
Jay Curry: Xerox discovered that customers who gave an eight in satisfaction ran a repurchase cycle six times higher - six times higher - than people who gave seven and six. If [the customer] is satisfied, then you're really in trouble, because [they're] going to walk. It's like Dick says, satisfaction is no longer OK. It's got to be really satisfied. Otherwise, [the customer] is going to walk.
Bill Brendler: I don't see this as a negative thing at all. I see it as reality. Reality 101.
But, the other thing that I think I see that is really important to know is that [companies] don't have as much time to make the changes as they did in the past. This is a real moving target at this point. I sure as heck would not want to compete with Cisco or USAA or Sun Microsystems or any of those. They've already gone through all of this, and they're absolutely unbelievable in terms of how they deliver. So, now I'm looking at that and saying if I'm in any of those industries, I'm under the gun. So, that's a dilemma that I think people that have not done CRM face right now. And, that's a real big one.
Mei Lin Fung: I'd go out on the limb in advising IT staff, if they are asked to lead a CRM strategy, and they go to their CEO and say this is something you have to lead and the CEO says no it's your job, it's time to look for a CEO who will say yes. And, it's time to leave, because the writing is on the wall for that company. Unless the IT manager's aspiration is to take over as CEO, which has happened.
MIDRANGE Systems: Is there ever a situation where the head of an IT department is able to pull off a CRM implementation?
Jay Curry: Bill Gates. [Laughter]
Dick Lee: Yes, but Microsoft's CRM implementation isn't working. So, you can't even say that.
Bill Brendler: Michael Dell.
Jay Curry: I think Dell is, maybe, a good example. My brother used to buy from them back in 1986 in San Francisco. And, he said these guys are unbelievable. He said [Dell] was, I think, still operating out of his college room - they are really terrific.
Bill Brendler: Yeah, he was making $50,000 a week out of his dorm room. He's right down the road here from me. They're an amazing company. He would be a great example of that.
MIDRANGE Systems: What are some of the things a company like Dell does that separates it from the competition in the way it handler its customers?
Bill Brendler: They have a front-line group of people that are so into service and focused on service. The culture is service and they will service you no matter what. It's an amazing thing. It's kind of like Saturn. Saturn will literally fly 250 miles to pick up your car to service it - I'm being somewhat facetious. But, they will turn on a dime at Dell to do everything they can to service you as quickly as they can. If you want to buy another product, it's gone and to you in a day. And, when you talk to the front-line staff they're very, very people-focused and customer-focused.
Bob Thompson: As long as your talking about Dell - again to get the partners in there because partners are customers, too, if you think about it. VARBusiness just released their annual report card awards. It's an incredibly complex, comprehensive study on the overall relationship that vendors have with their channel partners. Now, Dell is not usually the first company you think of when you think of a channel, but they in fact do have a channel. They do work with integrators and VARs and such. And, they actually won their category for client systems, meaning PCs.
If you look at the criteria that VARBusiness used, there's three main sections. One was products and pricing. So, think of that as the basic stuff you're offering. And, they were not the tops in product quality, but competitive, kind of middle of the pack. They were tops in revenue and profit potential, and did quite well in availability. But, they weren't number one in pricing. They absolutely were number one or tied for number one in all of the support categories, pre- and post-sales support, marketing support, and all of the partnership categories. They were either first or tied for first, in terms of communications, channel strategy, e-business and overall ease of doing business.
Now, you call it what you want, that means that partners like working with Dell. And, their overall score when you total up - one, two, three, there's like a dozen different things - they got a 76 on a scale of 1 to 100. Two points ahead of Apple. Five points ahead of Compaq. Six points ahead of HP. And, eight points ahead of IBM. To me, that's CRM. These guys are good. They're good with their partners. I don't know what their story would be directly with customers, but I suspect it's quite similar.
Jay Curry: The beauty of Dell is they understand that the Internet is nice, but it's not the only thing. They have people calling up - inside sales and salesmen on the road - getting people to open up that Internet channel. They're not an Internet company. They're not a pure direct-marketing company.
Bob Thompson: No, they're just a good business.
Jay Curry: No, but they have a culture. Direct marketers are, I think - because they have been dealing with both IT and the customer - they get faster into CRM.
Bill Brendler: I think that's the key. They have a culture. I've been inside this culture a number of times. There's something about the people at Dell. They're smiling, they're up, they like their job, they're really willing to go the extra mile - all of those things. That to me, when you see that, I call that leadership. That's the kind of thing that has to happen. I keep on trying to figure out how you can make CRM without that happening. It's impossible.
MIDRANGE Systems: Why don't we end the conversation there, unless anyone has some final comments?
Jay Curry: I'd like to share one anecdote. I was playing golf with a guy from Nordstrom. I always use Nordstrom in seminars. We were talking about CRM. And, I asked how do you get those people at Nordstrom to be so customer-oriented. His answer was, "Yeah, everybody always asks us that, and the answer is, we don't train anybody to be customer-oriented. Their parents have done that already."
There are some very fundamental things about the culture and the people you bring into your company. And, if its not there already, it's a long haul.
Bob Thompson: My closing comment would be, CRM can seem like a very - and is - a very challenging thing for a company to do. So, I think generally people are aware now that you can't go buy a piece of software, install it and turn on CRM. The way I would turn that around is that you can find examples like Dell and Cisco and Nordstrom ... Amazon.com. You can find it in every industry - companies that take great care of their customers.
They use technology well. Whether they're using a CRM package, or not, is many times irrelevant, but they're very clever about leveraging technology. They have put in a lot pain and a lot of work, usually over years. They have proven there are competitive advantages to CRM. And, they've also, I think, made it clear, it's not that easy. So, if you have the intestinal fortitude and the leadership, and you're willing to make the investment, there's great news here. It's that your competitors by and large will not.
That's why you get a competitive advantage because it is difficult. And, so for those who are looking for something that's really easy to do, I say, well go look somewhere else. If it was that easy, it wouldn't be a source of competitive differentiation, now would it.
Jay Curry: Amen!
Dick Lee: Hear, Hear!
Bill Brendler: Hear, Hear and Hear!
NOTE: This roundtable was conducted via a tele-conference on Friday, November 17, 2000. Special thanks go to Elizabeth Fairleigh, President, thE Connection Inc., for helping to organize the event.