Much has been written about CRM in recent years. Most of it about the benefits, often expressed in intangible terms, of getting closer to your customers. CRM projects continue to be discussed, defined, approved and kicked into life, because we all know, deep down, that we need help to be better than the rest at wringing every ounce of loyalty and potential from our customer base.

Service delivery via a multitude of channels is now an entry level standard, and customer expectations of response levels are greater than we can afford by using our traditional resource – people.

Today, it simply makes sense to use CRM technology to do all the things we need to do if we want to create and sustain profitable relationships with our customers – enabling and automating the basic functions that provide consistency, structure and accuracy to the way we run our businesses.

Does size matter?
So are we using CRM tools in New Zealand? The answer is ‘sort of, but not really’, with the uptake being relatively low when compared to the number of registered businesses.

To understand why we don’t embrace CRM tools as enthusiastically as our European and American counterparts, we need to look at the specifics of our local market.

We are a nation of small businesses with 99.5% of companies in New Zealand employing less than 100 people (only about 1300 businesses have more than 100). Moreover, 94% of the almost 295,000 registered businesses in New Zealand have less than 10 employees. Of this, a whopping 250,000 have less than six – and in CRM terms are not likely to need much more than a basic contact and sales management system.

This leaves a potential CRM market size of around 45,000 businesses. Up until now, however, the reality for many companies in this SME sector has been that the licence costs of a Tier 1 CRM product were out of reach – to say nothing of the additional services costs that go with such an implementation.

The New Zealand vendor community has at least a dozen CRM solutions on offer and an additional five or so if you add in the combined CRM/ERP offerings. And the uptake? Disregarding in-house solutions and off-the-shelf packages such as ACT!, it’s likely that the current CRM penetration in the New Zealand market is probably under 500 businesses.

A CRM evolution
The positioning of CRM as a standalone product offering appears to be transitioning. Many basic CRM requirements overlap the traditional ground of other application solutions, with financial/ERP systems and email systems being the most obvious.

This has not gone unnoticed by the CRM vendors and consolidation is rife in the market. Predictions of changes to Siebel’s ownership abound and Pivotal has just emerged from an acquisition right (a three-way contest won by chinadotcom’s CDC Software).

Pivotal Australasia managing director Helen Robinson says Pivotal’s suite of CRM products will complement CDC Software’s existing ERP, Supply Chain Management, Human Resources and Payroll offerings, which currently have limited CRM functionality.

And it’s not just Pivotal which has the urge to merge. The providers of Sage Accounting products now own SalesLogix. PeopleSoft purchased Vantive… and on it goes. Without a doubt the need to provide integrated and consolidated offerings rather than standalone solutions will drive further mergers and acquisitions. ERP and CRM products are obvious bed partners but e-business and contact centre solutions are also likely to be getting cosy as well.

Adding momentum to all this activity is the launch this year by Microsoft Business Solutions of Microsoft CRM. Although Microsoft Business Solutions already had CRM functionality in existing ERP solutions like Axapta and Navision, Microsoft CRM has been designed specifically for the SME market and built from scratch on the Microsoft .NET framework. Early adopters here include Glovers Foods, New Horizons Computer Learning Centre, Whitecliffe College of Arts and Design, and Zeacom.

The system provides users with an intuitive interface tightly integrated with applications they already know. For example, sales and service representatives can work from within Microsoft Outlook to access comprehensive customer or incident histories, view product and sales literature, track customer related tasks and appointments, and manage contacts.

Competition welcomed
So could CRM on the desktop be heading for the same level of ubiquity as office tools like PDF readers or PowerPoint? A commodity product, a useful tool, not everyone needs it but for those who do, it is invaluable. No drama surrounding implementation and no drama around usage or training.

Active experimentation with CRM tools can only be good for both the CRM vendor community and for users. But what do the vendors think? Interestingly, far from reacting negatively to the competitive threat posed by Microsoft, CRM vendors seem to have embraced the prospect of the market opening up.

Pivotal’s Robinson, for example, welcomes the Microsoft initiative, suggesting it will strengthen the market for CRM tools as customers increase their understanding of the benefits such a tool set can deliver. StayinFront’s Tony Bullen is also supportive, stressing that the speed with which the market opens up will depend on the ability of Microsoft’s channel partners to drive some of the softer elements of CRM change projects.

The new entries and mergers are bound to drive competition in the SME sector. For many businesses previously wary of the investment, CRM will be back on the ‘to do’ list. Pricing has always been a hurdle but with Microsoft CRM solutions specialist, Charlie Wood, saying a five user set-up could be implemented for a budget of around $6000 (once all the associated software has been factored in), the jump for many is no longer as high as it once was.

