Based on our field experiences and the Best CRM Practice Evaluations in the past four years, it’s clear, even without direct research, that the failure rate of CRM in China is still high. To understand why, you should know the truth behind three common beliefs.
Chinese Enterprises Are Rich. They Just Don’t Spend
Yes, Chinese enterprises are rich. But why don’t they spend on CRM software, hardware, system integration, consulting and training?
At $25 million (based on the 2004 report by IDC China), spending on CRM is insignificant compared to the world CRM market, which Meta Group projects at more than $20 billion per annum.
More and more Chinese enterprises are listed on the stock exchange or are waiting to be listed. The promising market potential makes them an easy draw for investors. A few years ago, no one would imagine that a Chinese company could buy IBM’s PC arm. Yet, Legend did just that in 2004. Putting customers at the heart of the business should be every enterprise’s focus, especially with more foreign competition opening up by the World Trade Organization.
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However, the early failures of big-ticket projects scared them. With poor ROI and no pre-set measurement metrics, companies might attract initial investments but not sustaining capital. China is such a big country and diverse in its development phase;in terms of infrastructure, culture, language and customer maturity; it’s similar to another Europe. Based on the prevailing CRM evaluation method, CRMBodyCheck, businesses in China lack in all categories: software, call center, solid customer strategy, change management, process redesign and good data. One major bank in China could easily have more than 100 million customers. But it will take you nowhere without the ability to clean the data about the customers. Skip this step and jump-start your leads to definite CRM failure.
Without data management, there is no CRM.
Chinese Employees Are Clever. They Just Don’t Perform
Yes, Chinese employees are clever. But why don’t they perform (in terms of customer-centricity, satisfaction and employee turnover)?
Chinese people are known for being clever and hardworking. You might even say the Chinese are too technology-oriented, given their overwhelming focus on technical education at universities around the world. This lack of concentration on management skills cannot be solved by MBA programs. In addition, the professionalism and business ethics of Chinese employees are not up to standard yet.
But the most critical issue is: China has undergone a stage of fast economy growth and development with tremendous opportunities. Without a good corporate culture to ensure the cohesiveness and without the proper reward structure tied directly to customer-centricity and customer goals, any talk about CRM is just a talk. Without loyal employees, no successful CRM system can be implemented.
Without change management, there is no CRM.
Chinese Consumers Are Demanding. They Just Don’t Spend Well
Yes, Chinese consumers are demanding. But why don’t they spend?
All consumers are demanding. The Chinese like to copy success, but they lack creativity. China is famous as the world production center, but we have yet to see strong brands. With weak branding and product differentiation, price is the primary competitive weapon. Thus, there is no incentive to create added value to consumers and emotional (or even spiritual) bonds to the brand.
The open market makes consumers more demanding, and as consumers become more mature, there are increasing concerns about time, convenience and added values. Consumers need a brand they can trust and rely on.
Without brand management, there is no CRM.
Most Chinese enterprises are not doing CRM right. Vendors here are even worse; we haven’t seen any vendors who have been working hard, or hard enough, to educate the market properly. Short-sighted actions lead to poor results. Almost none of the CRM vendors are profitable: AKuP disappeared; MyCRM retreated; and the local ERP giants Kingdee and UfSoft did not achieve any satisfied results. Siebel has recruited the ex-CEO of UfSoft to head its China operations, but we at GreaterChinaCRM have strong reservations on whether the traditional software-centered approach could do much good, no matter whether it is based on the enterprise, mid-market or ASP market, or a hybrid. A few big-ticket projects cannot sustain a strong stand.
However, I will not be surprised if the China CRM cake has grown five to 10 times bigger a couple of years from now. To turn things around, all China needs is the collective efforts of enterprises and vendors, not only the CRM vendors but also the data, brand and change management folks.
So, Step 1, let’s act collectively and correctly to demonstrate how real CRM can produce real ROI!