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The 56 Group, LLC

Finding the appropriate software during thedevelopment of a CRM implementation is not just package selection, but is truly vendor selection.

Perhaps the single most critical and least understood facet of CRM is the major cultural changes that it entails and the difficulty that exists in managing those changes. More than any other so-called IT-based "business system," CRM is dependent on the will of the individual customer for its success. That is a bit of a trick statement, though, with the definition of the customer changing dramatically over the past decade.

Originally, the customer was the paying client — he, she, or they bought goods and services from a company. However, as the corporate world evolved from a competitive world of multiple enterprises to a world of "coopetition" to a corporate ecosystem to its current evolution toward the customer ecosystem, the need for cultural change within companies has been profound and its scope actually a bit scary. The result? The need hasn't been met in a large number of instances.

CRM is also evolving from a technology-based customer-facing system to an "onramp" for customer-centric convergence. What this means is that CRM, supply chain management, logistics and delivery systems (transportation management or what is, of course, being called logistics relationship management), ERP, and other back-office systems are all moving toward provision of a multi-enterprise integrated whole that is focused in and around the individual customer in a B2B or B2C environment.

While the prior paragraph has lots of phrases and acronyms, there is a conclusion to be drawn from it. With this convergence, comes the need for changes in the business processes and methods used by not only customers, but also CRM vendors and service providers. It demands that the vendors’ cultures are aligned with the concepts embedded in the CRM systems they sell. This might seem to be a given, but often is not.

There is a need for vendors to be "aligned culturally" with the concepts and the customers; the changes that are necessary in the dramatically evolving environment above. The benefits for both the vendors and the customers are obvious if the changes are made. However, if the vendor does not align its culture with its process-driven CRM product, failure is just about guaranteed for the vendor and, worse, for the customer.

The Beginning of CRM

My, how the business world has changed. It seemed so simple back in the days of the mom-and-pop corporation, back when a customer was someone who paid you for your goods and services and it was as easy as that. Now, the world has gotten so complicated that a customer could be that purchaser or your employee or your supplier/vendor or even your partner. Could be that guy standing next to you on the subway or that couple sitting next to you in the movie theater. Who knows what definitions lurk in the hearts of men? CRM knows.

One of the great differences between CRM and its oft-equated enterprise resource planning sibling is that CRM is not just an internal set of processes. ERP came from the world of manufacturing (MRP & MRP II) which used business processes that grew from internal need to make workflow more efficient. It spread to the financial and human resources realms — both still based on internal corporate workflow that never dealt with the outside world. The majority of ERP processes are workflow, data manipulation, and reporting. Product and logistics. The way that companies addressed their finances or human resources changed, but the way the corporation dealt with the world didn't.

CRM is another animal entirely. CRM is customer-facing and must fully integrate with the back office. It creates a unique set of cultural issues that impact every facet of a business being run. That means small business with five people and a couple dozen customers or massive enterprise with 175,000 employees and thousands of customers. CRM engages employees who work in the office, who work in the field, and it engages suppliers who provide you with the inventory that you deliver to your customers. It engages the partners who are working with you on revenue production. It engages the customers and prospective customers. If your objective is customer satisfaction, who most likely to know what satisfies them then the customers themselves? Rather than the product and logistics, its people facing customers.

Corporate Culture

Size has little to do with culture. There's an old saying that goes, "As soon as you have three people, you have business problems." Let's change that to, "As soon as you have three people, you have a company culture."

That culture is often forged through individual personalities, business direction, and corporate history and even by either resistance to or acquiescence to social change outside the corporate walls. It is affected by the national culture in which the business resides. Internally, it can be affected by compensation schemes, levels of employee empowerment, and the personality of the CEO or other senior management. It changes over time either slowly or dramatically, even when left alone. Left alone is, of course, never left alone really, just involves change below the range of the optical. But when it comes to the implementation of a CRM system, one of the unchangeable maxims is that the culture has to change — and change vividly. This is not negotiable. No change means CRM failure. Resistance to that change means danger.

Keep in mind, the success of cultural change is driven by self-interest. For example, if salespeople are compensated for customer satisfaction, then salespeople are likely to engage in the activities that drive their compensation. That extends to the entire sales force. If that compensation is based on contract signature with the prospective customer, meaning "closing the deal," then the level of aftercare will most likely decrease and the presale promises will increase. However, if the compensation is based on ongoing customer contentment, then the level of presales pledges will be sharply reduced and the aftercare attention will be considerably increased because the interest of the individual salesperson is served by doing so. They know that to receive their compensation, their relationship with the customer must travel past the contract signing. It actually just begins with contract signatures.

