AVOID THE FOUR PERILS OF CRM

By Darrell K. Rigby, Fredrick F. Reichheld and Phil Schefter

Presentation by: MBA Class Group 2

 WHY IS CRM IMPORTANT?
• Makes gathering customer data swiftly
• Identify the most valuable customers
• Increasing customer loyalty
• Helps in creating customized products and services
 HOW SUCCESSFUL IS CRM AND WHY?

• 55% of all CRM projects don’t produce results

• Ranked bottom three for satisfaction of 25 popular tools
• Reason for failure is that the managers don’t understand what
they are implementing, let alone the costs incurred and time
spent on them
• Cost of implementing CRM = an estimated $60 million to $130
million
• Time taken to implement CRM = anywhere between 90 days to
24 months
 DEFINITION OF CRM

CRM is NOT a software tool that will manage

customers relationships

CRM is the bundling of customer strategy and

processes supported by relevant software to
improve customer loyalty and corporate
profitability
 PERIL 1: IMPLEMENTING CRM BEFORE
CREATING A CUSTOMER STRATEGY
• Softwares can help in making a perennial problem go away
provided that a traditional customer-acquisition and retention
strategy has been conceived of and implemented
• Effective CRM is based on old-fashioned segmentation analysis
• CRM without segmentation is like building a house without an
architectural plan
• Technology that affects customers must be aligned with an
overarching strategy
PERIL 2: ROLLING OUT CRM BEFORE CHANGING
YOUR ORGANIZATION TO MATCH
• If a company wants to develop better relationships with its customers, it
needs to revamp the key business processes that relate to customers
• A CRM rollout will succeed only after the organization and its processes
have been re-structured in order to better meet customers’ needs
• Ensure changes in the customer-facing processes and the internal
structures and systems before investing to CRM technology
• 87% failed CRM programs have been attributed to lack of adequate
change management
• Adopt customer-centric philosophies, change the structure and
processes and alter the corporate cultures accordingly
 PERIL 3: ASSUMING THAT MORE CRM
TECHNOLOGY IS BETTER
• CRM can be managed without huge investments in
technology simply by, say, motivating employees
• Assumption of a high-tech solution being better than
low tech one is a myth
• Simple, inexpensive solutions can be more effective
than complex, techie solutions
PERIL 4: STALKING, NOT WOOING, CUSTOMERS

• Managers usually tend to become inconsiderate when it comes

to maintaining relationships
• Often they try to build relationships with wrong customers or
build relationships with right customers the wrong way
• Relationships are two-way streets; failure to build relationships
with customers who value them means losing your customers to
your competitor
• Avoid building relationships with disinterested customer are you
may be perceived as ‘Stalker’ and annoy potential customers
 LEARN FROM FAILURE

• If you’ve been unsuccessful in implementing CRM, try again as

companies do recover from failures
• CRM is not just another fad; it is a powerful idea, difficult to
implement
• Successful CRM depends more on strategy than amount spent
on technology
• Effectively lead and manage change, showing CRM support
teams how to achieve their goals through new processes