One third of CRM projects generate great results, one third create minor improvements, and the final third produce no improvements at all. You’re probably wondering: “How can I tell where I’ll end up?

To get a good feel for how ambitious your CRM plans should be, first take a serious look at your existing CRM processes—the way in which you market to, sell to, and service customers. The better defined your processes are, the greater your chances of success in leveraging CRM technology.
Over the past ten years, I have seen a trend emerge regarding the relationship between the maturity level of a company’s CRM processes and the types of CRM systems that company is able to implement. I now classify companies into one of five levels of CRM process development. A company’s maturity level often dictates the level of CRM technology it can successfully absorb.

CRM Maturity Level 1: Adhoc CRM Processes

Anarchy prevails in an organization at the level one stage of CRM process development. Account managers tend to view themselves as CEOs of their own territory, unbound by a structured methodology for working with customers. There may be a suggested sell cycle, but it is used haphazardly at best, based on the whims of the individual salesperson.
Being a level one organization does not mean you are a failure, it simply means that results are unpredictable. In this type of company, leads get generated, sales get made and accounts are serviced. However, sometimes lead conversion rates are 20 percent, sometimes they are 1 percent. Sometimes deals close in three days, sometimes in one year. Sometimes customer satisfaction ratings are near 100 percent, sometimes they are in the pits. The problem is nobody can explain why these things happen.
The success of a level one firm is not dependent on CRM processes—because there aren’t any! Instead, it is based solely on the skill levels of individual marketing, sales, and support personnel. If there are no CRM processes in place it is impossible to implement a sophisticated CRM system, as there is nothing to automate. A firm at this level of maturity would be best served by providing its people with CRM tools that focus on increasing individual efficiency (contact managers, word processors, presentation systems and e-mail) versus organizational effectiveness. Such companies need to do a lot of work on process definition before they try to expand their CRM technology plans.

CRM Maturity Level 2 : Replicable CRM Processes

A level two organization has things pretty much under control. Salespeople hit their numbers regularly, future business is forecasted with a fair degree of confidence, customer satisfaction is within an acceptable range. The key attribute of a level two organization is that it achieves its success not through sophisticated CRM process methodologies, but rather through solid management. Level two companies are driven by “tribal folklore”—the belief that, “If we keep doing the best practices of the past, we will keep hitting our numbers in the future.” These types of companies tend to be successful, but only as long as there are no major changes in the way business is done in their marketplace. This type of company can successfully implement a more advanced CRM system than a level one firm. Since there is a recognized way of doing business, such tools as opportunity managers, forecasting systems, configurators and help desk systems can be implemented to help improve operations.

CRM Maturity Level 3: Focused

A level three organization is one where CRM processes have become a way of life for the company. Every employee in marketing, sales and support has the “bible” for how things need to be done—not just the accepted way of doing things, but the only way to do them. Because these processes are so ingrained into daily operations, they can be analyzed and improved. This type of company is rarely caught off guard by changes in its marketplace. It can detect very early when product requirements begin to shift, when competitive strategies are becoming more effective, or when customer satisfaction is just starting to decline.

This type of company is an optimal candidate for a more sophisticated CRM system. Processes are so well disseminated throughout the enterprise that these companies can successfully absorb technological innovations such as marketing automation systems, sales coaching systems, interactive selling systems and systems for marketing, sales and support performance analysis. These companies will probably also have no trouble implementing e-business extensions to their CRM systems to allow channel partners access to the tools.

CRM Maturity Level 4: Dominant

Level four is where we all want to be. A firm at this level has solid CRM processes that are optimized by the most sophisticated CRM systems. These companies also are strong believers in gathering and continually analyzing metrics about their performance. They have a solid understanding of how they sell, how their customers buy and how they need to service clients to create long-term loyalty.
Level four firms are constantly questioning the status quo. They ask themselves such things as: Why do 30 percent of the people who visit our Web site abandon their shopping carts? Why do 15 percent of our “A” leads never get followed up? Why do 23 percent of the orders we process have errors? For these types of companies, CRM systems are not an option—they are a necessity. Implementing CRM is the only way level four companies can get the information they need to analyze and improve their performance. A level four company is in a position to implement, not just great CRM systems, but great Analytics/BI System as well. These companies’ knowledge of how they, their channel partners and their customers do business gives them the insights they need to determine how to best leverage technology to optimize their operations going forward.

CRM Maturity Level 5: Visionary

Level 5 is a state of predicting the future for your business and a state CRM completely stays in Nirvana and often this is pulled to Level 4 and companies put forth stupendous efforts to get back to Level 5. We hardly find very few companies in this state and this requires customer experience optimization as a daily affair.