Achieving critical mass
There has frequently been blood on the floor in the world of CRM implementations. All the technology in the world will not encourage staff to embrace an interface they can’t use easily, and like so many other aspects of e-business, without staff buy-in, CRM implementations are unlikely to succeed.

But what if we could put a toe in the CRM water without the need to get it 100% right first time, every time? Going from nothing to full-blown CRM in one project cycle is like taking on a marathon as your first training run. We need time and space to learn how we want to manage customers, how our customers want to be managed and whether our staff will come with us on the journey into a customer-centric world.

Thus, at a lower cost point, CRM will no longer be a board level decision. The upside for business is the chance to experiment with CRM without risking serious money. Any seasoned CRM practitioner knows that the most valuable elements of customer relationship management often need to go hand in hand with organisational change to accrue any real benefit.

If the drive to the mid-market is successful CRM could potentially achieve a level of acceptance which has eluded it for years. Once this happens the greatest benefits will accrue to those businesses that do it better – not just do it – and the bar will be permanently raised. And this, in my view, is the most positive outcome of all. Refocusing the discussion on the business outcomes we want from CRM – rather than on the technology that underscores it.

People are the silver bullet
The maturing New Zealand CRM market needs (and is now getting) CRM solutions that are affordable, quick to implement and easy to use. A prerequisite for CRM maturity, however, is acceptance that CRM is not a silver bullet. That silver bullet is people. People who listen and respond to customers and reinforce your messages in countless little ways across the multitude of interactions they have with customers every day.

The penalties for failing to deliver a positive experience at each point of the customer journey are well documented. But to reiterate; your people count when customers are thinking of using you, are using you, are thinking of leaving you and are leaving.

It has taken experience to recognise that people are the silver bullet. Banks represent the most experienced businesses when it comes to using CRM – and they are hiring customer services staff again.

The 2004 KPMG Financial Institutions Performance Survey reports that banks appear to have rediscovered the key to customer service, with latest figures showing that staff numbers have been boosted by almost 4%. Andrew Dinsdale, chairman of KMPG’s banking group was reported in the NZ Herald remarking on the change – particularly given the bank’s dramatic staff cutbacks during the 1990s. And the reason for the growth in staff numbers? “… banks have got the message that customers like to be able to deal with real people when they are carrying out their banking transactions,” he said.

So make the silver bullet count and harness a solid CRM solution to back your people up.

June 2004

Trudy Barnett runs an independent practice helping organisations change the way they interact with customers; the approach, the delivery of tangible benefits, the design of robust processes and the selection / implementation of tools.

Trudy has been working in the customer management space for over 20 years, from the acquisition and management of customers in the private banking markets of Europe to the development of effective contact centre and web channels here in New Zealand. She can be contacted on 021 666 221 or trudy.barnett@x-f.co.nz.

Opinion: CRM and the need for Change Management

As Trudy Barnett so rightly points out “the most valuable elements of customer relationship management often need to go hand in hand with organisational change to accrue any real benefit”. StayinFront’s Tony Bullen also mentions the need to “drive some of the softer elements of CRM change projects”. What they’re both talking about here is people – CRM’s silver bullet as Trudy says.

And if it involves people, it involves organisational culture which can be defined as “the ideas, customs and ways of doing things in the organisation”.

When CRM, or even a change in existing CRM is introduced, it means there will be new ideas, new customs and new ways of doing things.

By understanding ‘The Transformational Change Cycle for CRM’ (see fig 1.0) and the steps that must be taken during each phase, companies can get staff to reach a level of CRM competence in a managed and sustainable fashion.

This will provide the company with a return on investment (ROI) and the customer with consistently good experiences.

When CRM is introduced there is often a strong underlying desire by many people (consciously or unconsciously) to return to the way things were (represented by the outer arrows), back to where they felt comfortable. They understood the status quo.

It is for this reason that managers need to have appropriate plans and steps to drive people forward, to get them to reframe to the new way of thinking. It is only once the people have reached the Competence Phase in terms of skills, processes and CRM role integration, that the organisation gets its ROI.

Just how quickly (and if) they reach that phase depends on how the organisation sets in place its cultural change management and training programmes. Knowing the what, how and when, through the use of a change model like the ‘Transformational Change Cycle for CRM’, will help ensure your CRM journey is successful.

Neil Stewart
SRD Group – Merging Teams, Technology and Customers.
www.srd-grp.com