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Small and medium-sized businesses can finally get down to business with CRM solutions.

The information was there; the associations were known.” With these words Tom Siebel, CEO of Siebel Systems Inc., told a congressional subcommittee last February that customer relationship management (CRM) technologies could have allowed law enforcers to prevent the Sept. 11 terrorism acts. The message couldn’t have better summed up the current state of CRM: We have the technology and information; what we need is the will to implement them.

One subcommittee member ironically called Siebel’s message “sobering.” The representative was probably unaware that for years, financial services have been the government’s designated driver for CRM-based responses to terrorist activities. Banks and other financial institutions use CRM technology to identify terrorist individuals and organizations identified by the Office of Financial Accuracy Compliance (OFAC).

For both government and business, CRM is the promise of using data to get a clearer picture of groups of people (clients, users, new markets, etc.); with that picture, companies and agencies can develop better plans of action. This promise is why, from humble beginnings in sales force automation, CRM has blossomed to include marketing automation, supply chain management, and business intelligence, among other things.

Assessing the maze of applications, services, and practices that comprise CRM is an overwhelming task. There’s not enough room in this article–or this entire issue–to cover everything. However, we can provide a framework for assessing solutions, observe common project pitfalls, and scope out some market-leading solutions. The technology that allows organizations to get, give, and use information about people is what this article is all about.

Customer-centric e-business

CRM is not a technology. It is a business strategy through which an entire organization commits to understanding customer relationships and using that knowledge to strengthen the bottom line.

Harte-Hanks Inc., a major direct marketing and CRM software and services provider based in San Antonio, sells this customer-centric philosophy with every implementation. “CRM is a process and a mindset,” says Andy Rutberg, senior vice president of direct marketing for Harte-Hanks. “It is how you manage the relationship with your customers, whether through a multimillion-dollar, enterprise-wide solution, or by changing the process of how you handle your customers.”

CRM is a process that includes several stages. The first stage involves collecting customer data, storing the information, and analyzing it. This is the only way to identify patterns of customer actions that are the basis of targeted responses.

Building a solid technology foundation for these processes is a critical component of CRM; however, identifying the business reasons for choosing specific technologies is the most important–and often most difficult–part of the implementation process. If you don’t tie individual technology decisions to specific business goals, your CRM project will probably be DOA before the ink dries on your vendor license agreements.

Enterprise-wide CRM

Most of CRM practice uses customer information to strengthen relationships and increase business value. This can be done on a departmental level through sales force or marketing automation software, for example. However, CRM is most effective and least risky when it is integrated across departments, feeds off of a single, consolidated data source, and links front-office (the stuff customers see) and back-office (the stuff customers don’t see) applications.

Integrating the entire enterprise through CRM allows the customer to maintain a consistent view of the company across channels and touchpoints. Moreover, it streamlines customer interactions and transactions, providing more satisfying experiences and encouraging loyalty and increased profitability. Without it, customers often feel as though the company is disorganized. How many times have you had to give representatives from the same company the same information over and over again? CRM allows companies to have one robust client record for each customer; from the help desk to the shipping department, every person within the company can access this record and treat the customer as they would treat a neighbor. Some examples:

o In customer service, it can ensure that representatives know and respond appropriately when their most valuable clients call.

o In sales, it can prevent representatives from pitching to delinquent clients or selling products that aren’t in inventory. In addition, it gives the sales force information about key sales indicators–such as customer behavior shifts and customer service needs–that indicate cross- and up-sell opportunities. Finally, it allows the sales force to understand the customer life cycle, knowing when and which customers are most likely to respond to sales efforts.

o In marketing it can avert wasteful efforts to communicate with insensitive customers.

o In customer support, it can help call staff respond more efficiently with access to customers’ billing and support histories.

“Due to the maturity of the SMB CRM market, companies are gradually beginning to see how important the front-office/back-office integration is,” notes Gartner Research Director Joe Outlaw. Outlaw predicts that a growing number of small and medium-sized businesses (SMBs) will implement CRM in the next year as the economy spurs businesses to look inward for new efficiencies.

