First Things First: The Three P Factors

May 01, 2004 9:30 PM  By

The concept of customer relationship management (CRM) is simple: The integration of people, processes, and technology helps a company effectively manage its business. CRM technology provides information for every corporate activity from marketing to fulfillment. In theory, information is at your fingertips, just waiting to be used to increase sales and service. So it appears that every company would benefit from a CRM initiative.

Before you take the plunge, though, you should know that implementation failure rates range from 25% to 75%. The breadth of the range makes the statistics questionable, so let’s focus on your company: If your CRM initiative fails, you will have a 100% failure rate and lose a lot of money. That puts it in perspective, doesn’t it?

To improve your chances of succeeding, you need to determine if your company is ready to implement a CRM program. And to do that, you should start with the P factors — people, processes, and planning. Avoid the temptation to start shopping for silver-bullet technology that promises to solve all integration and data management issues. Technology cannot drive your business without support.

The P factors affect sales, productivity, service, and profitability. If you manage them well, your company will grow and prosper. Poor management will ultimately result in business failure. The challenge is finding the right balance of people, process, and technology for your unique environment.

The people factor

If you browse through the business best-seller book list, you will find that customers are king, employees come first, and win-win strategies are critical for vendor relations. All three premises are correct. No company would survive without employees, customers, and vendors. Positive interaction among these groups creates a successful enterprise.

Contact customers and vendors, making sure to include some with whom you’ve had problems. Ask them about doing business with your company: What do they like or dislike? How can you improve? If they speak candidly, you can learn a lot about your business in a short time.

When I served as chief operating officer at home decor catalog Ballard Designs, I occasionally terrorized our customer service department by taking overflow calls. It served many purposes (besides generating additional calls from customers asking why the new CSR was so slow). Every call provided an opportunity to see first hand how orders were taken and issues resolved. Some calls inspired operational changes. All calls increased my respect for our customer service team.

Listen to casual talk among your employees. It will provide the most realistic view. Surveys can be misleading because people will answer based on perceived expectations. Do your employees complain about customers, vendors, other departments? If so, there are gaps that have to be bridged before you can start a CRM initiative.

If there are interdepartmental conflicts, try cross-training. Once an employee experiences the realities of other departments, he will find it much harder to criticize and complain.

Implementing a CRM initiative requires people to change how they work and interact with each other. Change is always easier when you are acknowledged as a valued contributor to the process. Work with your teams until they are comfortable with each other and understand the importance of every job function.

Once the interdepartmental communication lines are open, customer and vendor issues will become more visible and resolvable. Establish a consistent process for reviewing and resolving the issues as quickly as possible. Employees, customers, and vendors will begin to accept change with a positive attitude.

The process factor

The process factor has such an impact on CRM success, software providers are marketing business process management (BPM) technology. Before you think about new technology, though, review your company’s business and workflow processes. Organizational issues are resolved with policies, procedures, and processes. Market, personnel, and technology changes can render these resolutions obsolete. At the same time, automation of ineffective processes is counterproductive.

Therefore you should validate or eliminate every corporate activity on a regular basis. When analyzing activities, ask:

  • What is the purpose of this function?
  • Why is it necessary?
  • What are the benefits?
  • How much does it cost?
  • What and where are the constraints?
  • Does it affect anyone or anything outside the immediate department?
  • What are the effects of elimination?
  • How can it be improved if it can’t be eliminated?

The best method for auditing workflow is to follow the natural flow of orders, product, and information. Begin at the point of origin for each channel. For example, order flow begins with the receipt of the order from the Internet, the mail, or the call center and continues through the shipment of product. In following the course of an order, you’ll soon enough notice any bottlenecks, employee conflicts, or interdepartmental issues.

Once you validate the effective functions and eliminate the obsolete ones, document the procedures, policies, and processes. Include the information from the review in the documentation. It will make the next review much easier.

The planning factor

The perception is that planning will use resources without generating results. And in fact, perception and reality are often the same, in that many corporate plans are never implemented.

Planning is also seen as something that imposes limitations. The reality is that a well-developed plan will give you the freedom to stretch boundaries and achieve your goals.

The primary characteristics of a good plan are:

  • specific details

    Each objective and step must be specified (increase customer retention by 10%, for instance, or develop a request for proposal).

  • assigned ownership

    Each step must have a team or person assigned responsibility for completion.

  • deadlines

    Each step must have specific deadlines and contingencies.

  • flexibility

    The plan must allow modifications when unforeseen issues arise.

  • integration

    Every area affected by CRM must be integrated into the plan.

  • metrics

    Detailed benchmarks must be included so that you can measure success or failure.

The bottom line

Addressing the P factors will affect other areas such as acquisition, employee retention, and order dynamics. The benefits are evolutionary. They begin as small gains and evolve into a snowball of growth and profitability. Monitor closely and modify your implementation plan as needed.

Granted, dealing with the people, the process, and the planning prior to investing in your CRM technology is challenging; it requires a commitment to identify and resolve insidious internal issues. It is not a short-term project that yields immediate results. But the benefits greatly offset the pain.

The result is a corporate culture that celebrates customers, encourages employees, and validates vendors in an efficient and effective environment. Sales rise and costs decline. You have a complete understanding of your business and the dynamics that drive it, which mean you can identify your specific needs. In short, you are now able to choose the best CRM technology and use it to maximize sales and profitability.


Debra Ellis is president of Wilson & Ellis Consulting, a Barnardsville, NC-based firm specializing in management, marketing, and operational solutions.