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					How Prepared Are You for CRM? And What Are Your Peers Already Doing About
It?

By William K. Pollock

CRM is not just an acronym to many organizations - it's a way of life! In today's fast evolving economy,
most businesses still require tools, crutches, or incentives to provide their customers with both what they
                                                               SM
want - and what they need. In 2002, Strategies For Growth and the Association For Services
Management International (AFSMI) conducted a joint survey of services organizations with respect to
their preparedness for CRM. The following data is excerpted from that study. Read on to see what your
peers think - and what they are already doing about it - with respect to CRM!

How Important is Customer Relationship Management (CRM)?
Nearly 95% of the respondents indicate that CRM is “important” to their organization - with 38.2%
indicating it is “essential”. All told, less than 5% believe that CRM is neither important nor applicable to
their respective organizations. As such, we believe that CRM is now both widely accepted, and firmly
entrenched, in the psyche of the worldwide business environment - particularly for services organizations.
There are still many opportunities for businesses to begin thinking about implementing CRM - but the
window of opportunity is closing, and now is the time to either jump on the bandwagon, or get left behind.
In an environment where more than 80% of your peers believe something to be either “very important” or
“essential” to their overall business strategy, then perhaps it is time to “join the crowd”. Keep in mind that
in today’s economic environment, being a follower is not necessarily a bad thing - if by not following, it
means that you will not be able to compete!

Where Does Your Organization Presently Stand on CRM?
More than three-quarters (77.8%) of the survey respondents are in various stages of CRM
implementation. In fact, almost two-fifths (19.1%) are presently rolling out their CRM programs; roughly
one-in-twelve (7.9%) have already approved a CRM program; more than one-quarter (26.4%) are in the
design phase; and another one-in-eleven (9.0%) are in the pilot stage. At the time of the survey, just
under one-sixth (15.5%) had already completed their CRM program implementations. At the indicated
pace, by mid-year 2003, an estimated 35% of the survey base will have rolled out their CRM
implementations, with another 9% estimated to complete their implementations by the end of the year. As
such, nearly half of the survey respondents will be expected to have their CRM implementations
completed by the end of 2003, with almost another one-quarter following by the end of 2004. This
strongly suggests that the position of “wait and see” with respect to CRM is a fast-closing window, and
one that is likely to disappear within the next two years.

How much does CRM Cost?
The range of dollar estimates for the total cost of CRM implementations ranges - well - all over the place!
Approximately one-third (31.2%) of respondents indicate they have spent (or plan to spend) less than
US$100,000 for their CRM implementations. Of course, these typically represent the smallest of the
respondent organizations. However, an equal amount (31.2%) also indicate that their CRM
implementations have cost (or will cost) more than US$1 million - primarily the largest of the respondent
organizations. All other respondents indicate expenditures somewhere inbetween. It has been our
experience that those organizations spending less than US$100,000 for CRM either do not have a
realistic budget to embark on the CRM process, or do not realize the full extent of the significant efforts -
and expenditures - that will be required. On the other hand, those organizations that spend more than
US$1 million are truly serious, and realize that CRM requires a significant expenditure.

How Long before You See Results?
For many, this is not the $64 question - it is the $640,000 or $6.4 million question! More than half (57.0%)
of the respondents indicate that they expect to see “measurable results” within the first year of CRM
implementation. If true, this would suggest that many organizations have taken the approach to
implement CRM in stages - or modules - in order to realize measurable benefits along the way. Still,
another 43.0% indicate they expect 1 to 3 years or more to go by before they anticipate seeing any
measurable results. As a result, many organizations have learned (or will learn) that they must be able to
show some measurable results all along the way - or else, they may find themselves in situations where
neither internal support, nor funding, will continue to come their way. The old adage certainly applies in
these cases - you have to show some results now in order to justify your expenses.
Do You Use/Plan to Use Practical ROI Metrics to Measure CRM Success?
Less than one-quarter (22.5%) of respondents presently use, or plan to use, practical ROI (i.e., Return on
Investment) measurements to evaluate the success of their organization’s CRM program; more than half
(51.4%) do not; and another one-quarter (26.1%) are unsure (i.e., they don’t have a clue!). While every
self-appointed CRM expert will tell you that ROI is the only practical means for measuring and evaluating
the “real” success of CRM, the marketplace continues to struggle with exactly how to do it. The results of
the survey clearly indicate how far behind the market is, as a whole, in being able to identify the true costs
of CRM via a realistic ROI analysis.

Have You Budgeted for Ongoing Maintenance or Future CRM Upgrades?
Less than half (42.6%) of respondents believe that their organization has adequate budgeting in place to
support ongoing maintenance and future CRM upgrades. About one-sixth (17.7%) claim they flat out have
not adequately budgeted for these two key areas, and another nearly 40% are unsure. The general rule
of thumb is, “if you think you have adequately budgeted for CRM - either dollars or people - then you have
probably only missed the mark by up to 50% or more!” Each component of the overall effort - from
conceptualization, through design and implementation, and on an ongoing basis through maintenance
and upgrades - has its own costs, risks and benefits. However, the key - in every case - is to adequately
plan, budget, support, measure and manage it from square one through forever.

Conclusion
CRM is what organizations put into it - nothing more, and nothing less. The trouble is that too many
organizations still do not recognize the importance of planning for CRM. They understand that CRM is
important - in fact, essential - but they still do not quite know how to go completely about implementing
and managing it. This is where we believe outside assistance, provided by qualified specialists in the
field, can be of significant help both in getting an organization kick-started in CRM, as well as mentoring
an organization that has become bogged down in a seemingly never-ending CRM program with no
direction and little to show management for all of the organization’s expenditures and efforts. Ultimately,
the CRM program must belong to you. It must be developed by you, incorporated by you, measured by
you, and managed by you. However, in the meantime, you will undoubtedly require some assistance in
order to make it all happen.

[For more survey results from the AFSMI Customer Preparedness Survey, please refer to our article
originally published in the January/February 2003 issue of AFSMI's Sbusiness journal, accessible to
AFSMI members at http://www.afsmi.org/sbusiness/index.cfm?content_id=129&cgroup_id=22.]

Until next month, keep your customers satisfied!

Very truly yours,

Bill
William K. Pollock
President
                      SM
Strategies For Growth
P.O. Box 1024
Westtown, PA 19395
USA

Tel: (610) 399-9717
Fax: (610) 399-9718
E-Mail: wkp@s4growth.com
Website: www.s4growth.com

				
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