The Rise, Fall, and Resuscitation of CRM

In the mid nineties, CRM—Client (or Customer) Relationship Management—began making headlines around the business world, touted as the next surefire way to increase market penetration and profitability. Though it certainly seemed like a good idea at the time, its rapid rise to the top of the business charts had at least as much to do with the irrational exuberance that characterized the Dot.com era itself. (So that’s why my Dell Computer at $95/share seemed like such a steal!). Naturally, when the Dot.com bubble burst in 2002, CRM fell, along with nearly everything else, to an all time low. Truly, it seemed to have become something akin to a four letter word.

In hindsight, the fall of the market in 2002 was the natural and much needed correction that comes along with anything so overly anticipated. And since then, the resuscitation of CRM has largely been about discerning what it really is—for both providers and consumers. Today, there is still a lingering air of uncertainty as to what exactly CRM means, what tangible results it may yield, and, just as importantly, how to go about implementing Client Relationship Management successfully in your company. So, let us begin with a clear definition:

CRM is a business strategy to proactively select and manage the most valuable customer relationships. CRM requires a customer-centric business philosophy and culture to support effective marketing, sales, and service processes. CRM applications can enable effective customer relationship management, provided that an enterprise has the right leadership, strategy, and culture.

In reality, true CRM success has far more to do with people and process than it does with technology.

In the late 1980s and early 1990s, those of you who used PCs might remember the electronic rolodexes. Remember that neat card file layout on the monochrome monitors? You could [pg up], [pg dn] through the card file and it even looked liked a rolodex…how cool was that? Sort, find, print and mail merge were only a function key away. Welcome to the age of the Personal Computer and Contact Management software.

My Contact Management tool of choice was PFS Professional File, which included the card file described above. However, maybe you used Sidekick. That was slick because you could use a hotkey combination to automatically pop up the rolodex on your screen. In fact, maybe you were one of the lucky ones who had those high powered CGA color screens (I’ve only read about them). Whatever the software was, if you used it as an address book, it was essentially your first generation contact management system.

As the decade progressed the stage was set for what is currently referred to as Sales Force Automation (SFA). This next generation of Contact Management software began allowing you to classify your contacts as prospects, leads opportunities, and clients. In addition, a calendar was introduced to provide scheduling of activities (“to do’s,” phone calls, meetings, events, etc.). By using these two features together, sales staff could proactively set alerts to remind themselves to reach out and bother prospects or follow up on leads. In addition, leads could be assigned to various sales representatives and tracked for progress. Then Microsoft Windows™ came along and these products just took right off.

While this was going on, another part of the market was maturing at an equal pace. Technology and the PC were allowing Call Centers and the Help Desk to revolutionize the way they conducted business. Calls from users with problems were being meticulously recorded with sophisticated software. Each center was growing a physical knowledgebase to allow problems to be resolved in the first call. If not, they were escalated through elaborate automated rules-based criteria, with built in Service Level Agreements (SLAs) to ensure prompt response to the customer. Capturing this information provided valuable information on products, services and trends. Companies and Services Centers were able to tune their operations to specific operating hours, identify problematic products (IBM PC Junior) or deficient services, and measure customer feedback.

Sometime in the mid 1990s (after my Dell and prior to my Enron stock purchase), someone realized that there was a missing link between the point of sale (Sales) and the servicing of the clients (Client Services). That person was Tom Siebel. The disconnect that he identified was one which often blind-sided the sales force, causing some awkward moments when attempting to up-sell or cross-sell products and services to an existing client. Tom Siebel had the foresight to bring the two ends of the customer cycle together—Contact Management/SFA and Client Servicing. However, what he had in vision, he lacked in creativity, as he named his software Siebel CRM.

To Tom’s credit, not only did he recognize that to manage the complete client relationship you needed to see it front to back, he also recognized that the relationship was not always one dimensional. So he introduced a multidimensional relationship model that allowed for multiple accounts, contacts and associations. In short, he established a relationship model that resembled “real world” business relationships.

