Insight White Paper: The Death and Rebirth of CRM

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Introduction

Despite years of investment, CRM, Donor and Membership systems have failed organisations and individuals. The days of mass communication to homogenised groups is drawing to a close. This paper reviews the root causes of the failures and looks to the opportunities that are now available for organisations to communicate more effectively and support improved engagement with members, donors and other important stakeholders. Communication is essential to the success of organisations in the Not-for-Profit (NFP) sector – membership associations, charities and others: Donations or membership fees need to be gathered. Members, donors and other supporters need to be “engaged” with the organisation. Additional services such as events and books need to be marketed and sold. Information and knowledge are central to many organisations, so there is a need to capture, organise and disseminate information and knowledge products.

Past Failures

Customer relationship management (CRM) is about two things: strategy and implementation. Some failures in the past have been due to not having the right strategy or perhaps no strategy at all; others have been due to inadequate implementation. Many of the strategic problems resulted from two common issues:

• Not recognising that a business strategy for CRM is needed. This is normally a side-effect of treating CRM as an IT project and not understanding that the organisation needs to have a plan for how it wants to manage relationships.
• Not recognising that the culture of the organisation is likely to need to change too. Trying to put relationship management into a purely administrative culture has failed for a number of organisations – some organisations have not had the necessary skill levels or competencies in their team.

In a lot of cases, CRM implementation has been limited by the CRM systems being used. NFP organisations have traditionally used two types of solutions to support their CRM:

• Membership and donor systems – specific solutions aimed at the NFP sector. Some membership / donor systems have provided good support to the organisations in which they have been deployed. Other organisations though have experienced difficulties both in deploying the systems and in their operation. The key is that the system needs to be flexible enough to support business change, without bespoke development (which makes upgrade difficult). Often they have proved to be a constraint on the organisation – they can be expensive (it is not uncommon to see the implementation projects costing £500k) and drawn out (they can take a year or more to implement). In addition to this, the organisation often needs to change to fit the software as many systems are not sufficiently flexible to implement workflows for example.
• Previous generation of CRM package. These are also often relatively expensive and inflexible. Part of the problem results from their design origins as they are aimed at commercial sector marketing, sales and service processes. So, there is a need for significant bespoke modifications and a significant cost of ownership. The previous generation CRM packages have also been difficult to link to websites. Both of these routinely led to mass marketing approaches – for membership renewals and donor appeals – with little or no engagement on an individual level. Where there has been more targeted communication, such as news emails, it has generally been broadcasts, rather than conversations.

These strategic and implementation problems have led to a disenchantment over CRM and a frustration that the organisation is being held back by its ability to manage relationships.

Opportunities

The inexorable expansion of the Internet and its ever increasing pervasiveness is creating new opportunities for innovative uses of information; offering new personalised, customer centric product offerings and giving individuals the power to define the terms of their engagement. One exemplar of this is the way that social media such as Facebook, Twitter and LinkedIn is changing NFPs – from the role of authoritative broadcaster to one of facilitator and aggregator The other side of the emerging opportunities is the push from individuals, who use social media and are consequently wanting and expecting:

• More open relationships
• To participate actively
• To manage their own activities and learning
• To be empowered through their support for the organisation, rather than passive recipients

These, combined, give the opportunity to transform CRM and radically change the nature of communications.

The Needs

Charities and membership organisations need to have relationships with many different groups of people (stakeholders), including: members (from students to fellows), donors (individuals, companies and major donors), event attendees, people who buy their products, sponsors, funding bodies, companies who buy services, volunteers, trustees, committee members, lobbyists and policy makers. This range of stakeholder is something that traditional membership and donor systems have been poor at recognising. It is also something that many CRM systems have been bad at, as their focus has been on the common commercial model of marketing to sales through to support, which does not translate well into the NFP sector. CRM should be seen as a strategy not a system; a CRM system is an enabler for the strategy. It’s the relationship that’s important. So, deciding on how to engage and the types of conversations you want is the key driver here. People are happy to receive broadcast emails, but they want content to be appropriate to them. In a world where there are more and more feeds of news and information, people welcome authoritative communications that are targeted to their needs. They also want answers to their questions, rather than a “thank you for your enquiry, we value our customers” type response. There is also a move to more specific, individual conversations with all classes of stakeholder, preferably real time, using a variety of methods. The implication of this is that the content of the conversations are also changing, from administration, fundraising and news, to value-added, knowledge-based conversations. This is likely to mean that the internal staff engaging in the conversations will need to have a good level of knowledge of the subject area – the type of person who can write blogs and facilitate forums.

