Use the Balanced Scorecard to Execute CRM Strategy
CRM is all about vision, strategy and implementation. Too many companies lead with technology, and fail. Changing behaviors and processes are key to implementing strategy. A Balanced Scorecard makes change manageable.
Competitive pressures are driving companies to invest in CRM, even though 50% to 90% of CRM initiatives fail. The primary cause of failure is the inability to develop and effectively implement a strategy for relating to customers. Combining Gartner’s CRM process map with the Balanced Scorecard framework is a good starting point.
Companies that focus on an overall CRM strategy will be far more successful than those that focus on CRM technology. Implementing strategy will increasingly become a critical core competency.
Focus first on developing a vision and customer strategy related to long-term business goals. Fund CRM projects only after you have a process in place to manage strategic implementation.
• • •
Related Research from GartnerG2 Gartner Core Research Methodology
Kevin Murphy with Randy Russell
“To beat the odds against successful CRM, use Gartner’s CRM process map together with the Balanced Scorecard framework.”
GartnerG2, a new service from Gartner, Inc., helps strategists guide and grow their businesses. RPT-0702-0117 © GartnerG2. All rights reserved. GartnerG2.com. Page 1 of 11
Use the Balanced Scorecard to Execute CRM Strategy July 2002
The key to CRM is developing and implementing strategy Customer relationship management (CRM) is as old as the market economy. Sellers try to manage customer relationships to create additional value for their customers and for themselves. So what’s new? Software tools to help you improve customer acquisition and retention, grow your share of customer’s spending and improve understanding of customer profitability. This simple notion has created a $40 billion market for CRM software and services, most of it wasted. To reap benefits from managing customer relationships, more than technology is required. First, build the basics: a customer strategy that can harness the power of CRM technology, and a strong focus on implementing strategy across an organization. It’s easy to say: Align your technology investment with your customer strategy. But strategy execution is one of the most daunting challenges facing organizations. That’s why the failure rates of CRM initiatives parallel those of successful strategy execution. To beat the odds, combine Gartner’s CRM process map with the Balanced Scorecard framework. This helps your company translate a customer strategy into action.
Why has CRM failed? Analysts and consulting firms have reported staggering estimates of CRM initiative failures over the past two years: • • • Gartner research shows that more than half of all CRM projects don’t produce results, and that 50% of CRM strategies will still fail. Cap Gemini Ernst & Young reports that 70% of CRM initiatives fail. Peppers & Rogers Group, which focuses on the benefits of one-to-one marketing, estimates that 80% of CRM projects fail to generate a positive return.
This negative publicity has attracted much attention, and there is no shortage of opinions on what’s gone wrong. • According to Booz, Allen & Hamilton, companies that fail at CRM initiatives fall into three traps: — — —
They treat technology as the primary driver of their customer strategy. They rely on vague aspirations instead of customer strategy. They fail to align organizational resources to the customer strategy when one exists.
A CRM forum survey of companies with failed CRM projects showed that 87% of respondents identified the lack of adequate change management as the primary cause of failure. A recent Harvard Business Review article, “Avoid the Four Perils of CRM”...