15 Mar 2010
Customer service, it seems, is back in vogue. After the recent turbulent years of obsessive cost cutting in a bid to survive tough economic times, those companies coming out on top are the ones that have maintained strong customer loyalty.
Customer relationship management, or CRM, has long been seen as one means of increasing company revenues by better understanding and responding to customers’ (or employees’) needs. Investment in CRM continues to expand, with AMR Research estimating that the market will grow to $22bn by 2012.
Despite significant investments in licence fees, not to mention complex and lengthy implementations, many CRM initiatives seem to fail. According to research by Gartner Group, nearly 70 percent of all CRM implementations fail to deliver the expected economic value to the businesses that implement them.
So why is this? Two of the key reasons are around user adoption of the chosen software and the inability to customise it to fit an organisation’s specific needs and requirements. For these reasons, many companies still struggle to implement their CRM system effectively and achieve the results they expect. As a consequence, many organisations are currently taking a serious look at their customer relationship management strategies and supporting systems.
In recent years, there’s been a lot of hype around SaaS, on-demand software, or cloud computing – effectively, generic, ‘out-of-the-box’ CRM-ready solutions available via a web browser and with the option to deploy in a hosted model. It’s a fast growing market. Gartner predicts the software as a service (SaaS) slice of the CRM pie will soon double its market share and exceed $1bn in sales, reaching around 15 percent of the overall market, particularly with many more smaller businesses being attracted.
Both approaches have their respective merits, depending on the type of organisation, but they usually mean a certain amount of compromise – whether it’s time, resources or performance. The main reason why most CRM initiatives fail is because employees either don’t like, or don’t know how best to use the system. Productivity starts with the CRM user interface. The more comfortable and familiar the interface is, the easier it is for users to learn and navigate. Interfaces that mimic widely used applications such as the Microsoft Office suite are particularly intuitive for most users. Since different user groups (such as sales, marketing, and management) have different goals and needs in using CRM data, the same interface will seldom meet all their needs equally.
The difference between a CRM system from a web-browser, or the ‘cloud’, compared to one that is on-premise, is that it doesn’t necessarily fit the individual needs of an organisation. The ‘one-size fits all’ mantra rarely works in most complex businesses. The other main challenge facing companies that have invested time and money in the wrong type of system, is a lack of flexibility. An application delivered to solve one set of business issues can become useless overnight when the issues change and the application doesn’t.
The vast majority of businesses, particularly larger ones, find that it pays over the long term to go for another, better option: namely on-premise, specialist CRM applications (‘smart client’ versus ‘thin-client’ solutions). For instance, Wickes in the UK and Ireland have found that Pivotal CRM from CDC Software has evolved with their business as requirements have changed and now have approximately 2,500 licensed users in over 200 stores. Wickes Home and Bathroom division have found that Pivotal gives them flexibility for customisation, and far more productivity than a SaaS solution would offer.
Whatever solution you are considering, think long and hard about the needs of your business and make sure it’s a good fit, and able to give you both the short and longer-term returns you’re looking for. If you’re leaning towards SaaS, make sure the myths aren’t clouding your view. These implementations often prove to be more costly, complicated and time-consuming.
Jason Rushforth, Head of CRM Solutions, CDC Software Tel: +44 (0) 1604 614 122