What's left to say about customer-relationship-management (CRM) solutions?¹ Business commentators have spilled oceans of ink describing the gut-wrenching rise and fall of these programs' reputations. Most large companies have implemented some form of CRM, and many have followed their early disappointments with full-scale CRM remediation efforts.²

Indeed, more than half of all companies investing in CRM consider it a disappointment, according to several recent surveys. What's wrong? It's not that companies are spending wildly; many of them build robust business cases before making their investments, which at this point are likely to be incremental. Nor does the fault lie with the technology itself—most systems provide the required features. Companies have lavished attention on business and technology issues because both were glaring early impediments to CRM's effectiveness.

The core of the problem now is that too few companies are paying enough attention to the organizational challenges inherent in any CRM initiative, whether it involves delivering a new solution, fixing a foundering application, or tweaking a functioning CRM capability. These challenges stem from the wide variety of people—frontline sales and service providers, business analysts, IT professionals, and a broad array of managers, to name just a few—who must collaborate to ensure that a CRM program is defined, delivered, and deployed. This diversity creates accountability issues and complicates the challenge of persuading employees to embrace CRM.

Solving these organizational problems requires a company to go beyond the vigorous exhortations and heavy-handed rollouts that many have relied on—understandably, in view of the money invested and the opportunity costs of failure. Instead companies should view CRM as a product or service targeted at internal customers. Like any product or service, it must be infused with clearly defined value, priced appropriately, advertised, and provided with after-sales support.

In our experience, no temporary centralized team, however competent and well intentioned, gets everything right. What's needed to achieve long-term business results is an infrastructure grounded in accountability, as well as supporting initiatives to motivate, train, and track the many employees in diverse positions throughout the organization who make or break the CRM program. Attention to these perennial organizational challenges, which are easy to overlook in the rush to fix the technology and business-alignment issues, correlates strongly with success in CRM (Exhibit 1).³

The role of senior executives is vital. CRM's impact on frontline employees is so significant and potentially jarring that clear, forceful messages from the top are critical to enforcing accountability and motivating change. Senior executives can dramatically improve the likelihood of success by explaining in detail what a CRM initiative will accomplish and when, who will be involved, and which trade-offs will be necessary—and by taking tough corrective action against pockets of resistance.

The organizational challenge

Building, modifying, or running a CRM solution involves a large cast of characters. It can include systems experts; business analysts; backroom operations specialists; managers who use customized reports to fine-tune sales, marketing, and customer service strategies; and frontline sales and service people, who are responsible for inputting much of the data the CRM initiative needs to yield rich insights and for acting on them. The breadth and scope of these constituencies create two organizational problems: identifying who is accountable for which results and truly achieving the broad behavioral change that success requires (Exhibit 2).

Fuzzy accountability

Put yourself in the shoes of the typical IT or business manager who is involved with a CRM initiative. You know that your long-term career advancement has less to do with its success than with your performance in your ongoing role. If you're an IT manager, you also recognize that as long as the project comes in on time and on budget and the software actually works, you will be judged a success, even if it doesn't deliver all of the promised results. Equally, if you're a business leader, you are not accountable for delivering the required features; that's an IT problem.

When the responsibility for different aspects of the solution rests in different places, it's often hard to muster the organizational resolve to pull in the right people, unclog bottlenecks, and make effective decisions. At worst, companies wind up with the kinds of problems that plagued Soviet-style planned economies: a lack of ownership, a failure to choose the right features, and an inability to meet performance goals. One large computer manufacturer's CRM program, for instance, foundered because no one could free up the time of the end users who were needed to help define the solution's requirements. Business operations personnel who served as the end users' proxy lacked the right kind of frontline expertise. As a result, the solution didn't meet the needs of the business.

The computer manufacturer's experience probably sounds familiar. Excessive reliance on technology specialists who didn't really know what would make CRM solutions valuable to businesses helped sink many early CRM initiatives. In the past few years, some organizations have overcompensated so much that many capabilities are now defined by the business side, without enough participation from IT. Too often, the results resemble those experienced by one large media company that developed a strong business case with limited participation by its IT organization, took several months to realize that achieving its goals with the chosen technology would take more than a year, and ultimately abandoned its original plans and began redefining the program. Unfortunately, the fuzziness of organizational accountability for CRM means that such frustrating experiences are common.

Resistance to change

The large number of stakeholders involved with CRM doesn't just complicate accountability; it also magnifies the difficulty of effecting behavioral change in managers, salespeople, and business analysts—all groups whose recalcitrance can cripple an initiative. Consider the problem of sales-pipeline management. CRM helps managers to see quickly when salespeople are not hitting their targets and remedial action is necessary. But management can act only when salespeople input timely, accurate information and analysts generate the right reports. If management doesn't augment the underlying performance metrics, frontline employees are likely to go on behaving in the old way.

Yet it's easy to see why salespeople and managers might drag their feet. The former are inherently skeptical because they think that information flows only in one direction (which it often does) and is therefore unlikely to benefit them, even if it helps the company. Salespeople also fear that new systems and bureaucracies will bog them down. Managers, by contrast, often recognize the potential long-term benefits of a successful CRM program but worry that they will be penalized if short-term results suffer during implementation. (Productivity often drops during deployment periods, but few operating plans take this reality into account.) When midlevel managers hedge their bets, they aren't likely to infuse the deployment with energy or to modify the metrics for evaluating frontline employees.