Of course, the concept made perfect sense, and began to catch on. Everyone got into the game, especially the software manufacturers, each trying to out-do the other. Significant enhancements such as Workflow Automation, back-office interfacing for supply chain management, and sophisticated Marketing and Opportunity features were added. All of this delivered “out of the box” and with the ability to customize—who could ask for anything more? But was the business world really ready for it? Just picture a snake swallowing a Volkswagen.

Ah, but let’s not forget the exuberance of the times! From the mid 1990s through 2000 the party was in full swing. The Dot.com bubble, combined with the high hopes and hype for CRM, resulted in a mad rush for the stage. The big five were doing it. Thousands of vendors were doing it. High (ROI) expectations were being set. Money was pouring in. Each year was “the year of CRM.” From 1998–2000, the CRM market grew 50% year over year. But it really didn’t matter anyway, since everything was going to come to an end with Y2K just around the corner.

In 2000, businesses were still buying billions of dollars worth of CRM software—partly because it was in vogue—like the Internet, Yahoo! and pets.com. (Remember the sock puppet? My dog finished him off in 5 minutes!) Even worse, these large organizations were buying huge quantities of software without a business case, cost justification, or key stakeholder involvement. But while the software providers continued to provide glowing statistics and case studies, insiders were hearing customer horror stories about incomplete projects and unrealized ROI. In early 2001, Gartner published a report stating that 55% of all CRM projects were failing to meet expectations. Shortly thereafter, they forecasted that number to reach 65% and Ed Thompson was quoted as saying, “We think it’s going to get worse and could see it all come crashing down by the end of the year.”

He was right, the party was over. Not all the Alka-Seltzer or Bloody Marys in the world could cure this hangover. In 2002, CRM sales were down for the first time (5.4%) and it only got worse. In 2003, they were down another 27%. It got so bad that our CRM visionary, Tom Siebel, uttered the dreaded words “CRM is dead.” Of course, it could not all be blamed on CRM. There were certainly contributing factors. The NASDAQ had just completed the 78% descent that had begun on March 11, 2000. American citizens were still trying to get through one of the worst terrorist attacks in the nation’s history. Nonetheless, you couldn’t help but notice the underlying sentiment. It was all over the internet—“over sold and under delivered,” “CRM has not lived up to its promise,” and the beat went on. As a result, a massive consolidation began to take place within the Enterprise Resource Planning industry, the companies that had been providing CRM software. This was highlighted by Oracle’s acquisition of its archrival Seibel Systems in September of 2005. Who would have thought? Tom’s old employer had bought him out.

So what went wrong? Everyone has their opinion. Remember the snake and the Volkswagen? I simply believe it was just too much too soon. Tom Siebel had the right idea, and the features and functions that were layered on in the race to stay ahead will one day be digested by the providers and consumers.

Nonetheless, the CRM paradigm is still a significant undertaking, and should be digested in bite sized portions. Let’s learn from the well-documented lessons of the past, and avoid repeating the failures:

	90% of users were only using CRM for Contact Management, missing the real opportunity.
	A “one size fits all” mentality just isn’t reality.
	An “out of the box” mentality? Really?
	Users were using less than 15% of the functionality—how can you realize true ROI with that?
	While vendors were adding features, users wanted existing ones made easier.
	Companies and clients underestimated the cultural change required to be successful in leveraging CRM in daily operations.
	Software was sold without the training, Business Process Definition, and access to Subject Matter Experts (SMEs) necessary to implement it.
	Lack of internal selling and commitment within the organizational structure led to widespread failure in adoption of the strategy and tools.
	Lack of automation and integration with key business applications lead to deficits in workflow efficiencies, not gains in productivity.

The result was a 50% abandon rate, incomplete implementations and unrealized ROI across the board.

The good news is that the industry is beginning to catch up and embrace the many dimensions of CRM, especially the cultural changes required. The failures are well documented and the vendors are slowly acknowledging their past mistakes, some better than others. Moreover, clients are beginning to recognize that they too play a vital role in the successful implementation and adoption of CRM. Without the proper alignment of business goals, organizational preparedness and effective planning and management, a CRM initiative is doomed to failure, no matter how great the technology and the provider.

