Customer Relationship Management

Sounds easy, doesn't it? So, why do so many CRM implementation projects fail to deliver the improvements that were approved in the business case?

Why is CRM so Hard to Implement?

Over the years, banks have invested billions of dollars in CRM systems, yet it is reported that between 18 per cent and 70 per cent of them will run over budget, suffer data integrity issues, have technology limitations, or cannot realise the expected growth in the business that pays for them.

There are several reasons banks struggle with CRM, and we will look at the main ones here:

1. No Coherent CRM strategy

In the 1990s, many banks bought CRM systems although they did not know what they wanted to do with them, which often led to poor implementation and low employee adoption rates.

The first CRM systems were developed for branch-centric banks where customer interactions were mainly conducted face-to-face and captured what had happened, rather than driving what should happen through next best actions.

Early vendor CRM systems were nothing more than sales management reporting tools that were more useful for software salespeople than branch-based customer service focused employees where there was a poor fit with their day-to-day job. Many resisted and used their CRM system only when it suited them, or they were forced to do so.

When telephone banking was implemented in the mid-1990s, additional functionality was tagged on to add this channel to allow customer service representatives to replicate processes that the branch had undertaken. The customer's obvious preference to call the bank, rather than visit their branch, was rarely captured or understood and the CRM system retained its branch-centricity.

Fully remote channels such as Internet Banking and Mobile Banking have further strengthened, but sometimes complicated, the role of the CRM system as employees who meet customers face-to-face have a much smaller role. Slowly, banks recognised that understanding how the customer used all its channels would help it be more relevant and personalised.

Many banks' executives don't ask, "Why are we implementing a CRM system?". They're often seduced by vendor sales pitches that 'promise the Earth' but fail to take into account whether the bank is culturally ready and able to be customer-centric. The misaligned sales pitch becomes their strategy, often with disastrous results.

Decisions to buy a CRM system are often made by the Marketing and IT departments, who make selections based on their criteria, not those of the ultimate user in a branch or call centre – where CRM can be made or broken!

2. Lack of Executive Support

Even though the bank's executives sign-off millions of dollars expenditure on CRM, many don't provide their support to help successful implementation, employee adoption, and payback. As mentioned earlier, many are seduced by vendors and the promise of overnight success. When it fails to materialise, their support wanes.

One failure is thinking that just by implementing a CRM system, the bank will become 'customer-centric'. It won't, and like 'customer-centricity', implementing a CRM system is potentially disruptive to many processes and the way employees are motivated and managed.

3. Poor Employee Adoption and Usage

Employees who are supposed to use the system to help them do their job aren't engaged in using it. They may fear that CRM will only be used to inspect their lead generation and sales activity and causes a failure to adopt after implementation. Early CRM systems were guilty of not focusing on how it should help employees do their job better and how they can improve customer satisfaction. Linking employee CRM activity data to the bank's performance management and rewards and incentive frameworks with balanced approach to service and sales activity usually helps solve the problem, although it may expose unexpected behaviours by employees who aren't doing their job.

4. Poor Data Quality

The adage 'garbage in, garbage out' is relevant. Unless the data being inputted to the CRM is reliable, then it won't be of any use to employees using it, whether it is front-line or analytics, or marketing. CRM exposes poor data quality to the customer. We discuss data quality in the 'Operations and IT II' module.

5. Poor Project Planning and Implementation

Implementing a new or replacement CRM system requires meticulous project planning and execution. Scope creep, where new functionality is added after requirements have been signed off, often causes budget overruns and implementation delays or lack of functionality.

Other failures are caused by overwhelming users with new functionality all at once, with a phased approach backed by training and verified adoption is a better approach.

We discuss project planning in the 'Operations and IT II' module.

6. Lack of Attention to Processes

This follows the previous point, as processes must be realigned to the customer's journey, whether they are buying or using a product or service.

We discuss this topic in the 'Operations and IT II' module.

7. Focus on Technology, not People

Many organisations whose CRM cannot achieve its goals forget this golden rule: 'people, process and technology', in that order, and focus on the technology, forgetting that 'people' (customers and employees) should be the focus. People and process come before the technology.

How to Implement or Remediate a CRM System

Most banks have implemented CRM systems with varying degrees of success, and they are periodically replaced by new systems that offer better integration or performance. In addition to some of the remedies mentioned above, the following applies to selecting and implementing a new system or remediating an existing one that is or has failed.

Have Clarity of Vision

Be clear on what you want your CRM system to do. As banks are now distributed across many channels, the CRM system must break down silos to share information about customers with those that need it, in real time. This saves the customer repeating themselves or replicating data if using an 'unassisted' channel (such as Internet banking). It should also be easy for staff to use – and don't forget, employees of all levels are also customers.

Select the Right CRM for your Needs

This means involving the ultimate users in the selection process. It is crucial to involve 'superusers' (we explain below) in the system and process design projects.

Look at it from the customer's eyes. Whilst we're not advocating that the customer is involved in the buying process, employees who interact with customers should be involved in the specification and selection process to make sure it is fit for purpose.

Lean CRM

Lean CRM is only building and releasing functionality that is necessary to avoid overwhelming users with information and training that they'll never use. Many CRM systems are geared towards use by specialists such as data analysts and marketers, with front-line users using between 20% to 40% of overall system functionality. Information and training needs to focus on how to use CRM to improve their individual performance and customer satisfaction.

When operational, only ask users to collect data if it is to be used – because at least 50% of what many users are asked to collect, is not used!

Deploying functionality in phases builds up users' skills, experience, and confidence, and that helps adoption.

Executive Sponsorship, Leadership and CRM Champions

This isn't only visible leadership; it is championed by someone who is recognised by the users. They not only need to promote it but also visibly be seen to use it – the CEO is usually the best executive champion.

CRM champions are also local 'superuser' members of staff who promote and mentor adoption and best practices at ground-level and are involved in development and implementation.

Successful implementation depends upon 'winning hearts and minds'. Local and recognised CRM Champions and the Executive Sponsor play an important part in winning the battle.

Integrate and Omnichannel Distribution

Integrate and streamline marketing and sales processes into CRM, not only from office processes. Automation should remove unnecessary administration tasks and help your front-office and back-office teams do a job better. It should mean more time with customers, and more time understanding customer data, their value, their behaviour and opportunities: the list is extensive. Nearly two-thirds of an employee's working day is spent on unproductive work: properly implemented CRM can turn that around and improve employee (and customer) satisfaction.

Align CRM processes to customer journeys, to improve efficiency, but allow flexibility as no customer journey is linear.

Training and Accreditation

When choosing a new CRM system, ensure that it is easy to set-up and easy for employees to learn how to use. Don't take a vendor's word for it, talk to users who have successfully implemented the product to get the real story about the training and support they provided.

Accreditation ensures that users feel recognised and competent following training. Training should ensure that users understand not only the 'what', but the 'why'.

Measure Success

Having identified the problems of underperforming CRM systems, and offered solutions, we must consider how to monitor success. Here are several ways:

• Employee adoption – measured through data, aiming to achieve at least 80 per cent, focusing on the lowest unit possible. Involve leadership and champions;
• Features used, not used – an obvious marker of how the adoption rate;
• Increase in sales – from a baseline before the new or replacement system or remediation of an existing system;
• Improvements in customer satisfaction scores – a used CRM system should help improve customer satisfaction scores – from a baseline before the new or replacement system or remediation of an existing system;
• Reduced customer attrition (improved retention) rates, from a baseline before the new or replacement system or remediation of an existing system.