This month's column is co-authored by Lisa Loftis, vice president of Intelligent Solutions.

Picture this: The increasing momentum and continuous press around customer relationship management (CRM) technology has caught the attention of a spirited, forward-thinking executive in your organization. Intrigued, (s)he asks you to determine what all the excitement and commotion is about and recommend a course of action for the technology group. After researching the myriad technical possibilities, you present your findings.

You strongly recommend that your organization spend the money to build a new customer service system as the foundation of a CRM effort. Your presentation is a resounding success, and the executives respond enthusiastically. You are given a sizable budget and told, "Get started." Armed with an enthusiastic champion, money to spend and a mandate to move, you confidently think, "What can stop us now?" Good question.

When you embrace the true CRM philosophy, there is no question that its adoption will change the order of things. While the implementation of a CRM program may not call for entirely Machiavellian tactics, it certainly requires careful planning, the understanding of CRM critical success factors and the ability to manage the success factors while continuing to facilitate change. Technology alone is never enough.

To better understand why this is so, let's consider the definition of CRM. CRM is aligning business strategy, organization structure and culture, and customer information and technology so that all customer interactions can be conducted to the long-term satisfaction of the customer and to the benefit and profit of the organization.1

This definition highlights a key issue ­ true CRM requires a focus on business strategy, organization structure and organization culture, as well as technology. Your organization's understanding of the benefits of implementing customer-oriented technology does not guarantee that it understands and is willing to undertake the extensive, comprehensive changes required to bring the benefits to fruition.

Service Culture for CRM

What is required (beyond technology) to establish a sustainable CRM- friendly culture in an organization? Start by understanding that the service representatives in an organization account for most or all of the direct contact with the customers. Therefore, they must grasp the importance and implications of their interactions. It is imperative that the organization has a stable and enthusiastic service representative force that can perform CRM- related activities. Several factors can be monitored to ensure that the culture will enable a customer focus:

  • Service representatives understand the positive impacts that can result from satisfied customers.
  • They are generally accepting and enthusiastic about the sales and customer satisfaction aspects of their positions.
  • Their job skills have been assessed and are adequate for implementing CRM strategy.

Does a culture devoted to customer service really make a difference? Absolutely. Consider the following example involving a very profitable, long-time credit card customer and a large bank.
The customer's credit card account was in good standing with the bank for more than a decade. The customer traveled frequently each month by plane and racked up significant hotel and airline charges, but paid the balance entirely each month. During a particularly heavy travel month, the customer was several days late in making the monthly payment. The customer expected to get charged for the interest resulting from the late payment, but did not expect a $29 late payment fee, a $29 over-the-limit fee and a new annual surcharge on the next bill, as well as the impersonal and insulting treatment from the bank when they were contacted to plea for the removal of the extra fees.

The customer called the number on the back of the credit card to speak to his "personal" care representative. The first annoyance was that he had to enter his credit card number into the phone system ("so we can serve you better"). Then, as soon as he was connected to the customer service representative (CSR), he was asked for the 16-digit number again. He first requested that the CSR remove the two $29 fees. Why hadn't they taken all the years of his excellent payment history into account? The CSR told him that she was not authorized to do that and that he would have to speak to her manager, who just happened to be unavailable at the moment. Next, he requested that the $50 annual surcharge be removed. Surely the bank knew that he was a loyal, active and profitable customer and that he could easily obtain another credit card with no annual fee. Even so, he was told that there was nothing that could be done and that the annual fee was the same for all credit card holders. Finally, the customer requested an increase to his the credit limit so he would be less likely to exceed the limit should this situation happen again. He was told that was not part of the CSR's job and that he should call another 800 number.

The customer hung up the phone, paid his latest bill and took several minutes to cut up the credit card into very small pieces. He mailed the payment, the destroyed card and a cover letter to the president of the bank, who was (evidently) too busy to respond.

What's wrong with this picture? To sum it up, the bank does not understand its customer. Its billing system blindly applied late payment fees without considering the customer's payment history and blindly applied limit-exceeded fees without considering the customer's usage history. The CSR was more interested in processing the call than making the customer happy and was not empowered to act in the customer's interest. Finally, the bank did not centralize its customer service functions. Unfortunately, the reality for many organizations is not that of a centralized, empowered, enthusiastic service culture, but rather one that matches the illustration provided.

How can you ensure that your customer service culture aligns with the success factors listed earlier? Two factors contribute greatly toward a CRM service culture ­ training and incentives. To act as ambassadors of the organization and to promote customer satisfaction, service representatives must be trained and understand how to recognize the signs of a trouble situation and know what to do to turn it around. It is also important to ensure that the success and performance measures associated with customer service are customer focused. Many product- oriented service measures are geared around volume of customers served rather than on customer satisfaction. In a CRM organization, traditional customer service performance measures must be adjusted to accommodate customer-oriented goals and objectives.

In summary, technology is a necessary part of the CRM equation, but technology alone is not enough to bring true CRM to an organization. In addition to CRM technology, your organization will need:

  • Executive endorsement and funding for a comprehensive, enterprise-wide CRM culture.
  • Enterprise-wide CRM education and encouragement of CRM culture.
  • A thorough understanding of (especially the reasoning behind) all organization-to-customer business transactions.
  • Organization and optimization of customer touchpoints to facilitate all of the business transactions.

1 I mhoff, Claudia; Loftis, Lisa; and Geiger, Jonathan. Building the Customer-Centric Enterprise. John Wiley & Sons, New York. 2001.

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