Many companies may be lamenting that they’ve pumped millions of dollars into customer relationship management projects and have so far seen very little return on their investments. But Mary Lou Kolodziej, director of consulting and education for NuEdge Systems L.L.C., knows that you can’t reap rewards from CRM just by installing some new and innovative software platform.
The reason for these apparent failures? Kolodziej believes that, even after investing heavily in CRM initiatives, most companies probably don’t have a clear definition of what CRM really is and what it should accomplish enterprisewide.
Companies also cannot expect to succeed without undergoing some sort of top-down cultural change, across all corporate divisions, that can benefit from data-sharing tools to embrace a more customer-centered business philosophy, she said.
"Another key reason why CRM system implementations may fail is because the company has not set any realistic, measurable goals to determine what effects these systems will have on the bottom line," Kolodziej said. In her six years with the Milwaukee-based software vendor and consultancy, NuEdge Systems has helped guide such b-to-b mainstays as Whirlpool Corp. and Compaq Computer Corp. through the CRM chaos.
"We practice CRM here at NuEdge, too, putting our customers first with our package of software, consulting and training," she said. In a recent interview, she told BtoB that CRM can indeed help companies boost customer satisfaction and profitability, but is still confusing to many as competition among vendors increases, customers’ expectations rise and the economy continues its crawl.
BtoB: What do you think of those companies that claim CRM is a complete bust?
Kolodziej: I think they’re most likely suffering from a lack of an overall corporate vision. Let’s face it, most business people still can’t define what CRM is. And, within different silos such as customer service and marketing, everyone seems to have a different vision and different solutions. Top management needs to communicate throughout the enterprise what goals the company hopes to achieve by implementing CRM systems and, unfortunately, many are not.
What you are left with is different departments working on their own, throwing the overall organization out of harmony. To avoid this, you need to institute an internal cultural change while you are putting CRM solutions in place. You need to get rid of silo philosophies and create an environment of open thinking and open sharing of information. You could have the best solution in the world, but you’ll fail without the cultural change. If you can’t get your organization to believe in your new customer-centric approach, you certainly won’t get your customers to believe in it.
BtoB: How can companies tell if their CRM initiatives are succeeding or failing?
Kolodziej: They must define the problems they want to solve and the opportunities they want to take advantage of throughout the enterprise, not just within silos. They must also establish a set of well-defined, measurable goals, of which customer retention should be their No. 1 priority in most cases. In the b-to-b space, for example, let’s say you have one quarter million customers in your active file and you’re fighting attrition problems. A retention rate as low as 1% is a positive, achievable goal. If each customer spends an average of $5,000 a year with you, then you’re generating at least $12.5 million. And since it costs five times as much to acquire a customer than to keep one, it’s also an economically attractive goal. Another measurable goal that translates into bottom-line benefits is improved customer satisfaction levels. But often if you go to top management at companies, they’ll say all their customers are satisfied. But do they really measure this? If so, how and how often? It’s a tough metric to obtain, but one which more b-to-b companies should focus on.
BtoB: With CRM spending and online services at an all-time high, how have customers’ expectations changed?
Kolodziej: Customer expectations have increased across the board, especially because of all the extra touch points the Internet has created. However, many companies aren’t doing a very good job seeing how the customer views them across these touch points. A good CRM solution lets a company get a better view of the customer by openly sharing information from each of these touch points or views and then integrates these views to see each customer as a whole.