Playing The CRM Odds

There are all kinds of competitive-edge technologies being deployed by businesses today. Many technologies - such as Web-based supply chain management software, which we wrote about last week - may be difficult to deploy. But hard-pressed companies have beaten the odds and successfully implemented SCM systems. Then there are other technologies - such as some new forms of virtual private networks, which we explore in this week's issue - that are turning out to be, shall we say, works in progress.

To avoid making big, costly mistakes, I-managers, like good baseball managers, often play the percentages when deciding which move to make. Except when it comes to customer relationship management. Here, I-managers are moving ahead - damn the percentages. Check out these numbers: Several market researchers say that more than 50 percent of all CRM deployments don't meet their objectives. Even if a CRM project isn't a complete bust, Gartner estimates that as many as 60 percent of these installations fail to meet their goals. And with many multinationals looking to CRM, it's interesting to note that analysts say there are few, if any, successful global implementations.

CRM systems fail for any number of reasons: Lack of management or user buy-in and the complexity of tying in all the back-end systems needed to make a CRM system work are usually cited as the two biggest.

Mack Murell, The Dow Chemical Co.'s global director of customer interfaces, told our Mel Duvall that the chemical and plastics giant put big bucks down on a CRM project two years ago. Dow didn't say how much, but CRM runs into several millions of dollars for a big implementation.

The Dow project, however, ran into several major problems and went bust.

But Dow took a look at what went wrong, came up with some remedies and plunked down another wad of cash on a second CRM try.

Dow isn't the only one continuing to buy into CRM despite the odds. IDC in June said the CRM services market will grow from $61 billion this year to $148 billion in 2005. Last week, IDC came out with a separate report that pegged the CRM applications market at $6.2 billion last year, and said it would grow to more than $14 billion by 2005.

Once a CRM system is up and running, it can slash customer support costs and help a company keep existing customers and win new ones.

Some more percentages, courtesy of Meta Group:

• CRM can drop call center phone time 20 percent to 30 percent.

• CRM can slash sales support charges by 25 percent to 40 percent.

• CRM analytics can boost customer retention 5 percent or more.

• Effective CRM systems can pay for themselves in six to 12 months.

There are other, albeit more intangible, benefits - getting closer to the customer, finding out more about your buyers, making add-on sales.

Good managers know how to play the percentages. What separates the good ones from the great ones is their ability - or, perhaps, instinct - to know when and how to make a gamble that pays off really big.