Applied Information Management

Change Management: The Defining Factor in Customer Relationship Management Success

In Brief: Customer Relationship Management (CRM) evolved in the customer-centric late 1990's out of the need to proactively provide the best customer service possible, while creating a database of customer preferences that could be reviewed and utilized by sales, marketing and management. Since then, CRM has become a major financial investment for many diverse industries. Spending on CRM implementations experienced 20 to 25 percent annual compound growth in the past five years, surpassing $75 billion in 2005.

What is CRM?
Customer Relationship Management (CRM) is a combination of information systems and strategic management aimed at providing better customer service. CRM represents the idea that as customer satisfaction is increased, customer behavior changes, customer value is added and profits increase.

Yet despite this considerable investment, the majority of CRM implementations resulted in failure. They did not increase customer retention, loyalty and revenue, and did not achieve a predetermined return on investment (ROI).

According to leading consultant Sudhir H. Kale, Ph.D., change management is often the deciding factor between success and failure in CRM projects. Kale identifies four change management practices that facilitate successful CRM initiatives: leadership practices, infrastructure change, training practices and performance metrics.

  1. Leadership Practices—A large CRM implementation is bound to change corporate culture. Part of the challenge is to change culture in a non-disruptive way. In this case, the corporate culture must become customer-centric.

    Change management is often the deciding factor between success and failure in CRM projects.

    Change needs to be marketed internally like a commodity. Marketing efforts should include many of the communication vehicles of external marketing efforts such as e-mail, e-marketing (in the form of portals and intranets), promotions, and newsletters. Internal buy-in has to start at the top, with C-level (CEO, CIO, CFO) management getting on board early in the development of the CRM project. End-user buy-in is critical, because end-user adoption rates often determine the success of the CRM.

    Communication is essential and requires a formal communication plan. Personal communication of the change plans from management to the end-user is essential. Organizational structure should be realigned to foster communication between departments.

  2. Infrastructure Change—Key players (CRM steering committee, the change effort champion, change agents, project managers) in the change efforts should be identified at the beginning of the project. Pertinent roles of all key players should be defined at this stage.

    Processes will change as a result of the CRM. Current processes should be mapped and understood before an attempt is made to change them. The new customer-centric culture is defined by the lack of barriers between functional areas, as well as facilitated communication among functional and geographical teams, which fosters data and information sharing.

  3. Training Practices—Well-funded training should involve all users of the CRM (including management), should commence at the beginning of the CRM project and should look years into the future. Training should not focus strictly on how the CRM is used, but why it is used, and how it affects organizational processes and workflows.

  4. Performance Metrics—Because the CRM fosters a customer-centric culture, customer satisfaction metrics should become a regular part of performance assessment. Current metrics often need to be modified as a result of the CRM. Job definitions and success criteria might also be modified. Post-training knowledge must be evaluated, in order to identify areas of training that need improvement. Processes and culture must be constantly monitored and evaluated during and after the CRM implementation. Low CRM usage can signify that the CRM is headed for failure.

Leadership Practices Infrastructure Change
  • Change marketing
  • Communication plan
  • Burning questions addressed
  • Key players identified
  • Map current structure
  • Change current structure
Training Practices Performance Metrics
  • Training plan in place
  • Training is ongoing
  • Train on why the CRM is used
  • Job definitions are modified
  • Performance measures realigned
  • CRM usage patterns are monitored

Figure 1: Emergent CRM themes


(Selected citations only)

  • Adidam, P. T., Sindhay, B. (2001). Customer Relationship Management: Critical Issues in Implementation. Retrieved September 9, 2005.
  • Chan, J. O. (2005). Toward a unified view of customer relationship management. Journal of American Academy of Business, 6, 32-38. Retrieved September 9, 2005, from Business Source Premier database.
  • Kale, S. (2005). Appreciating the role of change management in CRM. Retrieved September 9, 2005, from CRM Community, Toolbox for IT.
  • Newell, F. (2003). Why CRM does not work. Princeton, NJ: Bloomberg Press.
  • Nykamp, M. (2001). The customer differential: The complete guide to implementing customer relationship management. New York: AMACOM.
  • Siebel White Paper (2004). Applied change management: A key ingredient for CRM success. Siebel. Retrieved October 4, 2005, from Applied Change Management: A Key Ingredient for CRM Success.
AIM alumnus Nicholas Kanellakis

Research Paper Author: Nicholas Kanellakis—2005 AIM Graduate, Systems Analyst, Sage Software

Abstract: This paper identifies change management practices that facilitate Customer Relationship Management implementations. Selected literature published between 1994 and 2004 is subjected to grounded theory and constant comparison analysis. Results are grouped by four change management areas from Kale (2005): training, leadership, infrastructure change, and performance metrics. The outcome is presented to CIOs and CRM steering committee members, as a decision support tool in planning a CRM implementation.

Download the entire Capstone research project