LAURS & BRIDZ CASE

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Module13ImplementationofCRM.pdf

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We’ve covered many different concepts in this course to date. This is the last module of this CRM course. The idea is to integrate everything you have learned so far into the development of a CRM implementation plan. CRM initiatives have not been without their failures, but we can learn a lot from these failures and from companies that have done things right. We will study the critical success factors of a successful CRM implementation plan.

In order to define and implement an effective CRM strategy, one must consider the reality of the environment of the organization that’s attempting to implement it. As a company begins to shift to a customer-centric strategy, it can notice certain signs that indicate the need to step up CRM efforts. A company will undoubtedly face several challenges.

We will look at the business dimensions, the technological dimensions, and the human dimensions. CRM is about people, process and technology, guided by the customer-centric strategy. A change in one dimension of the organization will impact the others. Underlying all three of these dimensions is a fourth: time. Everyone is in a rush to solve their business problems thereby making the environment competitive. So the question becomes: how can an organization implement CRM both effectively and quickly. A sound plan addressing people, process and technology components can aid a company in overcoming those challenges and making their CRM efforts successful.

Without organization collaboration, CRM can’t happen. You can have the greatest strategies written down on paper but if you don’t have the right people, processes, technology and organizational culture, all working together in the right way, all that effort is useless.

PERSONAL EXAMPLE: failed CRM initiative.

• No clear understanding of customers

• No clear vision & strategy

• All technology-based

• No buying from stakeholders

• No structure, no customer-centric culture, poor leadership

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The dynamics of any organization has an impact on a CRM initiative, both positively and negatively. This module creates awareness of the areas that need to be addressed when an organization is thinking about implementing CRM and/or evaluating a current CRM initiative. Every company has a culture, an organizational structure, people, processes and other dimensions, such as the value chain relationships. CRM will affect each of these dimensions. This module presents suggested approaches to implementing and maintaining CRM implementation.

The learning objectives for this module are noted on the slide.

1. Explain the cultural, process and structural changes within an organization, needed to create a customer-centric company and consequently gain the benefits of a CRM strategy.

2. Define the key ingredients and best practices to successful organizational collaboration.

3. Identify the various stages of organizational change and the appropriate actions to take at each stage.

4. Examine the elements of a CRM change management strategy. You need an internal marketing plan.

The bottom line is that organizational collaboration is the customer-centric internal change needed to deliver the required and desired external customer experience, based on the voice of the customer. It will involve changes to organizational structures, business processes, technology, metrics, incentives and compensation, skills and even the organization’s culture. Ongoing change management will be key to delivering organizational collaboration. But unlike other forms of change management, the degree of change necessary for CRM affects a wider employee audience and involves direct input from customers and others in the value chain.

NOTE: We will also look at a ‘big picture’ model for implementation, broken down into four stages.

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Let’s talk about some of the research that has been done on the way companies implement CRM. If you talk to any experienced CRM professional or any organization that attempted to incorporate CRM as their business process and almost without exception, they’ll tell you that a key challenge is the organization itself. It’s not the technology but the organization.

This slide shows some reliable research studies that have been done to better understand what it takes to make CRM implementation successful. McKinsey, a well-known company in the field of CRM research, conducted over 25 client studies with in-depth organization design issues; 20 in-depth CRM case studies on leading companies across industries and CRM performance levels; and 10 external interviews with leading CRM executives from high performers to emerging performers. The studies concluded that ORGANIZATION is a critical and often overlooked factor in driving CRM initiatives to better performance. Of all the interviews, organization was among the top 3 critical challenges and over 60% cited organization as one of their top 2 challenges.

According to another study by an online CRM Forum, when people were asked what went wrong with their CRM projects, 4% cited software problems; 1% cited bad advice or poor consulting; but 87% pinned failure on the lack of change management.

Thomas Davenport, a well-known researcher in technology implementation, states the right education and training as crucial – at all levels –for every employee that will be using CRM technology.

So these findings set the stage for what this module will cover. What can an organization do to reduce these alarming statistics?

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If you look at this slide, you see detailed reasons why CRM initiatives are perceived as failures. There aren't any that relate to something other than the organization.

• The inadequate support from top management with that saying is that the leadership is not the way it should be. There's no real Champion or CRM change agent that is committed to implementing this across-the-board.

• Inadequate financial commitment usually comes from poor leadership, or a management group that is not really completely sold on the idea of implementing CRM.

• Supply chain partners that are not included in the decision-making process or that are not a part of the collaboration. Collaboration and cooperation are necessary between the different stakeholders, between strategic business units and also in the value chain, you're going to have partners, suppliers, and distributors that need to be a part of your planning. They may play a role in the processes that your company has.