Training—often involving just a day or two of classroom immersion—overwhelms users, who complain that it is too abstract

The predictable result is that CRM systems are used little or not at all. In the insurance industry, for example, more than a third of the CRM modules developed during the past three years in areas such as marketing-campaign management, data analysis, and opportunity management lie dormant. Many companies have responded by punishing salespeople who don't "get with the program." Heavy-handed approaches such as docking commissions or circulating internal blacklists of nonadopters may bump up compliance, but only in a grudging and mechanical way that isn't likely to exploit the initiative's full potential. Training—another typical response, often involving just a day or two of classroom immersion in the new features—overwhelms users and they often complain that their training is too abstract. Many become discouraged after valiant attempts to use the new system and revert to their old ways despite management's exhortations. Fortunately, these problems can be solved.

Frontline solutions

Overcoming organizational roadblocks requires a more elegant approach than pressuring uncooperative business and IT personnel into building a solution and then forcing skeptical employees to use it. A better way is to establish an organizational structure that mimics a market in which constituencies alternately take on the role of buyer and seller or, in this case, "sender" (delivering the solution) and "receiver" (implementing it). This approach creates accountability and lays the groundwork for later efforts to motivate employees to embrace the initiative.

Sending and receiving

In our experience, a simple but powerful structural solution can help organizations overcome the accountability issues that bedevil CRM efforts. Instead of holding businesspeople accountable for determining the requirements of a CRM solution and IT personnel for developing it, companies should make both parties responsible for all of its aspects, from designing process shifts to managing change to implementing technology. At the same time, companies must carefully delineate the responsibility for sending and receiving the solution as a whole (Exhibit 3).

The sending team's function is to define a solution that meets the objectives specified in the business case, to estimate the level of effort required to implement the solution, and then to deliver it. "Delivery" includes establishing the architecture of the system, building and testing it, and supporting its deployment, particularly the systems-training programs that help launch it in the field. When all the elements of this broad mandate show up in a sending team's cost assessments, executives get fewer surprises later on.

As for the receiving team, it provides the business case and the usability requirements. Then it leads the rollout by communicating to internal customers the goals and likely implications of the program, assessing how the behavior of end users must change to take advantage of the proposed solution (and therefore what behavioral training is necessary), and implementing the sending team's systems-training plans. When an initiative involves placing new technology in the field, the receiving team also ensures that the infrastructure is ready for use, that support is available for customizing software to local needs, and that data can be moved to the new system. All this has a cost, and the receiving team, like the sending team, should estimate the effort required to carry out its work before getting started.

The sending-and-receiving infrastructure addresses accountability issues in two critical ways. First, each team's cost estimates make clear to the sponsoring business executive what he or she is signing up for while also clarifying the teams' responsibilities. Of course, if the estimated benefits of the business case appear too small or squishy to justify the cost, executives have a solid reason for backing off from weak initiatives.

Second, since each team includes both IT and businesspeople, it becomes harder for either side to define its scope of accountability too narrowly. Finger-pointing by senders or receivers is of course possible, but the likelihood of it is diminished by the two teams' dovetailing responsibilities. Employees sending new features know that the program's success depends on their usefulness to the receiving team. Moreover, nobody can ensure that they really are useful better than a member of the receiving team who has local-deployment responsibilities. As a result, individuals on each team have a powerful incentive to coordinate their activities. And when problems arise, it is always possible to hold teams accountable for them by checking whether the receivers were unprepared, the senders failed to deliver, or both.

When a large global technology company whose executives coined the sending-and-receiving terminology adopted this structure in its CRM program, it overcame the weak accountability that had engendered budget overruns, slipping delivery dates, "scope creep," and, ultimately, disappointment. Its teams—which included members from the Americas, Europe, and Asia—began by clarifying who would define, design, develop, and deliver each piece of the initiative. Because accountability and ownership were clear, often-overlooked issues such as organizational implications, behavioral training, and the communication of the program's goals to internal customers stayed front and center.

The sending-and-receiving structure also helps bring order to CRM's training challenges, which often arise because most CRM solutions create a need for both systems and behavioral training, with the former monopolizing training resources. In fact, behavioral training is the more difficult to accomplish—and deserves twice as much attention—because it addresses deeply ingrained habits affecting all aspects of a worker's job. The two-day classroom cram sessions typical of systems training aren't enough to change these habits.

Responsibility for systems training—which includes developing training material, running the sessions, and providing follow-up support—should be owned by the sending team. Members of the receiving team should take the lead in behavioral training, which encompasses issues such as changing job responsibilities, new incentive plans and reporting relationships, and procedural changes, including new processes for signing off on decisions and for making them on a higher level when appropriate. Ideally, the receiving team employs "live-fire" and "day-in-the-life" approaches that integrate new work procedures with systems training.

