The Rise and Fall of CRM, Part 3
Updated · May 22, 2002
This three-part column is about the birth and death of the CRM fad. In parts one and two, we looked at the Internet fad and the early hype surrounding CRM. In this, the third and final section, we’ll look at two examples of a new generation of more practical, clear-headed approaches to CRM.
Two examples of successful CRM implementations, recently publicized in prominent IT management magazines, share some remarkable differences from early CRM efforts. Early efforts tended to be based on dreamy, plug-and-play visions of quick and easily won customer loyalty.
These two case studies represent a new approach, placing emphasis on competitive strategy, business process design, analytics, and application integration.
What sets these apart from earlier efforts is an unwavering conviction that CRM requires executive leadership, is extremely different to do, and is a never-ending process of improvement.
One Boise: The Irrefutable Benefit of Knowing What Your Customers Want
Boise is in the prosaic business of producing and distributing office supplies. There’s nothing simple or easy about successfully competing in this low-margin business. The beauty of the Boise project, known as One Boise, is the economics on which it was founded: By keeping track of what customers ordered, what they were likely to order, and how they responded to offers, Boise would be better able to serve their needs and differentiate itself in the marketplace.
Boise’s CRM project has some very telling critical success factors. First, it was owned and driven by the CEO. The company recognized how difficult the effort was going to be and mapped out an entire program to deal with the resistance to change the initiative would invariably bring to the organization. A sizable investment in change management and employee communications was made.
To its credit, Boise quickly recognized the potential benefits of putting aside internal politics to consolidate all customer information into one system. It estimates annual savings of over $3.5 million by eliminating duplicate infrastructure costs.
Also to its credit, Boise addressed two critical issues most organizations overlook when undertaking a CRM implementation.
First, it developed an application integration effort as part of its best-of-breed solution design (although it did things the hard way. Boise had to build 34 bridges, or interfaces, linking old and new systems. Perhaps this could have been achieved easier through a middleware or an EAI solution). It also cleansed and loaded 2.2 million customer and contact records into the customer data store.
Hurrah for Harrah’s
Like Boise, the CRM effort at Harrah’s resort and casino chain focused on the benefits of integrating customer information to better understand how customers spend their money and how to accommodate those behaviors.
Harrah’s built a unified customer database that serves as the underlying engine of Total Rewards, the company’s loyalty program. As you might suspect, it wasn’t cheap or easy. It involved integrating Harrah’s AS400 transactional systems with an otherwise incompatible Unix-based national customer database. Integration was achieved using middleware and in-house software.
The real key to success was executive commitment to the vision and a resolve to see implementation though. The executive spearheading the project was quoted as saying the real challenge wasn’t so much integration, but convincing employees the integration could be done.
I hope you enjoyed this three-part series on the rise and fall of the CRM fad. Thanks for sending your comments and feedback to [email protected].
Arthur O’Connor is a director and head of the CRM Integration Practice at Reuters Consulting, a unit of Reuters, PLC. As one of the nation’s leading experts on CRM and business intelligence solutions, he frequently writes on business and technology trends. He’s a frequent speaker at industry conferences. Last year, he served as chairperson of the Institute for International Research’s CRM Project Management Conference.