• No specification regarding who owns data. Once you have a CRM system, you need to have people that take ownership in inputting certain pieces of information. For example, a sales rep may be responsible for identifying how much an opportunity is worth. Here, the sales rep owns the data piece or the data component called opportunity. If you're dealing with somebody who is in the service area, the type of complaint would be a data field that would be owned by a customer service rep.

• Poor quality data has to do with the fact that we’re not collecting the kind of information that we should or that the way that we collect it is not descriptive enough or detailed enough.

• Technology is the focus instead of the customer. Many companies tend to focus more on the technology solution as opposed to what's in it for the customer. How will this have a positive impact on my customers? If I implement this technology and I use it to enable certain processes, will they be of value to the customer? A lot of companies don't do that. They focus more on what they get out of the technology and how much it's going to save them.

• Another area is performance metrics that haven't been established. You can’t improve what you don't measure. So if you don't have certain metrics in place to identify the progress that you're making, then you're never going to know whether you are failing or succeeding.

• Lack of change management initiatives - if you don't have a plan to communicate the adoption of your CRM technology or strategy, then a you might as well just hang it up because you need to have of internal marketing plan to be able to get the buy-in from different people within the organization.

• Every employee in the organization needs to understand how this is going to benefit them if they do a better job of selling to the customer or servicing the customer. Ultimately the employees themselves should be rewarded with incentives and compensation that are aligned with those values.

Let’s use this diagram to review the major stages of the CRM planning and implementation process and the deliverables of each stage. 1. The first stage is to define your CRM destination. According to Gartner, the primary cause of CRM failure

is the inability of a company to develop and effectively implement a strategy for relating to customers. A company must know where it is going; it must have a clear destination or, as I refer to it, the compass. Lots of research and analysis are required in order to determine where a company wants to go in terms of its future in CRM. The deliverables from the 1st stage are a high-level strategic plan, a business case and proposal for CRM.

2. In the second stage, the company uses the gaps and CRM opportunities of the company to design a blueprint for what it wants to look like in the future. This blueprint is the detailed roadmap of the new CRM infrastructure for getting to the destination. This infrastructure includes the new processes, customer information requirements, experiences, technology, metrics, and so on. After designs are completed, another business case should be documented to help quantify and prioritize sub-projects.

3. Stage 3 is the actual building or construction of the CRM infrastructure design developed in stage 2. Again, another business case should be developed after this stage so implementation efforts can be planned for effectively and efficiently.

4. In the last stage, the company focuses on putting the new strategies in place and making them reality. This requires adoption and acceptance from key stakeholders. At this point, let’s distinguish between CRM implementation and installation. Implementation is broad and consists of the adoption of the CRM DESIRED work practices based on the CRM vision. Installation is much narrower in scope – it includes putting into place of the new software application or solution. Installation normally refers to the one-time placement of the technology component of CRM.

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You’re already familiar with this diagram. One focus in this module is organization collaboration. Organizational collaboration involves the transformation of a company’s culture, structures, processes and behaviors to make sure that employees, partners and suppliers work together to deliver what is promised. It’s critical to make sure that end users of the change (employees & partners) accept any new behaviors and embrace the use of new processes and technology.

The reality is that it’s the people within an organization that hinder CRM success. The best way to prevent the problems (or at least minimize them) is to create behavioral change. In the long run, this provides the best return on investment (ROI) of CRM. So how can this be done? That’s what organizational collaboration is all about. Only a program of managed change that builds the internal organization into a force of collaboration across all departments will transform an enterprise and build a customer-centric culture.

Many enterprises believe that implementing CRM technologies makes them a customer-centric organization. They forget, ignore or deliberately avoid the changes that employees need to make and the impact on the enterprise culture. Very few companies make organizational changes with regard to "the CRM project" or give employees proper incentives to behave in a collaborative manner. If a company doesn’t change its internal behavior to benefit customers, it is clearly not customer-centric centric and should not claim to be so. Individuals, teams and departments need to learn to behave differently toward each other internally to build relationships with customers that transcend technology and benefit the customer.

Successful CRM involves changing processes, organizational structures, compensation incentives and employees' behaviors. Therefore, it is difficult, if not impossible, to achieve true CRM through a series of bottom-up initiatives. The main obstacles to successful CRM initiatives are difficulties in changing people, processes and politics. When vision, direction and leadership come from senior executives, the necessary changes are less likely to be blocked or restricted due to internal political infighting, introspection and inertia.