While corporate culture change might be a recognized need for any company implementing CRM and change management a necessity, what is less visible or obvious is that long before those internal cultural changes are effected, there should have been certainty about the cultural alignment between the chosen vendors, integrators, and the purchaser. The failure to pay attention to that is the failure of your later internal cultural change initiative.

The Application Is the Vendor

Think about it. You’re choosing a CRM package from some vendor that supposedly was created to drive your company to the achievement of new heights of customer ecstasy. That package was developed by a CRM application provider. That software producer needs to live by the principles of CRM that the applications are designed to enhance, not genuflect to some truism about how their core values are customer-driven. Instead, they should be driven by a deeply embedded customer culture, one in which the principles that define that culture are aimed at creating happy customers — in this case, your company.

The problem is that the CRM vendor world is often misconstrued by how good or bad the functionality of the program is — a vestige of the pre-millennial, product-driven world. Vendors will often provide lots of homilies to processes, people, and technology, but the reality is that most of them are driven to sell the software. The result? Many make promises to the customer that often can't be kept, because their sales team incentives are for just that — sales of functional software that can be customized for an additional, very high cost.

Further, the senior management engaged in vendor selection, even when addressing the issue of culture internally by planning a change management program as part of the CRM implementation, are often looking at functionality-driven metrics or hard and quick ROI as their drivers. Even the customer's package selection teams are not looking very far — often responding to the relationship they have with the sales team assigned to their account, rather than taking into account the culture that drives those sales teams. This sales team is only a reflection of the vendor's culture, but not fully representative, because it is also driven by its own personality and self-interest.

Each of these groups, senior management, and the package selection team, though in a position to examine vendor culture, fall short of that because of the often myopic thinking that they internally represent. That shortsightedness leads to overpriced, poorly implemented, badly supported CRM systems that were doomed to failure from prior to the strategic planning because of a poor understanding of the vendor's culture and its adequate or inadequate alignment with the corporate customer's own customs.

Not Paying Attention to the Vendor's Culture? Bad

Yet, with all this lack of focus, how is it that most vendors are claiming customer satisfaction rates of 95 percent or more with a straight face?

Sadly, there is a considerable disconnection between the vendor's claims and independent studies done of customer satisfaction. (That is, studies done completely independent of the vendor.) Ultimately, some of the major reasons for the dissatisfaction and the low scores of even the leading vendors are related to the vendor's promises and culture. Look at this paragraph from the landmark CRM customer satisfaction study, "Multifunction CRM Software: How Good is It?" by CRMGuru.com, Hi-Yield Marketing and Mangen Research Associates, in October 2001:

"Very low scores for customer focus indicate that CRM software vendors aren't achieving what their products are designed to help customers achieve — building strong bonds with customers. Placing more emphasis on closing deals than on relationship building is the root cause, according to many consultants experienced in the software selection process. Verbatim remarks from survey takers, some included in the individual vendor ratings section, underscore buyer resistance to vendor sales techniques. Also, survey takers place extraordinarily high importance on vendors being willing to walk away from jobs when they know their software isn't a good fit — with their sensitivity to this issue a clear indication of customer relationship problems."

In fact, in this survey, the "customer focus" segments of the survey were the second most dissatisfactory category with the well-seeded cross section of CRM users and providers that were surveyed with a rating of 57.64, indicating serious dissatisfaction with the vendor relationship. The most significant reason was the failure of the vendor to understand that the relationship was more important than the contract signature.

In fact, other surveys that have been done, both rigorously and anecdotally, have found that the vendor dissatisfaction is so profoundly rooted that it begins prior to the vendor selection process! The level of cynicism runs deep.

Paying Attention to the Vendor's Culture? Good

What are the tenets that need to be addressed in determining how well the vendor's culture aligns with yours? How do you ask the vendor what you need to know and then investigate their answers?

First a definition of "cultural alignment" is in order. What this doesn't mean is that the vendor culture and your corporate culture have to be identical or even that similar in any operational sense. What it does mean is that you can be content with the values and operations of the vendor and that, to put it simply, you feel you won't be screwed in any way by them. In other words, your definition and the vendor's definition of concepts like "integrity," or "customer value" or "shared knowledge" are close to the same, if not identical.

