Ten Truths We Refuse To Believe About Customer Alignment–and CRM

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Have you ever sat down and pondered why customer-alignment – including CRM – is so hard for so many companies? Yah sure, we’ve all mouthed the same bromides about changing from company-centric to customer-centric environments; about the customer, not the company, being the boss; and about the damage CRM software vendors have wrought. But there’s much more to it than that – like the following truths that we ignore at our own peril, but ignore anyway. Because believing them requires changing our minds – and our values. And we’re often not up for that, regardless of the consequences of not changing.

1. Adding value to customers includes cutting costs to lower prices. Heresy, in CRM circles. Sure, many customers value service and even integrity over low price. But low prices have universal appeal. They’re a principal source of value to customers. So when people tell you that CRM should never involve cost-cutting, believe me, they aren’t wearing their customer hats.



2. CRM has a beginning, a middle, but no end. CRM is a direction – a path to follow. It’s not an end point, as in “cross that one off the list.” But business is ruled with a checklist mentality. And that mentality leads many a CRM-implementing company to the only “end” CRM has – a dead end.

3. There really are specific rules of the CRM implementation road – and we really do get hurt when we run off the road. CRM implementers have ignored more combined research and practical experience than perhaps any other class of business people. Why? Because we’re so resistant to change that we resort to self-deception. “Yeah, I can buy software without waiting.” “Yeah, we don’t have to change anything about us, just change the customer.” “Yeah, we can order sales people to use this software, and they’ll use it.” Yeah, yeah, yeah.

4. No risk, no reward. I cringe when Salesforce.com and other SaaS vendors tout their approach as “no risk” or “low impact.” It’s so disingenuous. Doing CRM right requires hard, high impact change. And change creates risk. And if companies lack the courage to implement CRM properly, they should at least have the common sense to keep their wallets secure, before their money gets “hosted.”

5. We can’t change strategies without redesigning workflow and information flow. Ugh, who wants to change workflow and information flow? So messy. Correctamundo. But it’s nothing like the mess left by pretending to be one way towards customers but then working another way. Uttering bold words about doing better by customers unsupported by changes in how we work produces self-inflicted injuries. Just ask Wal-Mart and Dell.

6. We’d better redesign process before implementing any new technology. Otherwise, we’re going to wind up doing the wrong stuff faster. The same issue rears its ugly head here as in #5. We don’t want to stop to redesign process first because that’s too hard, too expensive and takes too long. So we’ll go buy a bunch of whiz bang technology tools and think about all the money we saved. Ironically, process redesign provides the fastest and surest ROI of any CRM element. Oh yeah, but then there’s the mess.



7. The same factors empowering customers are empowering employees. You want to see how empowered employees are becoming? Try implementing CRM – including asking employees to change how they work – without putting anything in it for them. Just keep the company nurse’s phone number handy, because we’re going to get bruised. Just as the Internet has exploded our choice of products, it’s exploded our choice of jobs. Workers are more mobile than ever before, and they’re more likely to walk than ever before. Especially when we ask more of them without giving them more. Or when we order them to change without first getting their input.

8. Customer-alignment decreases, not increases, operating costs. Hey, this is good news, so why don’t companies believe it? Because “we can’t afford it” gives business a convenient excuse for not facing up to the need for structural change to keep pace with changing customer behavior. Sound improbable? Not if we’ve done battle with managers using “we can’t afford change” to protect their jobs and their turf against changing to a more customer-focused environment. Another irony, customers want to deal with empowered employees more than they want almost anything else from companies. And empowering line employees creates opportunities to eliminate supervisory levels, which does guess what?

9. CRM is more than a shoeshine and a smile – and a second hand in customer pockets. Prettying ourselves up doesn’t cost much. Smiling costs nothing. And lots of companies still believe that a shoeshine and a smile will open up customer pockets. “Hey, customers will bow down before us if we play nice – or appear to play nice. Or wow them with our brand strength.” Executives at these companies should spend a week – even a day – being a customer. They might never recover.

10. We can’t buy CRM. Spending money can be hard, but it’s a lot easier than changing how we think and how we work. After all, “We’re business.” “We’re in control,” “We get to make the rules.” “We do unto customers what we would have them give unto us.” So let’s go by some software and get over this “customer-focus” stuff.



Tough stuff, I know. But winning companies welcome the tough stuff. They take it head on. They look in the mirror without blinking. But they’re in the minority. And helping clients adopt winning ways requires speaking unpleasant truths – more softly and sympathetically than I have here – but insistingly. And isn’t that the role of consultants – helping clients succeed? You betcha.

9 COMMENTS

  1. Dick

    As someone who played a role (albeit minor) in the business process reengineering revolution in the early 1990s, I wholeheartedly agree with all the points you made in your post.