It starts with the right leadership. It’s much easier to overcome the company politics and alter behavior if the direction for a CRM strategy comes from senior management. A strategy and phased plan will communicate the vision and motivate people to work together to deliver valued customer experiences. When dealing with CRM, a company must have an ongoing change management strategy and training. Long term changes to organizational structure, behavior and culture require deliberate action to change. Employees need to understand the reasons for the changes and why they should support an initiative. This requires communication at the corporate level (what the company wants to achieve, and its value to the company and its customers) and the individual level (how employees will benefit). TALK ABOUT INTERNAL SALES.

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This module focuses on four main areas, as noted on this slide. The first area is the human factors or the PEOPLE associated with CRM which include the leadership, the appointment of a change agent, or a group of champions, the HR capacity or the type of resources that you have available, and those usually are looked at in two groups: the users and the enablers. The enablers are those people that have the technical skills to be able to facilitate all of the technical changes and the process changes. Then you have the users that are the ones that ultimately will be using the new processes and technology on a day-to-day basis. Communication is so important across all levels of users and enablers. This includes being able to explain to your company the benefits; the adoption plans that you have in place; allowing employees to vent and get their input and their feedback and incorporate that as part of your strategy; the cooperation that you need from different functional areas; a business process orientation or a cross functional approach and then the people themselves and the different skills that they need.

The organizational environment includes the organizational culture, the structure of the company (organization charts, reporting structures, processes and levels of authority) and the size of the company (number of employees, offices, clients, and more). There are advantages and disadvantages depending on the size of the company and how well they can do when it comes to CRM adoption. Think about it: the bigger the company and more people, the more complex it is to implement change. Consider a small business compared to a global organization.

Value chain organization is about integrating the different processes used between employees, departments, offices, channels and integrating your suppliers, vendors, distributors and partners, all in the business processes that you're designing. From an organizational perspective, what is important here is to recognize that CRM will cause process changes. Consider a team project at school.

Other things to consider at the organization level are the way in which the company shares and manages information and knowledge. This is called knowledge management.

We will address the fours areas by using different concepts and models to explain the impact of CRM and the ways in which an organization can prepare for CRM. If you know something upfront, then you can be proactive and put practices in place to minimize the negative impacts.

Let's touch on the size and structure considerations. One of the advantages of being a large company is that you have more financial resources available to you. In the case of a small company, sometimes they don't have the financial and human resources needed to implement certain aspects of CRM. A disadvantage would be that the larger you are, the more complex it's going to be to train and implement CRM and to get all people on board. You'll have to get more buy-in from many more employees than if you were in a small business. You also have more departments and more functions structured within your company to it's going to be a lot more difficult to break through those silos when you're dealing with a large company as opposed to a small one. In a small company, you have people the kind of do a little bit of everything. So they're not just focused on accounting or sales. They do a little bit of everything.

In the case of structures, there are many available. There is the functional structure, which is very silo-oriented, very departmental versus a business process orientation, which is much more focused on looking at the company as a set of processes and not as a set of departments. Process orientation has a very cross functional focus. Many companies today are also product-structured, or organized around brands, geographic areas or even around key customers or accounts. Another approach would be a customer based structure; it's not exactly key account management but it's categorizing or clustering your customers and then trying to get economies of scale by serving groups of customers that have similar characteristics, lifestyles and demographics.

Technology is important to think about; who's going to be handling all of the technology functions in an organization? Whether it's an internal department or even a function that you have outsourced, you want to make sure that they're all integrated and that that everybody is speaking the same language. Make sure that the technology environments and platforms are compatible with each other. Some companies have built their own functional databases. If you've ever put a CRM system in place, you have to make sure that those functional databases are going to be able to communicate effectively and integrate with any new technology. There are other technology considerations such as making sure you have the same software for different users within your company; and keeping track of all the different hardware and software versions and capabilities that you have. If you have different equipment and software, you need to track licenses and contractual terms for the different types. You also have to look at the skill levels of the employees in your technology groups and make sure that you are retaining those good employees and not losing them to the competition and then last but not least, we need to talk about business processes.

Business processes - When you're going to a CRM initiative, you want to make sure that you design or redesign (or some people call it reengineering) your processes so that the outcome of those processes is beneficial to the customer. You want to design the different steps and ensure you have the right inputs to be able to provide that excellent customer experience. There shouldn't be ever a process that prevents an employee from satisfying the customer. That's the philosophy behind redesigning your processes. You have to keep in mind the way that you're going to measure the outcomes of those processes. One concept that's used are hard standards, which are used in the call centers to be able to ensure compliance so employees are following certain guidelines and adhering to certain rules and regulations. You want to also minimize the number of people that have to contact a customer.

