What Holds Back CRM Success: Executive Fear

By Christopher J. Bucholtz
CRM Buyer
Part of the ECT News Network
01/06/11 5:00 AM PT

If you're sitting around waiting for best practices, it means that someone else -- probably a competitor -- is out there working to develop them. With the speed that customer relationships are evolving, can you wait to copy your competitors? Are you willing to spot them a huge lead? If you're not willing to answer the bell now, will you really be able to catch up later?

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The past year seemed like one of marking time in CRM -- at least to me. The trends are all well spelled out: Social CRM will become a critical tool, service has grown in importance as customer acquisition has become more difficult, and the value of mobile CRM is becoming painfully apparent. So why aren't we acting on the trends?

I've heard the excuses -- most famously, "we need to understand the ROI on this before we launch any projects." That's not a great excuse, because ROI calculators are out there and ready for use, even for social CRM. Great or not, too often the excuses win out.

You've probably heard the mantra that CRM needs executive buy-in to succeed. That's true -- so true, in fact, that the opposite is also true. New trends in CRM need executive apathy and fear to fail.

The people working in the trenches are constantly receiving anecdotal evidence of the value of social CRM in helping with sales, marketing and service. The service team sees only too clearly how deficiencies in their processes are holding them back. The people in the field are relying on mobile devices for many things -- and they know that a capability to use their business software on their mobile devices could make them both more productive and more effective.

So the front-line people are ready, and the technology is ready. What's keeping many businesses from launching a CRM revolution? I like to call it "C-level fear."

Far too many executives operate from a position of fear when it comes to the customer. They continue to debate the idea that the customer is now in control of the relationship, because the loss of control is scary to them.

As a result, they soft-pedal emerging technologies, kicking the can down the road to a time not when their organizations are ready for change -- because that time is now -- but to a time when they have come to grips with how the customer is changing, and how that changes the expectations and duties of a C-level executive.

They're afraid of making investments that don't pay off, and they'd rather find themselves too far behind the competition than seem too far ahead of the technology curve.

The great default is the ROI argument. If an initiative can't produce visible ROI in a short period of time, it doesn't get a go-ahead. Investments should have payoffs, but the way those payoffs are evaluated should be fair and realistic.

A pilot program whose evaluation criteria doom it to failure from the start is not a good investment. An evaluation of an underfunded initiative after six months is not fair to those involved in it.

Worst of all, once a half-baked, half-hearted program based around social media, in-depth service or mobile technologies fails, the executives plagued by "C-level fear" can then use those doomed projects as evidence that all such projects will fail.

Another great dodge is the idea of waiting for best practices to develop. Best practices don't just evolve on their own -- they come about when someone actually tries something and then adjusts what they're doing.

Thus, if you're sitting around waiting for best practices, it means that someone else -- probably a competitor -- is out there working to develop them. With the speed that customer relationships are evolving, can you wait to copy your competitors? Are you willing to spot them a huge lead? If you're not willing to answer the bell now, will you really be able to catch up later?

If you want to succeed -- especially as a C-level executive -- you need to be audacious. You need to realize what the reality is around customer relationships, accept what you have control over, and act decisively to improve those things. What you should not do is default to excuses that merely mask the fact that you're uncomfortable with change.

One audacious move: If you're a C-level executive, get out of the office and talk to the front-line people about these ideas. Find out if social CRM, mobile CRM, new service metrics, or new types of analytics would solve their problems. If the answer is yes, you need to realize that you will not be alone in any effort to improve your CRM efforts -- if you're brave enough to respond by initiating change.

CRM Buyer columnist Chris Bucholtz blogs about CRM at Forecasting Clouds. He has been a technology journalist for 15 years and has immersed himself in the world of CRM since 2006. When he's not wearing his business and technology geek hat, he's wearing his airplane geek hat; he's written two books on World War II aviation, and his next two are slated for publication in 2010. Print Version E-Mail Article Reprints More by Christopher J. Bucholtz

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American Air holds ground in travel agent spat

An American Airlines jet touches down at the airport in Port-au-Prince February 19, 2010.

Credit: Reuters/U.S. Navy/Oscar Sosa/Handout

By Kyle Peterson

CHICAGO | Wed Jan 5, 2011 5:26pm EST

CHICAGO (Reuters) - American Airlines sparred with third-party ticket sellers on Wednesday in an ongoing battle over distribution costs and methods as one key provider of airfare data vowed to stop offering the airline's flight information.

Privately held Sabre Holdings Corp operates a global distribution system that provides information on airfares to travel agencies like Travelocity. The company said it would end its distribution deal with American in August -- a month before the end of its contract.

The company said it would discontinue price discounts on American Airlines tickets that have stimulated sales. The airline is also at odds with online travel agency Orbitz Worldwide and last month stopped selling tickets on Orbitz.

American is trying to get travel agents to adopt a "direct connection" technology that would let customers shop based on various ancillary services rather than fares, which is the primary basis for the typical online travel agency comparison.

"For a number of months, American Airlines has taken actions in an attempt to impose a costly, unproven and unnecessary system on agencies and corporations," Sabre said in a statement.

"We believe these actions are harmful to our agency and corporate customers, as well as consumers, making it harder and more costly to comparison shop," the company said.

American fired back, saying Sabre's moves were "punitive actions" that come even though the carrier has met its obligations to the distribution service.

"Sabre's actions are discriminatory and patently inconsistent with both its contractual obligations and its professed goal of ensuring full transparency for the benefit of consumer and travel agents," American said in a statement.

Online travel agency Expedia Inc also has dropped American Airlines tickets from its listings, charging that the airline's new commercial strategy is "anti-consumer" and "anti-choice."

The actions set the stage for what could be a protracted dispute between airlines and third-party distributors. American Airlines, a unit of AMR Corp, is leading the charge because several of its key distribution contracts expire in 2011.

"It is kind of an inflection point for the industry as a whole," said Morningstar analyst Warren Miller. "American Airlines is obviously trying to take a more aggressive stance with respect to how they distribute their inventory of seats and how they get those in front of the eyes of consumers."

American says the publishing methods and pricing currently used by many travel agencies are outdated and do not reflect the increased reliance by airlines on sales of ancillary services like bag checks, meals and priority seating.

It is an omission that prevents carriers from offering the lowest prices, said AMR spokesman Ryan Mikolasik.

"We remain in talks with both Orbitz and Expedia," he said.

U.S. airlines, hard hit in recent years by an economic downturn and volatile fuel costs, have sought to lower their distribution costs -- fees, credit card commissions and agency commissions -- which Mikolasik said is about $800 million a year for AMR.