CRM: Once More, Without Reeling

Still in the works is a sales-force automation (SFA) system to provide the sales team with data from other units. Now being tested, the SFA system will help Boise salespeople receive alerts when a particular customer places an order, or have a sequence of E-mails and marketing materials sent to each new customer, among other things.

On the horizon, says Goudge, are Web pages that automatically pop up on customers' computers when they submit an online order; systems that can spot purchasing trends (say, an order for printer toner on the third Thursday of each month), then send E-mails to the customers that link them to an ordering Web site already configured with their information; and handheld devices for delivery-truck drivers that would allow them to relay information on competitors and customers back to the sales team.

"The whole idea," says Goudge, "is to be easy for the customer, be different from the competitors, and somehow add value."

Ay, there's the rub. Even Goudge acknowledges that showing a financial return on CRM is incredibly difficult. "For a while, being the first might give you an advantage," he explains. "Well, how much? How much did you pay for it, and was it a real advantage? That's the challenge."

Such talk bothers author Newell. "I'd like to see the CFO be the guy who blows the whistle and says, 'Time out! Let's start at the beginning, and you tell me how I'm going to get an ROI out of this,'" he says. Newell believes companies should define measures of success at the start of a CRM project, not halfway through.

The irony is that if enough companies get CRM right, there's a risk that it could become little more than a cost of doing business. "I would argue that three years from now, all the stuff we're doing will be just tickets to get in the game," says Goudge. "Everybody will be able to do it."

Therefore, add another irony: the technology's inherent complexity is actually a selling point, at least for now. "Since realizing an effective CRM strategy is so challenging, it provides an important differentiator and a sustainable competitive advantage," says Gartner's Marcus.

What's Shakin' (Out)?
Complexity will remain a factor in another way as well: the universe of companies selling CRM software will likely be in tumult this year.

One reason is the emergence of Microsoft. The company began shipping its first CRM package earlier this year, and some industry watchers expect that to galvanize the market, particularly in the midmarket. "Microsoft has an understanding of how to make a product easy to use," says Kevin Scott, senior research analyst at AMR. "Plenty of people out there are looking for something simple they can get up and running."

Despite some stutter-steps, the ASP model (in which companies pay someone else to host and/or manage the software for them) could also give CRM a boost. Such companies as Salesforce.com Inc., SalesNet Inc., and others are aggressively marketing this approach. Bob Chatham, principal analyst at Forrester Research Inc., says that in an ASP model, customers pay about $100 per user per month; by comparison, the major CRM vendors charge a flat license fee of roughly $3,500 per user.

Many CRM vendors have closed facilities, laid off staff, and implemented other forms of cost-cutting, but analysts predict a continuing shakeout. It seems that knowing what customers want and how to best serve them isn't easy, not even for companies that make the software designed to do just that.

Where does that leave CFOs? Make sure your company is committed to making whatever organizational changes are required to better serve — and sell to — your customers. Define and track specific measures of success from CRM, such as ROI or improved retention of your most loyal or profitable customers. Push your vendors to deliver value. And remember: just because the customer is always right, doesn't mean the CRM is.

What's Behind CRM's Bad Press?

Percentage of companies achieving various levels of success.
Source: AMR Research

What Is CRM, Anyway?

Everyone agrees that CRM stands for customer relationship management, but after that, it's anyone's call. Everything in the following list may be part of a CRM implementation, project, or product. Knowing just what your company means by "CRM" is vital to keeping projects aligned with strategy.
Source: AMR Research

Marketing
Campaign Management: Tools that help plan, execute, and evaluate promotional campaigns. May help define segments, select target samples, plan multistep and multichannel communications, track responses, and analyze results.

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