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Organizational culture is a pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide them with the norms for behavior in the organization. Essentially, organizational culture consists of the widely shared and strongly held values. These values are reflected in patterns of individual and interpersonal behavior, including the behavior of the business leaders, and expressed in the norms, symbols, rituals and formal systems of the organization. This is important because many times, the organizational culture needs to change to implement CRM. For some companies, it is easy to adapt to a customer-centric philosophy; for others, it isn’t as easy. The further away a company’s culture is from this CRM philosophy, obviously the harder it will be to change.

Let’s explore the key capabilities needed to create a CRM culture – A capability is the collection of skills, resources, know-how, and technologies needed to create customer value time and time again. To do so, let’s look at these five areas.

• Leadership: Today's CEOs should seek to develop organizations that are less hierarchical and that have a strong sense of purpose, and they must know how to motivate their staffs. Sponsorship can be defined as the material or financial support needed to carry out a particular objective.

• Skills and Competencies: Great leaps in technology require the development of the relevant business skills, especially in technology, analysis, project management, facilitation and service.

• Knowledge: Sharing knowledge builds collaboration and innovation, but political barriers are high. People have a hard time sharing knowledge. Evolving knowledge management tools and techniques should be employed.

• Organization: Decision making must come closer to the customer and enable faster action. Organizational structures must use communities and virtual teams.

• Compensation and Incentives: Performance targets must be aligned with customer goals, but recognition and celebration of contributions are more powerful motivators. There are numerous ways to recognize people.

Strong leadership is required. Change must start at the top. Also need strong change agents – people who believe in CRM and can influence others to follow.

Be sure to watch the video link on the slide. Taking ownership of the customer is a cultural issue. It is something many struggle with.

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Customer-focused leadership describes the behaviors and the values that leaders and managers display in their job functions. And it all starts at the top with executive management’s commitment to CRM. Top management commitment is more than just giving his or her blessing. Customer-centric leadership requires the 4Ps, and they’re not product, price, place & promotion: 1. Purse strings or financial support – Leaders must be willing to provide the right resources to CRM. This

means hiring and/or reallocating sufficient key employees. It’s hard to find qualified staff for CRM; on the other hand, you need the most competent employees you have to handle key functional responsibilities.

2. Passion is the level of advocacy leaders have for CRM. How excited do they get when they talk about CRM? How sold are they?

3. Practice relates to how well they walk the talk. It also considers how involved leaders and managers are in the CRM implementation process. CRM can’t be delegated to the lower ranks. People believe when they actually see changes in behaviors, actions and results – not just because management tells them. Seeing is believing.

4. Patience – CRM wasn’t built in a day. It takes time and learning. Management must be cautious when pressuring employees to do things differently.

Studies by the META Group report that top management support and involvement are key success factors for CRM implementations. Without it, CRM will lose momentum very quickly. Leaders must be heavily involved in the design of the CRM vision and strategies. They must walk around and show their enthusiasm to all stakeholders – each and every day! Check out the five traits of a customer-focused leader.

Now I’d like to discuss emotional intelligence – a leadership model for CRM. Psychological studies have recently shown that a 1% improvement in the emotional climate can generate a 2% increase in revenues.

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Emotional intelligence may be the key attribute that distinguishes outstanding performers from those who are merely adequate. Studies have shown that leaders and managers with emotional intelligence do a better job of managing change – and CRM causes change. There are five components to emotional intelligence: self- awareness, self-regulation, motivation, empathy, and social skill. All five traits sound desirable to just about everyone. But organizations too often implicitly discourage their people from developing them. Let’s look at each one:

Self-awareness. Emotional intelligence begins with this trait. People with a high degree of self-awareness know their weaknesses and aren’t afraid to talk about them. Someone who understands that she works poorly under tight deadlines, for example, will work hard to plan her time carefully, and will let her colleagues know why.

Self-regulation. This attribute flows from self-awareness, but runs in a different direction. People with this trait are able to control their impulses or even channel them for good purposes.

Motivation. A passion for achievement for its own sake—not simply the ability to respond to whatever incentives a company offers—is the kind of motivation that is essential for leadership.

Empathy. In addition to self-management skills, emotional intelligence requires a facility for dealing with others. And that starts with empathy—taking into account the feelings of others when making decisions—as opposed to taking on everyone’s troubles.

Social skill. All the preceding traits culminate in this fifth one: the ability to build rapport with others, to get them to cooperate, to move them in a direction you desire. Managers who simply try to be sociable—while lacking the other components of emotional intelligence—are likely to fail. Social skill, by contrast, is friendliness with a purpose.