WHAT’S YOUR LEVEL?

To get a feeling for how successful your CRM systems will be, first do a realistic “gut-check” on what type of organization you have. If you find yours is a level one firm, and you are currently planning to implement a very sophisticated eCRM system, chances are you will fall flat on your face. You are talking about running a four-minute mile when you can barely walk around the block. Pick the level of CRM technology your organization can successfully absorb today. If you don’t like the level of maturity of your CRM processes, then work to improve it. Once the changes have occurred, then upgrade your CRM systems to match your new level of process performance.

Thanks for your patience reading and appreciate if you could experience and share with me your views.

Successful users of customer relationship management have long known the secrets of CRM, and those enterprises that don’t will often fail. All organizations can benefit from the best practices that form the foundation of CRM.

Customer relationship management (CRM) was never meant to be an arcane discipline. However, in many cases, this has been the case. Many clients look at successful CRM practitioners, including the winners of CRM Excellence awards in variety of forums, and think they must have some secret to their success — a secret that’s difficult to discover. This is not the case. What appear to be secrets are really best practices — things that enterprises have learned (in some cases, the hard way), and you can emulate and incorporate as well. The only thing secretive about them is that many successful enterprises don’t want to trumpet them to their competitors. Let’s look at top 10 secrets

Secret No. 1: CRM is ongoing.

Enterprises that understand CRM well realize that it’s not a “once and done” strategy. They never think in terms of a stand-alone CRM project. Instead, they see it as an ongoing re-examination of customer needs, processes and internal dynamics. Enterprises that want to be successful in CRM look at it as a journey that never really ends, and as one that will continue to yield valuable insights and customer benefits via iterative processes. You should realize that customer needs are dynamic, never static. What was satisfactory a year ago may be woefully inadequate today.

Action Item No. 1: View CRM as a process that rolls out over time, and embraces its iterative nature.

Secret No. 2: CRM yields competitive advantage, not parity.

Many enterprises believe that everyone has “done” CRM; therefore, the only value is in matching them. They admit that they may be at a competitive disadvantage if they ignore their customers, but they are not really looking to gain an edge. This is wrong on several counts: 1) only about 50 percent of enterprises have undertaken CRM initiatives. In some industries, it’s even lower. 2) This argument assumes that CRM is about automating functions. If that were the case, they’d be correct, but it’s hard for enterprises to gain an edge when everyone has automated the same basic business functions (think of expense reimbursement or human resources). However, CRM is different because it’s a strategy based on the needs of your customers.  These needs are different for every enterprise and, probably, across different segments. So the key to success is understanding what your customers are saying and meeting those needs accordingly. Understanding this shows that real competitive advantage will come from creating a value-based relationship with your customers.

Action Item No. 2: Use CRM to gain an edge in the market. Don’t just copy others — understand what’s unique about your enterprise and your customers.

Secret No. 3: Think about processes, rather than functional automation.

Process automation is “the buzz” in CRM right now, but few enterprise really understand it or practice it accordingly. Successful CRM revolves around the analysis and redesign of customer-facing processes that provide real value to the customer. When enterprises talk about automating functions (for example, marketing, sales or service), they’re emphasizing the wrong thing, unless they carry it to the next step and start to identify the processes within the function. Truly successful CRM emphasizes these processes, redesigns them and automates them, even when they cut across functions, and even when they cut across the back office.

Action Item No. 3: Don’t just automate functions — concentrate on processes. Model, analyze and redesign them from the customer’s perspective, even when they stretch across political divisions in the enterprise.

Secret No. 4: CRM is about the long term, not the transactional.

An interesting misconception, which is often perpetuated by vendors, equates CRM with transactional systems, whereas other areas (such as analytics, planning and process) are viewed as outside CRM and part of some other acronym. This causes many enterprises to think of CRM exclusively as a solution for Short-term interactions — that is, basic transactions. At successful enterprises, CRM is viewed as a long-term relationship, across the customer life cycle and across all channels. You need to begin to think in terms of your enterprise, rather than individual departments, having a relationship with the customer. Discussions of who “owns” the customer will disappear, because such a concept has no place in this way of thinking. Strategies should be designed to optimize segments across time, products, channels and multiple interactions.

Action Item No. 4: Although making interactions more efficient is important, don’t forget long-term efficiency in sales, marketing and customer service when you’re designing your CRM strategy.

Secret No. 5: There are real economic benefits to CRM.

