Today there is so much hype about the virtues of Customer Relationship Management (CRM) systems. However, one thing is certain. CRM is really not about technology and shouldn't be treated as an IT project. Before getting drawn into thinking that your company needs to buy the latest package or use a specific methodology, you first need to answer some basic questions.

These questions should include -- What is CRM anyway? Is my company really ready for the commitment and investment it will take to ensure a positive impact on my business relationships? Keep in mind that these business relationships encompass customers, partners, suppliers and employees. All need to have a stake and are contributors to the deployment of a successful CRM system.

We can examine the first question and try to define CRM. The challenge is that CRM means different things to different people, so that we are often left with a connotation rather than a widely accepted definition of the term. However, a common thread seems to be that CRM involves the ability to capitalize on information. This can be information that a business already has or can acquire about its customers with the goal of migrating them from being simply satisfied to becoming loyal. Inherent in this description is the idea that a company must be able to leverage and continually enhance the intelligence it has about its customers. In addition, the company must be willing to invest the necessary resources to leverage it to support long-term relationships. A large part of CRM work is building and mining data sources about customer past behaviors (e.g., buying patterns) and preferences (e.g., how they like to communicate) and then using it in a forward-looking way to predict a customer's future needs. The thinking here is that a customer is more likely to stay with a business if that business is willing to invest in personalizing its offerings and the way it operates specifically for them. A good example of personalization that customers value is what Amazon.com does for its visitors that buy goods on-line. A repeat buyer is greeted by name, receives a list of those books that may be likely candidates for their purchase based on buying behaviors of others like them and benefits from promotions scheduled on the anniversary of each purchase.

The second question is more difficult to address. Once a company understands the goals of CRM, how does it make sure that its investment in the system implementation yields the expected result? Businesses will not want to become part of the casualty list that is being projected by Gartner, Inc., which expects that 55 percent of all CRM projects will fail to meet objectives over the next five years. This failure rate certainly represents large financial risks as well as potential customer loss and the alienation of employees and business partners. However, the good news is that there are a number of things a company can do to avoid a CRM disaster.
Understand that CRM is a business strategy - A company seeking to implement a CRM solution should first determine if it has the right mindset. Is the business and its processes organized around its customers today? A company should not expect that a CRM implementation will make a business customer-centric; it is only a set of tools to help that firm more effectively carry out a customer-centric strategy.

Build objectives for CRM at the beginning - How will a company know when and if it has achieved success with a CRM project? First and foremost, the company should be able to baseline its business in a number of categories. This could include customer satisfaction, revenue generation, sales effectiveness and operation costs to name a few. However, it should be noted that successful CRM solutions do not rely solely on number-centric measures. It is not strictly about cutting costs; rather it should be about customer value and retention of those customers that are the best match for a business. It's a long-term view of contributing to business profitability and competitive advantage.

Implement CRM at an enterprise level - CRM implementations affect all parts of an organization including sales, marketing, operations, finance, customer service, suppliers etc. Each needs to have a stake in improving customer relations and providing value to a customer at each point of contact. A well-designed CRM plan requires a company's cross-functional team to buy-in, help shop it around to other members of the organization and develop those skills that assist with project management, change management, communication and training.

Appoint a CRM champion - This emphasizes the fact that along with CRM not being an IT project, it is not a marketing, nor sales, nor financial project either. Since it transcends all areas, a CRM architect or a Chief Customer Officer (CCO) should be assigned as the overseer to manage the project across all stakeholder groups and not be directly affiliated with any one organization. This individual should be high enough in the company to effect change.

Use a phased approach - CRM implementations are very susceptible to providing less than stellar results, often abandoned, create dissatisfaction among customers and employees alike and drain resources. Because CRM touches every aspect of a company, the plan to implement it is often large and unwieldy. The best approach to follow after determining objectives, is to segment the plan into small units of functionality. These units can be delivered in the order that matches the company's priorities and be completed in a matter of weeks with working prototypes made available to show progress. This will help keep the project on track and maintain momentum.

Equip the staff - The best CRM plan and technology in the world will not be successful without empowering customer-facing staff with the right tools and information to serve the customers better. The goal should be that every encounter, conversation and interaction with a customer be as positive as can be. This can only be achieved by ensuring that users of the system are not only kept informed about the progress of the project but are key players in the shaping of the results. The staff must be part of the solution and documentation and training need to be built into the project and not just added on in order to ensure success.

Integrate CRM - As is often the case, there is a broad legacy of systems that exist within many businesses. Provisions need to made to ensure that the CRM project doesn't build yet another silo of data that doesn't communicate and share information with the embedded technology base. While it may be necessary to phase in integration with existing systems at a later date, it needs to be included as part of the plan. In some instances there may be a need to develop interim import/export processes to avoid data redundancy problems.

Account for ongoing maintenance and support - Because businesses do not stand still, neither should their processes and infrastructures. Once all the effort has been put into making the CRM project a success, further investment is required so it can grow and change along with the market and customer demands. A plan for administration, expansion, maintenance, ongoing enhancements, education, and care will ensure that the system remains in good working order.

After reviewing the points above about what accounts for a successful CRM implementation, one comes to realize that there isn't anything really unique about CRM and other system development concepts of the past few decades (remember ERP, TQM?). Of course, CRM has a unique slant on the value of long-term customer relationships and how best to achieve them. No one will argue that the challenges we face now are different from and inherently more complex than those in the past, especially with the speed of change and the power of the customer in the relationship. However, successful CRM implementation relies upon good, old-fashioned approaches in system planning, design, development and implementation. Today it's critical for a business to effectively apply these tried and true approaches especially in order to retain its most desired customers. Depending on which study you examine, the cost of retaining anywhere from 5 to 10 current customers is approximately equal to the cost of attracting a single new customer. Even with an economic slow-down it makes good sense to continue CRM implementations. After all, its those companies that are developing systems that best leverage their processes, people and platforms in insightful ways to get the best return on their innovation -- the return of the customer that repeatedly chooses to do business with them.