| Start Where
You Stand
By Steve Klinkerman
Rescuing customer relationship
management begins with a strong dose of reality.
Customer relationship management has
reached a state of crisis within U.S. financial institutions.
After years of struggle and massive expenditures, there's
woefully insufficient evidence of payoffs in the form
of enhanced revenue growth and improved customer acquisition,
retention and profitability.
Still, there's no going back. CRM-related
components and approaches are now thoroughly insinuated
into technology infrastructure and workflow. Many a career
and earnings report still hinge on wringing payoffs from
the computerized systems that blend customer information
and analytics to enhance all sorts of customer-facing
activities.
Without new methods, however, institutions
risk digging themselves into an even deeper ditch. CRM
is clearly in a retrenchment phase, and grand visions
now must yield to pragmatic measures that will help companies
start where they stand. Sophisticated proposals that would
revolutionize established infrastructure, such as entire
branch systems, must yield to simpler approaches crafted
with an eye toward minimizing expense and disruption.
Migratory paths are needed, not cataclysmic changes.
Increasingly, it seems that such paths
are best forged by focusing on specific initiatives. The
idea is to establish a nucleus of financially constructive
CRM applications — such as targeted marketing programs,
cross-sell schematics and product development — and
then back into a larger and more complete system, instead
of vice-versa.
These applications should play to the
company's best attributes. One trap is to think that a
powerful new system will make the company strong in areas
where it has been weak, when factors other than CRM prowess
— such as brand anonymity, inefficiency or nondescript
distribution — actually are the root cause of the
problem. Similarly, CRM is not a substitute for a strategy.
Only after a company aligns its core operations with the
needs of prime customer segments can CRM truly shine.
Customer representatives play a central
role in fostering this alignment, and that's why critical
staff implementation factors must be taken into account.
Incentives, for example, often still are at odds with
the objectives embedded in CRM systems. And far too many
managers and employees don't know how to take full advantage
of the increasingly sophisticated tools being placed at
their disposal.
Another requirement is that CRM solutions
be based on data available to the institution in the course
of its normal daily life, as opposed to "ideal"
combinations found only in laboratory settings. The most
elegant of segmentation frameworks will remain sterile
unless practical methods are found to place individuals
within their relevant groups. That problem has to be dealt
with before systems are rolled out, not after.
Finally, the appropriate performance
metrics need to be baked into each project. That entails
clarifying the business case, agreeing on how success
will be measured, installing sensing mechanisms and then
monitoring and interpreting results in a sufficiently
timely way as to permit mid-course corrections and refinements.
Only by dealing with gut-level issues
such as these can institutions move ahead with CRM. It's
not pretty, but there's little choice. For some time to
come, the only CRM initiatives that many managers will
be able to consider are measured steps — not leaps.
Mr. Klinkerman
is editor-in-chief of Banking
Strategies.
Copyright © 2003 by Banking
Strategies, published by BAI.
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