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Another important capability is to shift from a functional structure to a cross-functional one, which is based on business processes. Business process oriented companies design their processes based on what’s beneficial to the customer, rather than what is beneficial for the company or individual departments. The success of CRM adoption can be greatly attributed to how well an organization can analyze its business processes and modify them by effectively integrating CRM technology.

The diagram in the slide shows how companies must shift from thinking in terms of departments to thinking in terms of business processes. Processes are horizontal because they cross through various departments. Let’s take the Customer Service processes on the right of the diagram. You recently purchased a new computer and encountered some problems setting it up. You call the customer service number and get bounced around. Sounds familiar? Have you ever been transferred to another department when you have had a service problem? Or have you ever had someone say “that’s not my problem. You need to contact another department.” This is most likely a company that has vertical or functional processes instead of cross-functional or customer-focused processes.

A cross-functional orientation means that a process is looked at as it travels through the various departments and functions. Ultimately, it is the customer’s desired output that matters. The goal is for the company to get through the trip with as few errors as possible and as quickly as possible, for the customer’s sake!

Think of a time when you were a customer dealing with a ‘silo-company’ versus a ‘cross-functional’ one. What difference did it make to you as a customer? How did your experience vary?

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A company has a FUNCTIONAL ORIENTATION when it emphasizes hierarchies rather than processes. The major desired outputs are tasks and reporting relationships within the various levels of the organization. Who reports to whom? Who’s my boss and my boss’ boss?

A company with a BUSINESS PROCESS ORIENTATION emphasizes processes and outcomes rather than hierarchies, although it does consider hierarchies as well. It has the following characteristics:

• A unified strategy and vision • Is concerned with outcomes and not just the tasks • Is focused on the customer satisfaction FIRST • Has a redesigned organizational structure • Aligns employee rewards with structure • Has decision support systems and technology to help the customer • Has informal social systems • Shares knowledge across departments • Uses team structures

McCormack’s model of business process orientation is comprised of three components: (a) process view, (b) process jobs, and (c) process management and measurement systems.

A process view is the degree to which the organization emphasizes the view of the organization and its external environment as a series of interlinked processes, or as a value chain. How well are processes defined, documented and understood by employees?

Process jobs relate to the activities performed by employees; these are based on a process rather than a function or product. When employees own a process, they feel more accountable for the customer. Remember the video ‘who owns the customer’? Structuring jobs around processes encourages customer ownership.

Process management and measurement systems is the degree to which the organization has management approaches that continuously direct and assess the performance of business processes, allowing for the identification of opportunities for improvement. Here, we look at the measures, compensation and incentives; the collaboration of teams; and customer values.

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According to Gartner, “people and politics issues, as opposed to technology issues, are some of the biggest challenges in customer relationship management today”. Creating a culture with a "relentless focus on the customer" is not a quick and easy initiative. As we’ve already mentioned, effective CRM requires a high degree of change to organizational culture, behavior and collaboration. Without the ability of the company to align its resources to CRM strategy and vision, the risks of project failure are high.

Many companies don’t have the cultures to support CRM. Changing the entire organizational culture is beyond the scope of this course and module; however, it is important to understand the behaviors and skills that need to change. Noted in this slide, you will find the four stages of change: denial, resistance, exploration, and acceptance. As Peter Drucker, management guru states, managing change doesn’t always guarantee success. But ignoring the need to manage change guarantees failure.

The diagram in the slide illustrates two scenarios: managed change and unmanaged. In both scenarios, there is always a dip in morale, productivity and commitment on the part of employees. This is normal. But notice what can happens to the morale, productivity and commitment of employees when changes are not managed effectively. Over time, these dominate the workplace. In the other hand, when change is managed, the negative situations take a turn for the better.

There are four stages that people go through when facing CHANGE. Now let’s review each of the stages of change. Think about the last time you went through a change?

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The first stage of change is denial. People fear the unknown. The effect of denial is like the brain putting the brakes on. People suspend belief as they try to make sense of this new, powerful information. The condensed description of this stage is, “Oh my God is it true? OK. It’s true.”

The most important step you can take towards a successful CRM initiative is to let everyone involved know early what is planned. Then, communicate often about it – what’s planned, who’s affected, when and how the changes will occur. Further, it is estimated that organizations tend to only communicate 10 percent of the information needed to really help employees understand and accept a major change. Keep in mind the tips shown in this slide:

Each of the four topics (who, what, when and how) need to be covered differently with different people – be a SALES person.

• Pay equal attention to each topic

• Start communications early in the process – repeat information as needed.

• Communicate clearly – give people the “big picture”.

• Make sure the message is fully supported by management.

• Ensure two-way communication.

• Get people involved in the decision-making process.

• Begin to identify the skills required to transition to DESIRED STATE.

