It’s time for some end-of-year reflection in preparation for a new business year. I think we all consider ourselves changed compared to our previous December 2000 selves. The horrific events of the past year accelerated a trend toward focus, I believe – on key priorities both at work and at home. That trend was already underway, with the dot-com fallout and numerous divestitures, but clearly shifted into a higher gear this fall.

Nowhere was that trend more prevalent than in CRM, where rampant tales of grandiose endeavors ending in dismal failure abounded. Yesterday, I read another article predicting the demise of the CRM industry as executives cancel more over- budget never-ending projects and vendors consolidate or close doors due to the decline in market demand. At the same time, one analyst announced that 70 percent of CRM initiatives fail to reach financial goals and 20 percent receive no benefit from their CRM efforts at all. If these reports are to be believed, CRM is destined to end up in the "acronym graveyard," along with BPR and other management fads.

But let’s move away from what the letters C- R-M have come to signify and return to the original meaning of customer relationship management. After all, will companies still have customers in 2002? Of course. Will those companies have relationships with customers, defined by the sum of all experiences each customer has with the company? Of course. And will companies strive to provide a superior experience for those customers, with the goal of increasing retention and lifetime customer value? Of course.

Will companies continue to conduct customer relationship management (all small letters, no caps) in 2002? Of course.

If companies will still conduct customer relationship management in 2002, the question is: Will they conduct Customer Relationship Management as well? And the answer to that is another story.

If CRM will only stand for "enterprise-wide, fully integrated, multi-touchpoint technology implementations" then I think the industry is doomed. Those initiatives face hurdles that, in many organizations, are insurmountable. Interestingly enough, most of those hurdles do not involve technology, but I will return to that later.

What I believe the CRM industry learned in 2001 is that focus is the critical success factor for CRM success. The overwhelming difference between companies who succeed and those who fail is their ability to focus on driving business to the bottom line. If management loses sight of that objective, then the effort will ultimately be lost. Sooner or later, someone will ask (often the CFO or a board member) about the financial return from the technology budget, and the game will be up. This return to financial accountability is now commonplace in the IT world, as senior management pressures IT leaders to justify their budgets in terms of business benefit and financial metrics.

So lesson #1 – financial metrics are required. Now, that does not mean that financial metrics are the only way to measure CRM success. Increased customer satisfaction and increased retention are also valuable success criteria. However, the end goal should be to develop a group of customers who will provide increased revenue and profitability over the long term.

Those financial benefits are critical to gaining support, not just from senior management, but also from employees on the line, which is where CRM project success is determined. Money "in the bank" serves as points on the board in a CRM success tally.

That leads to lesson #2 – it’s all about the people. CRM initiatives are usually driven by IT with a business sponsor dragged in to obtain funding. But, over and over again, the key CRM issues are shown to involve business process and change management more than the ability to "hook up the boxes." I have spoken with countless executives who have described their failed CRM efforts, and the primary failure points always involve people. New technologies provide advances in customer experience, but those advances require equal advances in internal process management (my articles on marketing process changes are just one example). Across the enterprise, new ways of working are required, usually involving cross-functional partnering and the breakdown of traditional silos of people, roles and tasks. For success, these issues need to be addressed at the forefront of the initiative, not during training, with employees suddenly discovering how much their jobs will be changing. Most people find change very scary, and it will be much less scary if those employees are incorporated into the effort.

By the way, gaining employee buy-in during change management and process reinvention is directly tied to financial benefits through: 1) benefits that the program is forecasted to deliver (often considered speculative), and 2) hard benefits that the program has previously delivered to a smaller group in the organization (the whole "getting points on the board" thing). Financial payback is necessary for senior management, and important to the line staff, as the rationale for turning their lives upside down. To succeed, management must understand how substantial and disconcerting the effort may be and take special pains to ensure buy-in by communicating the business rationale and previous successful history.

The focus on the people aspect of CRM initiatives has several implications. First, CRM should not be treated as an IT project, but be driven by business requirements. Not business requirements in the application development sense, but the real requirements of the business – what the business needs to improve performance in a financially meaningful way. Those needs should drive the effort, not the other way around. In that way, business users will be along side the technical staff from beginning to end, ensuring that the necessary process changes are developed concurrent with technology, not subsequent to it. That alignment of business process with technical and change management efforts is rarely achieved in CRM projects and often results in a "stutter start" approach that chews up resources and people’s patience at an ever-increasing rate.

The other implication of focusing on people results in key lesson #3 – win the game by hitting "singles." I have come to believe that enterprise initiatives fail, unless they are comprised of a series of "singles" – small, contained initiatives that are quantifiable and short term. In such a manner, you can reduce the variables and the complexity while increasing the chances of success tenfold. By documenting the successes of these smaller efforts, you achieve a number of benefits. First, you produce a quantifiable benefit to the organization, albeit small, that can be projected across the enterprise to drive budget and buy-in. Second, you produce company-specific best practices, (rather than projecting from other companies’ results). Third, you create a group of front-line "heroes" who can evangelize the effort from a down-in-the- trenches perspective, critical to employee-level buy-in. Fourth, if the smaller projects face some unexpected challenges (and they will), the team can solve them "under the radar" without a lot of other people involved and with little financial implications.

Note, I am not advocating a proof-of- concept approach, which usually does neither (isn’t proof and doesn’t really illustrate the concept anyway), but a full-blown, controllable pilot with a hand-selected team of technologies and business users designed to maximize the chances for success. Using a down-and-dirty approach, the team can produce results quickly and share the learnings across the organization, increasing chances for success in rollout efforts.

In fact, most successful initiatives never really have an enterprise rollout at all. What they do is pile on singles until they win the ball game, by creating a groundswell the same way that a baseball team seems to be able to hit single after single once they get momentum. By avoiding the temptation to hit home runs, each individual effort is given the best chance for success. The same is true with CRM initiatives where each project is focused and targeted to produce measurable business results.

The three lessons from 2001 – financial metrics, focusing on the people and hitting singles – are all critical facets of the new business environment we face in 2002. No one has time for low-odds efforts. What management wants, what the line workers need, what even the vendors would appreciate is an approach that starts small with a high likelihood of success. In the uncertainties of 2002, the keys to success will be centered on focus – focus on people, focus on the bottom line and focus on growing relationships with the customers who permit us to be in business in the first place. If we keep that focus, then the saying "uncertainty breeds opportunity" will be truer than ever, and we can reap rewards in the years to come.

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