    As we all recognise, a business, any business, is made up of a large number of interacting and interdependent parts. Business process and workflows interact with each other to get work done. Enabling systems interact with processes to automate or generally facilitate them. Staff (and increasingly, customers) carry out the processes to deliver outcomes of use to customers. The currency of this business system is not money, but information. The prevailing culture and work climate set the tone for how staff work and how to handle unusual sitiations. And other assets and resources, such as relationships with 3rd-parties, may come in to play at different points too.

    As John Roberts describes in his excellent book, The Modern Firm: Organising for Performance and Growth, these parts complement each other such that changing one by definition requires changes in the other interacting and interdependent parts. If you buy new CRM software but don’t change your business processes, don’t train staff, don’t change information flows and so on, you will never harvest the benefits the software offers. The very same benefits that persuaded you to buy it from that slick salesman in the first place.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  2. Dick Lee – Graham, thanks for the comment. What’s amazing to me is that no one’s commented yet on the cost control element of CRM. I thought I’d gert tarred and feathered.

    Dick

  3. Dick

    I think (at least I hope) that most people understand how the Cost of Quality concept applies to the quality of the customer experience. The higher the initial quality of the customer experience, the lower the subsequent costs of handling customer service calls (Hello, anyone from Sprint out there reading this!), the lower the costs of recovering customer problems, the lower the costs of refunds (or even litigation), the lower the costs of repairing broken processes and the lower the costs of repairing a tattered market reputation..

    Obviously, a company can’t be all things to all customers, and would be ill-advised to try. I believe this company-customer mis-match is sometimes where the cost of poor quality is highest; companies trying to serve customers that even with the best will in the world they are not equipped to do so and who in reality they can never satisfy.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  4. Dick Lee – Graham – I heartily agree. But what’s still puzzling me is that no one has responded to the statement that CRM is a legitimate way to cut operating costs. What you alluded to covers some of that, but usually CRM folks lunge at anyone alluding to cutting operational cost as a legitimate CRM goal. Well, life is full of surprises. And perhaps the paradox that increasing customer satisfaction/loyalty often reduces costsw is catching on. Do you think?

    Dick

  5. Dick

    The research I have seen suggests that the emphasis that management places on cost-cutting versus revenue growth as the driver of CRM projects is very important. CRM projects built on cost-cutting, which is typical in economic downturns, are very different from projects built on revenue-growth, which are typical in economic growth periods. Both are associated with a different mindset which tends to make CRM projects that concentrate both on cutting costs and growing revenue mentally difficult for staff to implement.

    In reality, many of the problems are generated internally because of the simplistic way in which most companies try to reduce costs.

    One company I know well is currently looking for ways to cut 30% off its marketing costs. Rather than looking at cutting out all the non-value-adding activities and the significant costs they entail, it is simply trying to shave off 30% of all outputs instead. Sure, that means 30% less costs today, but it also means 30% less marketing campaigns, 30% less post-sale service and ultimately, probably more than 30% less future sales.

    This tendency towards mindlessly cutting value-adding output costs rather than non-value-adding input costs, is one of the reasons why CRM projects fail to deliver improvements in revenue at the same time as reductions in cost.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  6. Graham,

    Maybe I read the text wrong, but it talks about general cost-cutting being CRM objective, not specifically CRM-related cost.

    Cutting cost in customer service is not necessarily a bad practice, if done on the basis of process improvement, but creating cost advantages in ALL parts of operations is where the real value come from.

    Most of the CRM initiatives, which I have seen, where the predominant objective was to cut cost were doomed. If not in implementation, then in customer experience disasters. And mostly they were excuses for not improving anything else.

    As you mention the well-designed and run CRM processes should cost less, than mostly encountered haphazard and piecemeal approaches with random software spending.

    Jakub Bielikowski
    [email protected]

  7. Jakub

    Of course you are right. CRM today affects the whole organisation, particularly as we have come to realse that complementarities between different parts of the organisation mean that they are inevitably much more interlinked than first meets the eye. Cost cutting in CRM by implication directly influences costs in other parts of the organisation too.

    The fact remains, whether focussed on core CRM processes (to the exclusion of others), or at CRM and other complementary processes, most cost-reduction programmes only focus on superficial cost-drivers rather than at non-value-adding activties and their ‘muda’.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  8. Dick Lee – Graham, while I respect your comments, we have found that doing the right things by customers and cutting costs are actually related. Empowering employees, a very high priority for customers, usually means eviscerting a level of supervision, or most of the layer. Likewise, cutting cycle time, another priority for customers, usually requires fewer people handling work. In either case, we commonly see a reduction in FTE requirements (which we hope results in repurposing people, rather than layoffs). But saying that CRM can’t be tinged with cost-cutting is incorrect, in our opinion. If doing better by customers also cuts costs, as it often does, we shouldn’t shy away from it.

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