Among the many lessons learned, however, I believe the single most important one is that not every aspect of the vast universe of CRM must be implemented in order to achieve significant value. Ask yourself a few easy questions before engaging with a vendor about CRM (does my healthcare cover therapy?):

At the end of the day, when you wade through all the CRM marketing hype, these are the four basic value propositions you will ultimately achieve by successfully implementing Client Relationship Management. Granted, they are highly sophisticated and not to be taken lightly. But properly embracing just one of these principles and its associated components can easily put you head and shoulders above your competition. And depending upon your needs and timing, you can evolve your business by continuing to adopt additional CRM technology and practices over time. That is why you may hear CRM referred to as a strategy and an evolution, not a project.

How does UNAPEN ensure our Clients’ success and avoid the pitfalls of the past?

	90% of users were only using CRM for Contact Management Making the transition from flat file Contact Management to Multidimensional Relationship Management requires upfront effort. We work with our clients to define the hierarchy of their business relationship model and ensure that CRM is deployed accordingly.
	A “one size fits all” mentality just isn’t reality Everyone acts and thinks differently, even within the same industry. Our implementations are properly scaled to the needs, capacity and ambition of our clients in order to ensure immediate benefit and long term value.
	An “out of the box” mentality As mature and adaptable as CRM technology has become, an operational and cultural fit is still required. A well-designed balance of Client behavioral change and CRM application modification must be achieved in order to obtain the best fit and ensure widespread adoption.
	Users were using less than 15% of the functionality Users will gravitate to parts of a solution that they know, and stay away from what they don’t. Comprehensive training, followed up by retraining and easy access to immediate help, will mitigate this.
	While vendors were adding features, users wanted existing ones made easier KYC—(Know your client) UNAPEN hosts numerous usability sessions in which desktops are shared and application usage is observed. And since UNAPEN focuses entirely on the Asset Management business, we are able to aggressively advance ease-of-use while incorporating new features with each release.
	Companies and clients underestimated the cultural change required to be successful in leveraging CRM in daily operations As part of our CRM engagement lifecycle, we invest a significant effort into our clients early on to fully understand their business practices and operational culture. We negotiate adoption criteria, acceptance criteria and value proposition, and together, build a roadmap that identifies risks and critical success factors that relate specifically to operational and behavioral changes required for success.
	Software was sold without the training, Business Process Definition, and access to Subject Matter Experts (SMEs) necessary to implement it UNAPEN has a dedicated CRM team with Subject Matter Experts in each “domain”, from the Portfolio Accounting systems to CRM principles and best practices. Leverage our expertise for your success!
	Lack of internal selling and commitment within the organizational structure led to widespread failure in adoption of the strategy and tools This is all about “key stakeholder involvement”. Through negotiated adoption criteria, UNAPEN employs a unique methodology in gaining the organizational involvement and sponsorship so critical to project support and follow through.
	Lack of automation and integration with key business applications lead to deficits in workflow efficiencies, not gains in productivity CRM adoption suffered due to the lack of integration with back-office core systems. The UNAPEN ClientLogix™ solution provides for every critical integration point, from Portfolio Accounting to Outlook and beyond. This ensures that true workflow efficiencies are gained, from account setup to compliance notification to automated report generation. And ClientLogix Dashboard technology brings CRM to life in the hands of users daily.

CRM will ultimately succeed because it represents progress. But it will not come without pain—pain in the form of change and hard dollar cost. This will moderate the spread of true CRM adoption, as we are already witnessing. Nonetheless, as we know, those who don’t embrace change will one day be left behind—just ask the folks at IBM about the PC.

For those who are ready to embrace change and make a commitment to refine their business practices, there is a real opportunity to get a leg up on the competition. And if just one aspect of CRM is implemented properly and embraced by your organization, it could make all the difference in setting your business on the right course for the future. If you feel you are ready, seek out the right business partner to help you formulate a solid strategy and begin that CRM journey.