Technology Is Not a Silver Bullet

By Duncan Rein
December 1, 2005

The first in a two-part series on Constituent Relationship Management (CRM). You can read the second part Integrating CRM and the Web.

A good friend of my family, who is now in his late 70’s, suffered from the tragic loss of his wife to cancer over ten years ago. After grieving for several years, he decided that he needed to get on with his life, and he re-entered the senior dating circuit with gusto. A successful businessman, possessing sterling character and a strong Christian faith, he was an eligible bachelor, and before long he was going out on so many lunches, dinners, and other outings with lady friends that his memory began to fail him. When was his last date with Ellen, and which restaurant did they go to? Was he supposed to call Susan today, or was that Jane?

To help him manage his hectic social calendar, he began to record every interaction he had with each of his lady friends in a little black book. He was very secretive about this practice, but one day his personal secretary, a woman in her 30’s, caught him in the act and “outed” him to his friend to her great amusement and his great embarrassment. While she might have poked fun at his methods, ultimately they proved to be successful, as he was soon re-married to a wonderful lady with whom he has shared the past eight years of his life.

Defining CRM

While in my friend’s case, the little black book was discarded when he had accomplished his mission, I think that phase in his life is a good illustration for the challenges faced by businesses all the time. Whether you’re manufacturing wingnuts, selling airplanes, or selling an intangible product like expertise and consulting services, one of the keys to any business is building strong relationships with existing clients that grow into long-term relationships, while deepening relationships with prospective clients in the hopes of converting a percentage of those into clients. Each of these clients or prospective clients is unique, and therefore has individual needs that require individual attention.

Managing all of these relationships at once can be challenging for one person. First, there are interactions that need to be managed. Who am I meeting? What calls do I need to make? Which emails do I need to send? Second, there is important information that needs to be captured and stored, in order to give each client the individual attention they need. What services are they receiving from us? How satisfied are they with these services? What are other needs and pain points that they have? What are other opportunities for our company to grow the relationship into other areas? As a customer-centric organization, our priorities and our activities are driven to a large extent by the answers to these questions.

It is challenging enough for one person to keep track of all these things, but what if multiple people within our organization are touching our clients? How do we share information about our clients between team-members, and how do we make sure that as an organization we are communicating the right things at the right time to the hundreds of ministries with whom we interact on a weekly basis?

The answer is to have a set of business processes, supported by technology which facilitates and makes more efficient the workflows that are developed. Doing this well is one of the keys to a company’s success. The industry buzzword for this is CRM, standing for “customer relationship management” in the case of businesses.

Nonprofit organizations are no different in their need for CRM (in their case “constituent relationship management”) solutions. While nonprofits are not technically selling a product or a service, without exception they must all maintain relationships with thousands, or even tens of thousands of constituents if they are to be successful in fulfilling their missions. The general principle is the same as it is for businesses. The better these relationships are managed and the deeper they grow, the more likely it is that they will result in deeper involvement, whether that is in the form of a financial gift, or whether it manifests itself in other ways, such as volunteer hours, prayer, or word of mouth.

Technology is not a Silver Bullet

For both companies and nonprofits, an incredible amount of potential can be captured if CRM is done well, and there is a great cost (both hard cost and opportunity cost) if it is done poorly. As a result, technology vendors have spent millions of dollars to build systems that can support sophisticated CRM efforts. In the for-profit world, Siebel Systems and SAP have historically been the market leaders. Blackbaud has long been the most established player in the nonprofit community. Churches have used systems built by Shelby Systems and ACS to manage their relationships with their church members. According to Forrester Research, companies alone spend $3-$4 billion per year on CRM-related technologies, and this does not include the nonprofit market for CRM technologies.

Especially when watching a demo of a robust CRM product in action, it is tempting to believe that an investment in new technology will be a silver bullet that will instantly bring about the deeper relationships with constituents and the organizational efficiencies that such systems promise. The temptation is so great that the term CRM itself is often used interchangeably with CRM technologies. However, while selecting the right technology is an extremely important component of an effective CRM strategy, CRM and CRM technologies are not the same thing. Wendy Close, a research director with the Gartner Group, succinctly states this with her assertion that “CRM is really a business strategy, not a suite of products” (CIO Magazine).

There is much evidence to debunk the myth of technology as a silver bullet. According to industry veteran Paul Hagen, “The CRM highway is littered with the carcasses of technology bought with good intentions. Critics of corporate CRM are quick to note corporations’ multi-million dollar investments in systems like Siebel, Peoplesoft and Oracle that largely go unused, and provide little value to the companies. These efforts typically failed because CRM was thought of as a technology rather than an organizational strategy that included technology” (The Nonprofit Quarterly). The same is true for nonprofit organizations, as expensive systems lie dormant years after they are purchased, or are only utilized to 10% of their capability. What an enormous missed opportunity this represents!

According to Entellium, a technology vendor serving the corporate market, “user adoption” continues to be the number one issue preventing a successful CRM deployment. The capacity to store and share information is in place, but the data itself is unreliable because users are inconsistent in their use of the product. Lack of confidence in the data further reduces the use of the product, which makes the problem worse, and eventually the CRM effort fails.

Nevertheless, although there are challenges associated with implementing an effective constituent relationship management effort, non-profits cannot afford to neglect to make improvements in this area. The potential benefits are too great for an organization to accept getting by indefinitely with a vast array of spreadsheets as their CRM solution. An understanding that technology is not a silver bullet is a crucial truth to grasp. CRM is fundamentally an organizational issue, not a technology issue, and it must be made an organizational priority if it is to be successful.

Relationship Between Communication Strategy and CRM Strategy

The stereotypical creative person who is focused on developing designs or crafting marketing messages is notorious in his or her inability to understand technology or even communicate with people who do understand it, and the stereotype of the tech geek is of someone who cannot communicate with people who are not as technical. This is problematic for an organization that desires to align its CRM infrastructure and processes with its overall communication strategy, as CRM involves things such as databases, fields, and queries, which require some degree of technical background and understanding.

However, a CRM effort isn’t valuable if it doesn’t support the overall communication strategy of an organization. At its most basic level, a communication strategy recognizes that not all constituents should be communicated with in the same way. It involves defining various constituent groups, and then for each group defining the following:

• Talking points for individual interactions with individuals in each group
• Regular mass communications to each group
• Frequency of each communication to each group
• Summary of content for each communication to each group
• Calls to action for each communication
• Defining metrics and creating reports to measure the success of each communication

The overall communication strategy will then inform the organization’s CRM strategy, which involves questions such as the following:

• Technology selection
• Information Capture Requirements
• Database Architecture
• Queries and Reports
• Synchronization Processes, if Applicable
• Workflow Processes for Ongoing Management
• Training and Strategies for Organizational Compliance

Overall communication strategies must be developed in the context of operational realities. Says Robert Mirani who serves as director of the Yankee Group’s CRM practice in Boston, “Utopia is in some ways very easy to design, but very hard to make happen” (CIO Magazine).

For instance, while an ideal communication strategy might be to define 100 different segments and create customized communications for each segment; this would not be realistic for an organization with a staff size of three. Likewise, communication strategies must be informed by the capabilities of the technologies that will be employed. It doesn’t help to create a communication strategy that could only be supported by an implementation of Siebel Systems that will cost over $1 million to deploy, if that is greater than the organization’s entire budget. In the same way, operational realities should drive the development of the overall communication strategy. Knowledge of what is possible from a technology standpoint at varying levels of investment can drive a communication strategy that can actually be executed under real-world constraints.

If you would like to find out more about how to implement these strategies and ideas in your organization, please take a moment to let us know a little about your needs.