How to say it?

There are now multiple channels for communicating with stakeholders:

• The website with personalisation and self service provides an excellent means of automated communication.
• Mass emails, bearing in mind that people want to be given information appropriate to them at the frequency they are happy with.
• Blogs, which can be an excellent route to establishing thought leadership – a particular advantage is that the end user has the control of what they choose to look at.
• Forums are a great way of engaging and also an excellent way of involving and getting contributions from supporters. To succeed, they do need facilitation though, which requires knowledgeable input.
• Social media such as Facebook and LinkedIn. The choice will depend on the organisation’s demographics.
• Real-time social media, particularly Twitter. This allows conversations with and among groups of followers. Tools like Twitter and instant messaging add further impetus to rapid turn round in conversations.
• Individual emails – this is not a very time effective way of communicating, but is obviously necessary in some situations.
• Face-to-face should be included in the mix as well, particularly seminars, conferences and networking events. It is important to add the personal dimension to cement the relationships.

The role of the CRM system is to provide the data for personalisation and self service and to record important communications. It is not necessary to record everything in the CRM, just what is needed for the relationship, so it is not necessary to record forum contributions in the CRM for example, as long as they can be accessed if needed.

How to make the change

The first step to making the necessary changes is to define the business strategy for relationship management:

• Set out how the organisation will manage and facilitate the different relationships in the future.
• Understand any gaps in the current organisational structure and what changes need to be made.
• Identify which communication methods will be used, how and by whom.

An important part of any organisational change will be to free up staff from routine administration by implementing self service facilities on the website. It will also be necessary to develop or recruit knowledge workers who can contribute to conversations, write blogs, facilitate the definition of best practice, etc. The key IT questions is then whether the current CRM is suitable for the strategy – can the strategy be achieved with the current CRM; or is there a business case for changing to a new one? If the conclusion is that a change is needed, low cost solutions are now available – Microsoft Dynamics CRM and Salesforce both have considerably reduced cost licences for charities and other NFPs. In particular, the move to more general Entity Relationship Management, or xRM as Microsoft calls it, that provides much more flexibility to give membership organisations and charities what they need for their business processes. Possibly in the future open source CRMs such as SugarCRM and CiviCRM may provide some even cheaper alternatives for smaller organisations. With systems such as Microsoft Dynamics CRM and Salesforce, the change will be a much smaller project than has traditionally been the case; both financially and the duration of the project.

Conclusions

Real-time social relationships will have a major impact in the NFP sector, but the rewards will only be open to organisations with the right business strategy and appropriate supporting systems – the CRM system in particular. The best approach to getting a CRM system that can provide this support is to get the basics in place and then add incrementally, with careful investment (and measuring the results). The right approach can generate rapid financial returns, but more importantly, can transform the organisation and its engagement with its stakeholders; truly the rebirth of CRM. The benefits to moving to real-time, personalised relationship management are improved buy-in to the organisation by stakeholders; an increase in the opportunities to develop and promulgate further knowledge; and increased sales of events and knowledge products. The additional benefits to the organisation of introducing an appropriate supporting CRM system are:

• Greater business agility, giving the flexibility to introduce new initiatives and further business change
• Ownership of the solution, so independence from individual vendors
• Good interfaces with other systems such as finance and the website, leading to further opportunities for business improvements

Finally, it cannot be emphasised too strongly that CRM is much more about business change than it is about IT change – so any CRM initiative should be a business change programme, not an IT project.