CRM pitfalls

You’ve heard the CRM horror stories: failure rates of up to 80 percent, millions of dollars spent on vaporware, customer losses, and more. You’re probably also experienced poor CRM implementations; every time you call a regular vendor and the person you talk to doesn’t have a clue who you are or how important your business is to them, you’re dealing with a CRM failure.

The resource-intensive and highly political nature of many integrated CRM efforts accounts for a lot of failure. A technology might work, but the sales force rejects it because it’s too time-consuming to use. Users might be happy, but management becomes disappointed and disillusioned with lower-than-expected returns. The project might never get off the ground because the company finds it lacks the project management resources to successfully implement its chosen vendor technologies. Or customers might balk at new processes or poor interactions based on unreliable data in the CRM system.

Outlaw warns against overestimating the internal ability to handle a CRM implementation. “Many if not all SMBs don’t have CRM vision or strategy and therefore will achieve only moderate results,” he says.

Brutal honesty is also necessary in assessing available project management skill and experience. Outsourcing project management and technology implementation might be the most economical option for SMBs without a lot of IT talent.

These days, CRM has such a bad rap that vendors like Siebel won’t even use the term. It’s also a big reason why only 20 percent of SMBs in North America have implemented CRM so far. Smaller companies that are closer to their customers can’t imagine why they would subject themselves to the pain of CRM for such dubious returns.

The good news is, practically speaking, SMBs might be in a better position to implement successful CRM solutions than larger enterprises. SMBs are naturally less complex than their larger counterparts, as are SMB CRM solutions. Less complexity means that solutions are less likely to become bogged down in internal politics and sticky legacy system-integration issues, and less likely to be subsumed to larger projects.

Smaller organizations also are typically closer to their customers and have a better native understanding of their business rationale. Customer input is easy to come by, and even IT staff is less removed from the users and customers chiefly affected by the system. “The smaller the organization, the closer they are to their customers and the more the average person touches the customer,” says Outlaw.

Finally, smaller businesses feel more keenly the impact of failed projects; they are more likely to keep close tabs on both implementation processes and returns. For a business with 1,000 employees or fewer, losses in the thousands of dollars are visible on the bottom line.

It’s the data, stupid

On the bright side, you probably already have the most valuable CRM component in your possession. If you’re like most companies, you probably have more customer information than you know what to do with. It’s just scattered among several PCs and servers across many divisions in your organization. Because customer data is the lifeblood of any CRM project, getting all that information into one Web-accessible customer history is the central CRM challenge.

According to Rutberg, laying a solid data foundation contains many subtle challenges. “It is getting a true single 360-degree view of customer relationship, which encompasses data quality issues–bringing disparate data together and having the kind of system that allows them to turn that into action.”

Data integration shouldn’t be a major challenge for most SMBs, however. The Microsoft SQL databases that underlie most business processes can be easily consolidated using the Microsoft Data Transformation Services (DTS). Included with SQL, DTS lets you extract, transform, and consolidate data from disparate sources into single or multiple destinations supported by DTS connectivity. Consolidating data from UNIX and legacy databases should be similarly simple. In almost all cases the diversity of disparate systems and the amount of data involved won’t be a major hurdle to data centralization.

In contrast, the impact of data quality on CRM performance seldom gets the respect it reserves. Many businesses underestimate the negative impact of bad data on their CRM processes. In fact, every source of customer information is a source of potential data corruption. Left unchecked, about 2 percent of records in a database will become problematic each year.

Many data-cleansing solutions cost less than $1,000 and often pay for themselves in less than a year. Some, such as Melissa Data ListWare, are Coding Accuracy Support System (CASS)-certified. You might also choose to design your own data-quality algorithms that periodically remove replication.

CRM as a process

Within the business, CRM is an ongoing cycle of listing, learning, and applying lessons. Businesses must constantly assess and expand their CRM strategies, finding ways to apply new learning to their processes. Even if your initial implementation is successful, every customer interaction is potentially a source of CRM inspiration.

“Absolutely, start small,” advises Harte-Hanks’s Rutberg. “Try to get one, two, three key successes you can focus on, and then do incremental implementations to reach your end goal. It is really about knowing where you’re going. When so many fail, it’s because the implementations aren’t based on clear, understandable numbers.”

From fraud detection to national security, the lesson for organizations without CRM implementations is clear: The limitation is not the technology; it’s your imagination.

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