A second chance for CRM

“We want this! And that! We demand a share in this, and most of that, some of this, and all of that! Less of that, and more of this, and plenty of this! And another thing – we want it now! We want it yesterday, and we want more tomorrow! And the demands will all be changed then, so stay awake!”

Scots comedian Billy Connolly’s words, with expletives tastefully removed, are a rich interpretation of the pressures that customers put on suppliers in a fast-moving, technology-driven world. To meet this demand, IT vendors created a beast in the 1990s called customer relationship management (CRM) software that would revolutionise the way businesses dealt with customers.

Any member of staff could access the CRM system to view all information held about a particular customer, such as whether he had any complaints and how many times he had been called, and so better manage the customer experience and expectations. The problem was that CRM was a huge letdown for many businesses.

But CRM is now sexy again, according to Microsoft, at least, which has thrown some of its huge bank balance at developing a new CRM system that is to be marketed this year at small-to-medium enterprises. In Microsoft terms, that means any company with up to 500 users of IT which needs to get better information about its customers to make more sales. But will CRM work the second time round?

Jeff Young, Microsoft general manager of emerging solutions, says CRM had been flawed in the past, even though the premise for its implementation was right. “The Harvard Business Review says it is six-to-seven times more expensive to acquire a new customer than it is to keep an existing one,” Young says. “CRM solutions didn’t get deployed in the past because they were too complex, required too much customisation and people just didn’t use them – there was a cultural problem.”

All large-scale software installations generate the same problem: they cost a lot to buy, but they cost even more to businesses in terms of time and resources to ensure they are used properly by employees.

Siebel, which has more than 4,000 large enterprise customers of its CRM software and has recently teamed up with IBM to provide an on-demand service for smaller companies, took its fair share of flak during the backlash against CRM. But Steve Rogers, Siebel’s UK general manager, says his customers are a lot better at addressing the three key components needed before any large-scale software installation will work. “When projects haven’t gone well in the past, it’s likely they didn’t have good executive-level sponsorship,” Rogers says. “Second, business process must change as a consequence of having a new system. You can’t just take existing processes and add on some technology. Finally, you have to make new systems sensitive to the people who will use them.”

Surprisingly, perhaps, the vendors and business users of software now seem to be singing from the same hymn sheet. Matthew Key, UK chief financial officer for telecoms operator O2, has 13 million customers (at the latest count) and so spends a lot of his time assessing the way his company communicates with them. Like Rogers, his overriding experience of customer-focused software is that people have tended to rely too heavily on the technology and don’t spend enough time improving internal systems and processes, even though vendors such as Microsoft are keen to say their customers are getting smarter in the way they buy software. “I’ve seen a tendency to consider systems like CRM as a technology project. Well, actually, it’s not a technology project; it is a business project and just putting the new systems in won’t change anything. You have to change the process behind it. You have to change the cultural approach, which is where I think a lot of the systems fail,” Key says.

Even if the vendors of CRM systems do promise the earth, their customers must be prepared to spend the time, effort and money to ensure the system works in their business. Technology is an enabler, not a magic wand that will fix your business. As Bill Gates said at the launch of Microsoft CRM in London in January: “We are not in a position to take overall responsibility (for implementation), or even filter according to a particular business strategy. We do not have expertise in everyone else’s business.”

Customers will thank suppliers for providing a better all-round service, but not because they have bought a great piece of software.