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Resistance is the second stage of change and often the most uncomfortable stage. You’ll know employees got the message when they start to kill the messenger. This is what happens in the resistance stage. People begin to realize that the changes need to take place but try to fight them. The condensed description of this stage is, “This stinks.”

While poorly named, this stage is where all the feelings reside. These feelings can be worry, anger, elation, anxiety, sadness, fear, happiness, depression or guilt. This is the stage of suffering. People realize they cannot go backwards, but they don’t know how to go forward. The chart in the slide illustrates the roles that communication, education & training and metrics & rewards have in each of the four stages of change. Notice that the most important of the three tools listed above is communication! Timeframes between each stage is determined by how well the new change is communicated.

In the case of the resistance stage, your role as a Change Manager is to:

• Be a change navigator

• Lead employees through the stages of change

• Develop and communicate departmental and individual training plans

• Build an environment of trust and openness

• Recognize and reward their efforts

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The third stage is exploration where the person begins to ask what they are going to do next? They realize they can’t go back, and they are suffering, so what are they going to do to handle their current difficulty? They begin to explore the possibilities.

This stage is a bit more calm and logical, but it is common for people to go back and forth between resistance and exploration. As the person continues to deal with the fallout of the change, they may be thrust back into resistance, try to regroup and move into exploration. The condensed description of this stage is, “This stinks, but I can’t go back. Now what am I going to do?”

In the exploration stage, people will have questions and want to test new processes and procedures out. The diagram shows the various actions that should be taken with leadership, communication, education & training, workforce transition, and metrics and rewards.

Your role as a Change Manager during this stage is to:

• Be patient and open to new ideas

• Give people the proper training and let them experiment with new ideas

• Conduct “gripe” sessions

• Redefine job descriptions and performance measurements

• Implement departmental and individual training plans

• Learning takes time – Change, even for the better, still represents a loss of some kind

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The final stage of change is commitment. The person has suffered the loss, developed their next steps and now commits to a path of reconfiguring their life or their work. Through this path, something new is created. The change is complete. Under this stage, people understand their role and feel pride in their job – and in the company. The condensed description of this stage is, “That was difficult, but this is what my life is like now.”

Let’s review some key elements of training & education and metrics and rewards, all critical during this stage.

Training and Education

Understanding that each person learns differently is a key factor in successful change management. Take note of the different methods and make sure to provide training (materials, methods and tools) that accommodates each learning need:

• By reading (see it)

• By listening (hear it)

• By doing (do it)

Metrics and Rewards

Think about how you plan to measure whether your new change is effective or not. What measurements will you use? How will you know that it’s working? How do you know if modifications are needed? Is the new way better than the old way?

Also of importance, how will you know who’s doing it right? Who will you be tracking? Should they be recognized for setting an example? Will you want to include them in a follow-up focus group to obtain their feedback on improvements? How will you know who they are? Be sure to:

• Capture historical metrics for comparison

• Track the same things with the right people doing the new process

• Compare apples to apples

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Internal marketing is a planned effort to manage organizational resistance to change and to align, motivate and integrate employees towards the effective implementation of CRM strategies. To develop an internal marketing campaign, the first step is to identify who you need buy-in from on CRM – management, IT staff, different users or departments, etc. Getting buy-in can be the greatest challenge in CRM. Each group has different needs, expectations and benefits associated with CRM. The key is to figure out ‘what’s in it for them.’ How will each group benefit from CRM, both organizationally and personally. The marketing objectives can include broad goals such as obtaining commitment from user groups, motivating employees to adopt new CRM processes and work practices, or developing a customer-centric culture.

Then for each group, you will need to define the target message you want to convey to each group. What is going to ‘sell’ CRM to them? Along with the message, you will need to identify the best way to communicate with each group. With some groups, it’s better to communicate person-to-person; with others, meetings may be needed supported with written correspondence. You may even need to develop some incentive programs to motivate users to use CRM-related processes. It is always helpful to identify people that can influence users and help you sell CRM to them, such as sponsors, managers and other advocates.

Your internal marketing plan must include the CRM vision, mission statement and objectives, all translated into terms that are important to each group. You must be able to talk in their language.

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Your internal marketing plan must include a strategy for each of the 7 Ps. Let’s review each one.

Product: The CRM strategies are the product. Employees ‘buy’ the CRM strategies they must implement, changed work processes or other related initiatives of senior management.

Price: This is the psychological cost of adopting new work practices.

Promotion (internal communications): This includes face-to-face briefings, corporate newspapers, employee portals, corporate videos, trail runs, incentive plans, corporate TV network (for example, FedEx), road-shows, and conferences.

