Sales and Sales Management Article

Sales and Sales Management

Article Summary In the article, Avoid the Four Perils of CRM[1], authors Darrell K. Rigby, Frederick F. Reichheld and Phil Schefter provide insightful analysis and guidance from their collective experience advising companies on how to augment their marketing, selling and service strategies more effectively using Customer Relationship Management (CRM) software. Collectively the authors concur that the need for companies to first define their strategies and the processes required to accomplish their goals is the first step to effectively layering in CRM as an IT investment. The four perils the authors mention include implementing CRM before creating a customer strategy, rolling out CRM before changing your organization to match, assuming the more CRM technology the better, and stalking, not wooing your customers. These four perils all either directly or indirectly relate to change management, a key lesson the authors expand upon in their examples of how CRM implementations can typically fail. An excellent insight from the article is that the mere automating of customer- facing processes does not guarantee success of a strategy; in fact this is another point of failure. Instead, the authors contend, it is better to focus on the entire series of systems and their integration together, all aligned with customer-driven strategies for CRM to be successful. The mentioning of order fulfillment, a core process of ERP systems and manufacturing processes, exemplifies this point of the authors as well. Relating this article to the textbook, there are many supporting points made by the authors that in turn illustrate the need to first have a solid market and customer segmentation strategy in place, and this includes a consistent prospecting and selling strategy as well. Simply applying Sales Force Automation (SFA) applications to a sales force can just speed up the alienation and even anger of prospects, unless time has been taken to device sales strategies that approach these critical groups as they want to be communicated with. For example if a prospect opts into an online newsletter out of interest in its content, or decides to download a white paper on a subject of interest, CRM systems must be used to provide the customer information and content that aligns with their interests first. Just because a prospect opts into a newsletter or white paper download doesn't not give the marketing department a license to spam them with everything the company can think of sending. That is a key lesson learned from this article when considered in light of the books' many excellent insights into selling. Prospects have specific ways they choose to gather information, learn about and evaluate alternative products, and finally, have widely divergent approaches to how they specifically want to purchase products. The book makes many excellent recommendations of how to create lasting and value-driven relationships for customers, and the point of the article in light of the books' many points is that CRM must be the enabler of these relationships. CRM is not "speed dial" on your desk phone or the telemarketers' desk, it is a set of technologies that need to be selectively and carefully applied to selling strategies. At the intersection of the book and the article assignment is the use of CRM as an enabler of building relationships of trust with employees. Critique of the article The authors, writing this in 2002, were insightful and even prophetic in the statements made specifically regarding business strategies and processes being the primary determinants of demand for CRM. While Siebel Systems had enjoyed a meteoric rise and many credit Tom Siebel with originally defining the term and software category of CRM, in 2002 there was still a strong focus on features, functions and benefits in CRM applications. This was an era of big-bang CRM deployments, with literally thousands of seats of software delivered. The authors refuse to get on the "big is better" bandwagon of CRM however and choose to be prescriptive from a customer loyalty, intimacy, and long-term customer value perspective. It's clear that Frederick F. Reichheld made major contributions to this article as it stresses customer loyalty and its impact on profitability, an area Mr. Reichheld has written entire books about. The landscape the article paints as a result is one that shows how disjointed customer and selling strategies can be when technology for its own sake is thrown at complex, difficult to fix customer problems. At its foundational focus on processes, it is an excellent article, and the four perils serve as strong supports for the points made. What is missing however is a stronger and more thorough overview of the financial implications of failed versus successful CRM deployments from a scorecard approach. The authors need to provide a more thorough accounting of the total cost of failed CRM implementations and be prescriptive first from a strategy standpoint, and second from a systems integration perspective, as to how these problem cases would be fixed. Then the article would tie back to financial performance and the key performance indicators ultimately by which strategies are judged. The lack of a summarization of the costs of failure, even in a pro forma format, is missing, and with it, the costs of change management. The authors fail to mention the cost of making change management a success, and many firms are stating that even in best-case terms it is 10 times the cost of the software. That is a critical message the authors, in future articles, need to convey in order for the full role and cost of CRM to be fully defined for the reader. ----------------------- [1] Harvard Business Review (February, 2002) - Darrell K. Rigby, Frederick F. Reichheld and Phil Schefter, Avoid the Four Perils of CRM. Harvard Business Review. February, 2002. pages 101 - 109