Return on investment (ROI) in CRM has been elusive for many enterprises. It been frequently asked for simple ROI rules of thumb. The problem has been that many enterprises do not track, or they track badly, the sorts of returns they’ve attained with their CRM initiatives. And those that do it well often don’t want to share this information, because they feel it’s highly confidential and not something to share with competitors. But we see this as enterprises achieve real economic benefits from CRM. Payback periods of less than a year are not unusual, and, in many cases, ROIs are higher than any other IT-based initiatives enterprises are pursuing. In fact, several enterprises have indicated privately that their CRM initiatives were generating more benefit than their enterprise resource planning (ERP) projects and that, had they known that, they would have started CRM even sooner.

Action Item No. 5: Put good measurement and tracking in place to quantify the real value of CRM, and you’ll see tangible numbers.

Secret No. 6: CRM failure rates are improving and are irrelevant anyway.

Several years ago, more than 50 percent of all CRM projects were viewed as failures. This has now become an excuse for enterprises to avoid meeting their customers’ needs. Now that many practitioners understand why CRM fails and how to avoid it, failure rates are declining. The research on the subject should be used as insurance, not as an excuse to avoid CRM. Doing so is similar to saying you won’t drive a car because some people have had accidents. Its better is to know how to drive safely and not worry about what other people do. Beyond that, in many cases, the failure rates should not be a factor anyway, because customers are demanding that the enterprises they deal with become more customer-centric, so CRM is a necessity, not a luxury. Failure rates will continue to decline as more enterprises begin to listen to their customers and invest accordingly.

Action Item No. 6: Don’t use failure rates as an excuse. Figure out what can be learned from them, and then “blaze your own trail.”

Secret No. 7: CRM is far from mature or out of date.

Because CRM has been around for a while, many enterprises seem to think that it is mature, at best, and out of date, at worse. They often ask what the next hot acronym will be. However, CRM is still maturing, and it has a long way to go. Many enterprises are just embarking on their first, contained CRM projects, and customer processes have a long way to go to before they’re fully optimized. Successful enterprises see CRM as “young and vibrant,” with lots of opportunities for positive change, and wide open spaces for improvement and economic value. As the world’s economy begins to rebound, CRM will present you with an opportunity to position yourself to reap the benefits of increased business and consumer spending. On Gartner’s Hype Cycle, we see CRM moving up the Slope of Enlightenment, and achieving value in the pantheon of IT enabled strategies. In many ways, the best days of CRM are still ahead.

Action Item No. 7: Do not reduce CRM to a formula. Embrace it as an iterative process that will be unique to your enterprise and it will grow as you learn to listen to your customers more effectively.

Secret No. 8: Not doing CRM is more expensive than doing it.

Successful CRM practitioners are always surprised — and secretly pleased — when they hear rivals talking about how expensive CRM can be. However, CRM is less costly than the alternative: losing customers to poor service, overspending on lackluster segments, not having enough insight to make intelligent marketing decisions and running the business on only operational and financial data, rather than with customer data. Successful CRM-oriented enterprises view their implementations as wise investments that pay for themselves economically, as well as in customer satisfaction, better decision making and a more-balanced view of running the business. Many enterprises that initially resisted CRM have become some of the biggest supporters, once they realized how inefficient they’d been before.

Action Item No. 8: Allow CRM to become the third piece of a balanced view of your business. Enable the voice of the customer to enter into decision making with operational and financial concerns.

Secret No. 9: Even if you are doing fine right now, you need to do CRM.

The key business strategy of the 2010 to 2020 will be CRM. That means that many enterprises that did well in the past, based on product or brand, are not positioned to move forward as the world becomes customer-centric. Rather than resting on the laurels of past accomplishments, successful enterprises are using CRM as a foundation from which to remake themselves into customer-oriented businesses. This is not to say that you should abandon what got you where you are today, but rather that you need to adapt it to the new world of the 21st century.

Action Item No. 9: Build on your past successes, using CRM as a base to build a customer-centric philosophy.

Secret No. 10: CRM is change management, not technology.

Technology is important to CRM — it is one of what Gartner calls its “Eight Building Blocks” — however, the real benefit of CRM is in the positive change it brings to an enterprise. Internal silos break down, better and timelier information become available, customers are better served, and processes are streamlined, and effectiveness and efficiency increase. As the enterprise develops a common mission based on the customer, employees become more engaged, take ownership of business processes, and your customers begin to notice and start to feel better about dealing with you. The result is one of the rarest phenomena in business — the win/win situation. Your enterprise makes more money, and customers are happier to do business with you.

Action Item No. 10: Plan for change from the beginning, and embrace it when it happens.

Match Point:

The real secret to customer relationship management is that it is different for every enterprise, but that doesn’t mean that you can’t learn from the knowledge of others. Successful enterprises will aggressively apply these 10 secrets of CRM to transform their businesses and, in the process, set themselves up for greater success in the years ahead.