Place: This is where on-site/off-site meetings will be held, including virtual locations.

Physical evidence: This includes any tangibles items such as memos, briefing notes, training manuals, job descriptions, and awards.

Process: Training, coaching, direction, negotiation, and testing.

Participants: Included here are colleagues, team-members, supervisors, CEO, trainers, consultants, and IT staff.

MAR 4860 – Customer Relationship Management MODULE 13

One way to segment or group your users is to establish their degree of buy-in both from emotional and an intellectual points of view. Buttle (2009) calls the matrix in the slide the Buy-in Matrix. Emotional buy-in is when employees have a genuine heartfelt enthusiasm and excitement about the changes. Intellectual buy-in means that the employees know what has to be done or changed (rational) and understand the justification for the needed changes.

In this matrix, the champions are those individuals that are emotionally and rationally committed to the CRM strategy. These are the change agents, those that facilitate the changes needed for the new culture. Weak links are those that are neither emotionally nor rationally committed. Bystanders understand the changes but feel no emotional commitment to align themselves with the change. Loose cannons are filled with enthusiasm, but really don’t understand what they have to do to contribute to the change.

CRM projects need to be marketed and sold to each group in a different way. The objectives are to get bystanders enthusiastic and passionate about the CRM practices; educate the loose cannons to help channel that enthusiasm; and analyze the neutrals to determine if they can be won over – most are not and therefore must be reassigned to jobs where CRM is not a requirement.

Another way to segment is based on the level of customer contact that employees have.

MAR 4860 – Customer Relationship Management MODULE 13

One of the key components in the implementation of CRM is being able to quantify the value of your tactics and strategies. We eluded to this in the last module when we spoke about estimating the expected benefit of each targeted business outcome. This is important for prioritizing the various tactics by determining the specific ROI or return on investment of each initiative. ROI tends to be the most effective measure of program success. ROI’s components are costs and benefits. Let’s now look at the four main categories of costs or investments for any company embarking on a CRM initiative. The slide above shows examples of these significant investments:

• Research costs involve analyzing each department’s needs in relation to the customer. This consists of gathering and/or documenting the current processes and data collected about the customers. It also includes conducting a readiness assessment of your company’s ability to adapt to a CRM environment. You will also need to research potential solutions such as software providers, consultants and so on.

• Process costs consist of the redesign or reengineering of processes to create more value for customers. It is wrong to implement technology on processes that are not effective and/or efficient. They must be fixed first. These costs also include project management costs and more importantly, change management costs (reactions to redesigned processes). This last area is one that is attributed to the failure rates being as high as they are.

•Information technology costs consist of the purchase of software licenses, the set up of the proper technology infrastructure within the company and the purchase of any hardware required. For smaller companies, there are more cost effective solutions called ‘hosted or cloud-based CRM’. This means that the software provider maintains the CRM database on its premises and the company accesses their CRM database via the Internet.

• People costs involve the development of the people. This includes hiring the right people for the CRM projects. It also includes training employees on new CRM processes, new technology and functions, and redeployment/assignment of the right resources.

MAR 4860 – Customer Relationship Management MODULE 13

Even at a project level, CRM is not only about implementing technology. Automating poor processes will likely lead to failure, as will lack of attention to training and skills development and adjustment to incentive plans and metrics. At the more macro program level, it is even clearer that technology is only part of the challenge. Based on years of research and CRM consulting, Gartner offers eleven best practices for aligning the organization with the company’s CRM vision, giving it the potential to deliver the desired customer experience. These best practices summarize just about everything we have covered in this module. 1. Make Changes to the Organizational Structure: Historically, enterprises have developed around a product-

based structure. This structure makes it extremely difficult to have a customer-centric view of the world, very few enterprises are structured by customer types or customer-value-based segments. In many cases, hybrid structures can be created, but the entire organization may have to be rebuilt. Enterprises are also still structured by departments, such as finance, HR, IT, sales and marketing. This is not customer-centric. Enterprises will need to organize around customer segments (such as high wealth or least profitable or highest potential value) and customer life cycle processes (such as target, acquire, develop and retain). Within each of these key processes there must be a mixture of sales, finance, customer service, HR and other skills. Some traditional departments have little interaction with or impact on customers (e.g., the section of finance that prepares end-of-quarter financial results), so not all employees need to change as part of CRM.

2. Go Beyond the "Front Office": CRM is not just about "sorting out" sales, marketing and customer service. Customers feel they are dealing with the enterprise as a whole and its associated value propositions, not its departments. It doesn't matter that the call center, shop or the bank branch staff have an excellent customer-focused manner, with excellent CRM technology at their disposal, if the finance department sends an incorrect invoice or the delivery department sends the product to the wrong address. For the customer, the enterprise, not the department, has failed to deliver the expected customer experience. Customer-facing staff, processes and systems must be integrated with operations.

