Book Review: The CRM Handbook

Book Review:
The CRM Handbook:
A Business Guide to Customer Relationship Management

    Jill Dyché
    Addison-Wesley, 2002
    ISBN: 0-201-73062-6

Defining customer relationship management (CRM) is a difficult task, but one that Jill Dyché is clearly up to. The CRM Handbook leads the reader through multiple perspectives on CRM, showing how each colours our perception of the object in question. In the end, we come away with a balanced view of CRM, and a better chance for a successful CRM implementation.

The element of "chance" is precisely what Dyché proposes to mitigate. Indeed, leaving anything up to chance in a CRM program is a recipe for disaster. She estimates that 70 percent of companies that have attempted to implement standalone CRM systems have failed:

    As with enterprise resource planning (ERP), supply chain management (SCM), and other wide-reaching corporate programs that mandate a combination of innovative technologies, new business processes, and organizational buy-in, CRM's failures are vast and visible. (5-6)

She analyzes these failures and concludes that your best chance for success comes from being forewarned concerning the complexity of the program you are about to embark upon, and having clear, measurable objectives for judging the success of the program.

Strategic impact
One reason that CRM is initially difficult to grasp is that it defies simple categorization. Is it a technology? Is it business process re-engineering (BPR)? Is it an operational tool? Is it an analytical tool? The answer to each of these questions is a resounding "Maybe", or "Sometimes".

What CRM "is" within your organization is (or should be) entirely dependent on the objectives you set and measure. Your strategy should drive the definition of CRM functionality. Required functionality should drive the selection of CRM technology. In the end, you judge CRM technologies according to their strategic impact on the enterprise.

Who "owns" the CRM initiative?
The holy grail of CRM is enterprise-wide integration of customer-related data that provides a diverse user community within the enterprise with the historical and predictive information and recommendations they need to ensure customer retention and loyalty. In this ideal world, everyone has what he needs to succeed, and the system belongs equally to customer service, marketing, sales, and upper management. Dyché provides some shining examples of successful CRM implementations in which this ideal has been more or less realized, but the reality is that the typical case falls far short.

The companies that have experienced the greatest enterprise-wide CRM successes have made substantial long-term investments that look beyond simple return on investment (ROI) to return on relationship (ROR). The concept of ROR is critical to an understanding of the strategic impact of CRM. It addresses the fact that it costs more to create new business with new clients than it does to create new business with existing clients. Given this fact, why not try to maximize the business you do with existing clients? Why not try to know them and understand their needs so that you can retain them and engender loyalty in them?

Dyché notes, however, that the majority of successful CRM initiatives start out as so-called "stovepipe" implementations – programs designed to automate and rationalize processes, and analyze data, within specific departments such as customer service, marketing, or sales. Such implementations frequently start with a visionary executive who sees competitive advantage – or competitive necessity – in a subset of CRM functionality.

It's up to you to decide where CRM can have the greatest immediate and long-term strategic impact within your organization, but when you make the decision on which department will lead the way, you should give that department ownership of the initiative. The reason for this is simple: CRM is an ongoing program and a living process, not merely a project with an end state. It is not a technology project to be implemented by IT. It is not an executive information system to be implemented for the benefit of upper management. Rather, it is a program to create efficiencies within the specific department, to allow them to improve relationships with customers, and to allow them to set and meet measurable objectives.

How does sales force automation relate to CRM?
Broadly categorized, CRM is of two kinds: operational and analytical. Operational CRM concerns the collection and use of customer data. Analytical CRM concerns the storage and analysis of customer data. Whereas analytical CRM requires investment in data warehousing and/or data mining technologies, operational CRM can be achieved using simple stand-alone applications or Web-based suites of tools. Ideally, operational and analytical CRM work together to provide true, enterprise-wide data integration and an in-depth understanding of your customers' needs and desires.

However, while you can implement operational CRM without analytical CRM, you cannot implement analytical CRM without operational CRM. Since operational CRM provides the data for mining, it makes sense for any organization considering a phased or stovepipe implementation of CRM to begin with an operational perspective. Sales force automation (SFA) is one kind of operational CRM.

Dyché calls SFA the "cradle of CRM", meaning that today's CRM programs emerged from the original SFA products of the early 1990s. These products were all about improving the productivity of your sales force, thus creating a direct impact on sales revenues.

Modern SFA suites may improve the effectiveness of some or all of the following activities:

  • Sales process/activity management
  • Sales and territory management
  • Contact management
  • Lead management
  • Configuration management
  • Knowledge management

Compared to larger analytical CRM implementations, SFA provides a relatively immediate impact and return on investment. You should see measurable results within the length of time it currently takes you to complete an average sales cycle.
Hosted CRM

The Internet has had a huge impact on CRM technology. Hosted suites of tools have allowed remote and mobile users to update and access information in near real time. According to Dyché, the advantages of an application service provider (ASP) model are many and compelling:

  • Robust technology infrastructure – the ASP maintains the necessary hardware.
  • Speed of implementation – just sign up and log on.
  • Expertise – ASPs provide technical support, and may also be able to help in strategic planning and creative execution
  • Service-level agreements – contractual agreements specify availability, reliability, and support options.
  • Critical mass – support for your CRM functionality is a core responsibility for the ASP.
  • Scalability – increasing the workload is as easy as upgrading your license.

Recommendation
Dyché's book one of those rare business books that you will find yourself coming back to over and over again. Whether you are considering an enterprise-wide CRM implementation, or merely trying to improve customer focus in specific departments, or looking to make an immediate impact on revenue, this book will help you see both the big picture and the devil hiding in the details.

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Copyright © 2007, Tom Woodhead | Last Updated December 22, 2007