The kind of behavioral training that often falls through the cracks when responsibility for implementation isn't divided between sending and receiving teams is typified by a major pharmaceutical company's training efforts. (In this case, however, they weren't launched by an explicit receiving team.) The company asked its sales reps to move from a uniform selling approach to one that was tailored to doctors' attitudes. It chose three key areas for the pilot effort and sent teams of people from headquarters to ride with the sales reps during the first few days. In this way, it got the sales reps up to speed quickly while allowing the headquarters staff to see the program in action and to make real-time adjustments. Targeted follow-up visits tracked progress and provided remedial support. In many cases, the pilots yielded sales increases of more than 50 percent.

Helping CRM sell itself

The work of the sending and receiving teams should go on enticing internal customers to buy into the CRM solution long after the teams have ceased to operate. Research into organizational behavior suggests that frontline employees will change only if they know why an effort is important and what's in it for them. It's important to show salespeople, for example, how a CRM initiative could reduce the number of processes they deal with or of systems they use to enter data, improve their collaboration with other sales reps (thus closing deals more quickly), skim off customer data that would help them develop better leads, and reduce the time needed to generate quotations or obtain information about products and competitors. Another helpful step is targeting successful, influential salespeople as early adopters. Their success gives the CRM effort the credibility that drives widespread adoption.

Consider the experience of a department store retailer that identified "aspirational" shoppers, who shop infrequently but aspire to do so more often when their incomes grow, as key sources of revenue growth. This retailer also observed that while loyalty programs and periodic promotions helped pull in such customers, they reacted particularly well to personalized service. A CRM initiative provided sales associates in stores with lists of target customers they could personally call and offer to assist with new merchandise, styles, colors, sizes, and the like. For sales associates, the message was, "We have given you tools that will help you follow the lead of your most successful colleagues and build long-term relationships with customers who will earn you bigger commissions." The program yielded 10 percent growth in revenue from target customers.

Incentives provide important reinforcement, and we've found that quite specific goals are the most likely to inspire the desired behavior. The best CRM initiatives thus employ detailed "dashboards" that track changes in metrics such as revenue, lead-conversion rates, system usage, customer and user satisfaction, and margins. Dashboard metrics that reflect the sources of value propelling the initiative roll up into a high-level view for executives.⁴ Often, results vary by region (Exhibit 4). Comparisons are important because they promote the sharing of best practices and the fine-tuning of goals and rewards for specific regions and personnel. A retail bank seeking to expand its business in credit cards, for example, set and tracked ambitious weekly cross-selling targets down to the individual branch and call-center employee and rewarded those who met them. This highly focused effort yielded a 15 percent sales jump for the targeted products in just eight weeks.

Not every initiative yields immediate gratification. A company planning such a program should take into account the potential for productivity to drop during the deployment period, which often lasts as long as three months. Indeed, without some leeway, the motivation to give the new system a real shot at success may fall because frontline employees feel that they can't risk becoming less productive. But too much slack is also risky. The right answer depends on what benefits the organization expects. In extreme cases, when a big productivity drop seems likely, it's vital to involve the CEO and CFO early so that they can help manage external expectations.

The senior executive's role

Although many organizational challenges impeding CRM require solutions from the front lines, senior executives too have important responsibilities. For starters, only the CEO and the business-unit heads (or their chief lieutenants) have the authority to establish a sending-and-receiving infrastructure that cuts across organizations. Moreover, like marathoners running a difficult course, CRM teams require cheerleading for motivation, fuel to keep going, and clear direction to stay on course. Senior executives are uniquely positioned to provide this assistance.

Top executives ought to treat important CRM milestones just as seriously as they do quarterly business-unit profit targets

One key to success is articulating a specific business rationale—improving customer satisfaction to boost retention and keep competitors from stealing market share, for example, or improving cross-selling rates to achieve annual revenue targets. Clear messages like these help keep the effort focused and are far preferable to vague platitudes about the importance of customer satisfaction. Senior executives should also demand regular status updates, which keep the heat turned up and let them cut through the political tussles that invariably arise during large cross-organizational initiatives like CRM. And clearly, the senior team has a critical role to play in enforcing accountability. Executives need to treat important CRM milestones and performance goals just as seriously as they do quarterly business-unit profit targets.

The senior executives of one North American insurance company played all of these roles. At the beginning of the fiscal year, its management team articulated a simple goal: utilizing technology to achieve aggressive growth and to improve customer retention substantially. In management meetings across the company, executives relentlessly emphasized the importance—and monitored the status—of projects linked to growth and customer retention, particularly the retooling of a major customer-information-management system. To break barriers and free up resources needed for mission-critical tasks, the management team went to great lengths, such as refocusing sales and marketing efforts on the goals of growth and customer retention and eliminating IT projects that didn't promote them. In the end, the company benefited rapidly by implementing a CRM project it had abandoned on several previous occasions.

CRM and the forces impeding its success are both growing up: early problems that mostly concerned technology and the misaligned goals of different organizations within the same company are giving way to perennial organizational challenges. Companies are increasingly getting the business-alignment and technology issues right, but many must still tackle the hardest challenge of all: motivating organizations and making them accountable for results.