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Bob
Dorf, a leading
strategist in Customer
Relationship Management,
advises that CRM
software shouldn’t try
to “boil the ocean,
but maybe just warm up
the lake.”
His
analogy refers to the
flaw of earlier CRM
software companies that
tried to solve every
aspect of its client’s
contact with customers.
What it boiled down was
CRM software was trying
to be too ambitious.
Speaking at the ninth annual CrossRoads
Venture Fair in New
Haven, CT May 14-15 on a
Trends in Software
panel, Dorf recommended
that CRM software should
focus on smaller issues
rather than taking on
the universe.
“Instead
of dealing with one or
limited issues, CRM
software companies tried
to deal with the huge
application,” Dorf
said. “Too many CRM
projects try to solve
every aspect of contact
with customers.”
After
disappointing results
through the mid-1990s,
CRM companies that
narrow their scope
provide more useful data
management. However,
many CRM analysts
continue to report that
60 to 75 percent of all
new CRM installations
will fail. That’s a
serious problem.
Dorf
sees the most successful
CRM programs targeting
on tighter solution
sets. For example, the
latest generation of CRM
software is focusing on
specific industries,
such as insurance or
manufacturing.
“The
mistake of CRM systems
is they proposed to
address every issue,”
Dorf said. “It stems
from the old paradigm of
trying to solve every
aspect of contact with
customers.”
This
all-encompassing
approach left CEOs, who
invested in expensive
CRM programs, wondering
how to measure results
in a short time cycle.
Earlier CRM versions
were costly and took
several months to
develop, write and
implement – but did
the results collect
tangible results? Often,
they didn’t, according
to Dorf, the co-author
of “The One to One
Fieldbook” that drew
rave reviews from
Fortune magazine in
1999.
“When
a CEO invest about five
million in a CRM system,
the hope is to get a
return of ten to twenty
million dollar profit
improvement,” Dorf
said. “But that
wasn’t always
happening. The systems
were trying to boil the
ocean.”
Dorf
observed that the most
sophisticated CRM system
is only as good as the
employees who use it.
The company culture
typically will dictate
the results employees
will gather from
customers.
“Company
cultural issues are
critical,” Dorf said.
“Rather than measure
how many calls employees
can handle in an hour,
it’s more productive
to take the time to
thank customers and
learn three or four
things about them to
market better next time.
If they don’t, then
you wind up with an
expensive phone book or
calendar and no
meaningful return on
investment.”
The
revamped criteria for
new CRM installations is
more results oriented,
time sensitive and
solution focused. An
effective CRM system
delivers results in a
short time cycle and
allows CEOs to measure
the return on investment
sooner.
Industries,
such as
telecommunications,
insurance, securities,
financial services and
credit card collect the
most data about
customers. This
information is
invaluable, allowing
companies armed with
detailed customer data
to react to their
behavior and spending
habits.
Dorf,
the founding CEO of
Peppers and Rogers
Group, the preeminent
CRM consulting practice,
jumped to the other side
of fence to become a
Venture Capitalist two
years ago. He is a
co-founder and general
partner in Marketing to
1 to 1 Ventures LLP,
based in Stamford, CT.
– a private equity
venture capital firm
investing in early-stage
companies delivering CRM
tools, technologies and
implementation. His firm
has a $70 million
portfolio of eight CRM
companies
He
sees the climate
improving with more
traction for CRM
companies that target a
smaller market and
produce measurable
payback benefits. The
era of CRM systems that
claim to be panaceas has
passed.
“CRM
is an exciting field
that has had its share
of stress,” Dorf said.
“But people are
beginning to buy CRM
software again.
They’re talking about
CRM implementation with
more modest
activities.”
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