3. Involve the Business Partners: If the enterprise's value proposition to the customer is partially dependent on its suppliers and business partners, then they must also be included in any CRM program.

4. Do Not Change the Structure Too Quickly: Gartner estimates that enterprises can only change the attitudes and behaviors from one structure into a new structure at the rate of between one and two layers of management per year. So a management structure with 10 layers may take at least 5 years to become customer-centric, even if the changes are successful.

MAR 4860 – Customer Relationship Management MODULE 13

5. Use Change Management: Ongoing change management and training will be key to the success of any CRM. Organizational structure, processes, behavior and culture are built up over a long time period, in some cases hundreds of years. They won't change by themselves. Changing behavior to be more customer-centric and "bake in" the enterprise-level brand values is fundamental to the success of any CRM program — people factors are always among the top causes of CRM failure.

6. Communicate the Changes and Get Buy In: Hand in hand with behavioral change is the need for employees to understand why they are being asked to change and to give their support to the initiative. This requires communication at two levels: • At the corporate level — "This is what are we trying to achieve and this is its value to us and to our customers." • At an individual level — "This is the important role we need you to play in this." The need to target communication in CRM projects is far higher than most other initiatives because of the customer- facing roles of employees, the need to communicate with customers and partners, and the numbers of employees involved.

7. Build Customer Understanding Within the Enterprise: Many employees have no contact with customers and many of those that do joke that "if it wasn't for the customers we could get on with our jobs." Many employees are so internally focused that they have little understanding of what it is like to be a customer. Initiatives such as role playing as a customer or acting as a "mystery shopper" are very effective in opening employees' eyes to the realities of being a customer, leading to an understanding of the enterprise's strengths and weaknesses from a customer viewpoint and creating greater empathy with the customers. A company should involve every employee in the CRM initiative (including the CEO and senior management) to place a phone call, send an e-mail or access the Web site from the outside as a customer and try to do business with the enterprise by purchasing something firsthand without using internal contacts.

MAR 4860 – Customer Relationship Management MODULE 13

8. Improve Collaboration to Support Redesigned Processes: To deliver on the customer value proposition (CVP) and create the desired customer experience, enterprises must review and revise their processes to be more customer centric. This will mean that processes move away from product or department centricity toward a seamless integration of processes across product areas and departments. This will be a significant shift in thinking and working practices for many enterprises, requiring new levels of internal organizational collaboration and leadership — change management will be key. As processes are redesigned to be more customer-centric, a company must ensure that the necessary organizational collaboration is put in place to support the new cross- departmental processes. 9. Communicate Objectives and Performance Achievements: Enterprises must set measurable, specific CRM objectives and monitor progress if they are to become customer-centric. Regular communication of the relevant objectives, at all levels (e.g., corporate, customer-strategic, operational and process and infrastructure input) will help ensure a shared goal. Regular feedback on success in meeting those objectives will help ensure that the enterprise "stays on track" and that the reason for any corrective action is clear. Action Item: Define objectives and performance metrics in line with the overall CRM strategy. Ensure that they are regularly communicated internally and used to maintain and enhance organizational collaboration. 10. Review Incentives: Incentive and compensation schemes are designed to drive behavior. Unfortunately, they often drive the wrong behavior from the customer and overall enterprise viewpoint. They can pit department against department and channel against channel, create short-term gain that results in long-term loss, or focus on efficiency at the expense of effectiveness. Such schemes must be reviewed and aligned with the enterprise's internal objectives and metrics, to reinforce cross-functional collaboration, and with its external objectives, to reinforce delivery of the required CVP. Action Item: Start the process of changing compensation systems early as they are highly contentious and often fixed by unions and other bodies for at least a year. Renewal of job descriptions, contracts of employment and incentives is time-consuming and requires careful upfront planning and cooperation with HR. 11. Monitor and Enhance Staff Satisfaction: Many companies have found correlations between staff satisfaction and customer loyalty and retention. Improving the employee workplace and employee motivation has a positive impact on employee satisfaction, productivity and retention, which in turn have a positive effect on the customer experience. Enterprises need to monitor employee satisfaction and take steps to improve it as part of a CRM program. At least two steps are necessary to improve employee involvement: 1) the belief that management supports those who talk to customers every day and not the other way around and 2) allowing employees to apply their personalities during interactions with customers and contribute personally to "making a difference."

MAR 4860 – Customer Relationship Management MODULE 13

NOTES:

MAR 4860 – Customer Relationship Management MODULE 13