These questions go to the heart of the CRM vendor's culture. This is not a matter of great product functionality. This is not a matter of a drive to contract closure that nets the customer company some out-of-the-ordinary concessions. This is a matter of the deepest and most profound ethics and principles governing the CRM vendor that is supporting a customer value proposition via its software and services. If these different questions are not satisfactorily answered, then all the functionality in the world won't help.

These questions provide a few key indicators about the conduct of a company that isn't turning on the  hype to wow and dazzle. For example, if customers have been involved in the creation of the applications, then there is an obvious interest in the customer's wishes being fulfilled because their advice is being sought. Another example: If you can talk to customers and partners that are not chosen by the vendor and the company is willing to disclose its financial condition, then candor is clearly a part of the corporate culture of the vendor.

Finally, if the metrics for compensation are tied to long-term relationships with the customers, it is then reasonably inferred that the vendor believes that the signing of the sales contract is the beginning of the relationship, not the end. This implies that maintenance and attention after the implementation will be good and that the salespeople didn't over promise, at least not too much, because there will be an ongoing relationship with the customer after the sale.

Keep in mind, a contract exists primarily to set ground rules and to provide a path toward addressing problems and grievances. When you dot the "i" and cross the "t" on the signature line, you are just beginning your relationship with the CRM vendor. The vendor must be trusted to start and complete the arrangement that you’ve signed for them to complete. To have an untrustworthy vendor is to put you in a position to lose your job and your company to lose millions of dollars and countless hours of labor time. So the beliefs of that vendor can have a material effect on the success or failure of your CRM implementation, your business processes, your revenue stream and in the not-so-long-term, your job. That is why the core values of the vendor and its infrastructure and superstructure to support those core values are so important.

Core Values

This is the heart of the matter. The culture of a company is determined by its core values — in theory. Sadly, many of the vendor companies that have a core value system don't really adhere to them and see them, instead, as marketing tools. You can often tell how successfully a company adheres to core values by how well the employees know them.

What are Core Values, by the Way?

Core values are profound statements of corporate ethics, principles, and governance. They are defined by categories such as customer satisfaction, professionalism, community, ethics, courtesy, and goal orientation and even fun and other primarily subjective attributes. If the company is actually adhering to them, there will be a series of employee organizational objectives attached to the values and an organizational structure to sustain those objectives and values. What you are looking for is something like an ISO9000 plan. In other words, if the vendor core values are something that you as the potential client are comfortable with, how consistent is the vendor in execution of those core values? What is its plan for the realization of those core values? That consistency is very important to your future because if the core values and the organizational execution of those values are deviant, then the likelihood of your success is decreased dramatically, simply because the core values and thus the company are untrustworthy.

For example, take "customer satisfaction" as a core value. The actual core value statement attached might be something like, "We are committed to making our customers happy with our work at all times." While that is a pretty broad statement, the next step is to read how the vendor company defines it and then to see if their organizational structure supports it. So, perhaps there will be a series of activities that are mandated by the company such as:

• Regularized site visits by account managers with regular status reports and team discussions on how to deal with both technical and/or human issues
• Customer audits by independent firms to determine what are the levels of customer satisfaction and what are the problems found that need correction
• Compensation that is based both on individual management by objectives (MBOs) and team success rates aimed at things that reflect customer satisfaction, like repeatable business, long-term maintenance agreements, and upgrades
• Extensive customer support services with CSRs compensated for satisfactory problem solving in a timely fashion so the metrics may be reduced time to solution, increased number of customers signing service level agreements.

Right-Brained Due Diligence

Finding the appropriate software during the design and development of a CRM strategy and implementation plan is not just package selection, but truly is vendor selection. Of course, the technology, architecture, ROI, TCO, usable functions, fit, and pricing are all part of the selection, but they fall to the left of the space under the cranial hood. There is also a process of right-brained due diligence that demands a thorough knowledge of who you are dealing with, not just what you are looking for. If you don't grasp the essential intangibles of cultural alignment with a vendor that you are assessing, then the promise of the package, no matter how good, is ultimately a false promise because it takes human beings to install, customize, and administer that package and they’d better be trustworthy and in basic agreement with how you work.

Know thyself is a time honored invocation. But once you know yourself, make sure that your vendor also knows you and that you know your vendor. If you don't … then as the Bard said, "Oh what fools these mortals be!"