Will CRM become as much a staple in banking as a loan origination system? Will the use cases become so important to scale an organization that it’s considered a required investment?
Let’s start with the current status: CRM systems are a luxury good. This is an undeniable fact despite an ever-growing list of compelling use cases, more clear paths to a legitimate ROI, and the drool-worthy automation possibilities. The only way this will change is if the recent wave of CRM implementations demonstrates such a convincing return that onlookers are forced to adopt.
While that may very well come to pass, it won’t be this year. Recent purchases will take time to implement, adopt and digest. The bank-specific CRM models are still relatively new, and many organizations are either waiting to see the results or until other resource-intensive projects are behind them.
Salesforce as a Proxy
Another undeniable fact is that Salesforce currently represents the global CRM market. The annual Dreamforce conference has become a symbol for how pronounced Salesforce is in the industry. Sprawling across 11 city blocks in San Francisco, over 170,000 attendees weaved their way through endless speeches, vendor demos, sales pitches, networking sessions, game shows, concerts and late-night parties. Cornerstone attended Dreamforce in the shoes of a community financial institution in search of the CRM unicorn: ROI. Although there were plenty of great use cases to be found, it took sincere effort to navigate the 2,700 scheduled sessions to find the needles in a haystack of Salesforce euphoria.
More important than an annual popup theme park conference, recognizing Salesforce as a proxy helps assess and predict the broader market development. Salesforce’s “CRM” stock ticker has skyrocketed in recent years due to a combination of smart market segmentation and aggressive growth through acquisition. In the wake of the company’s success is a blossoming mix of rapidly improving incumbents, highly successful foreign entrants seeking U.S. expansion, and hungry startups funded by investors to seize on the opportunity.
Even if Salesforce isn’t the right solution for everyone (read: it’s not), its platform growth and forecasts should be monitored as a helpful indicator. The company has said financial services is their number one vertical and banking is the fastest growing segment. But will that continue in a more uncertain and tepid year for the industry?
Dreamers vs. Naysayers
The Dreamforce experience also sheds light on a growing divide between two factions: Dreamers and Naysayers. Representing the Dreamers are early adopting Salesforce acolytes who generally made massive investments in platform development to push the limits of relationship management and automation capabilities. In the opposing corner are the Naysayers, who witnessed their neighbors overspend on vague hopes of achieving a fuzzy math ROI pushed by sales reps and no meaningful progress to show for it.
Truthfully, categorizing current CRM adopters in either category is more challenging than either side would like to admit. Many of the Dreamers skipped evaluation of the vendor market and signed on with implementation partners naively assuming that the platform would automagically deliver growth or that the third-party developers would tell them how it’s done. Conversely, many Naysayers pessimistically claim their observations of a lack of bank-wide adoption and half-hearted attempts at managing a complicated platform are evidence that it’s a fruitless effort.
Unlike debates in my house, where I’ve learned my wife is always right, the CRM reality is somewhere in the middle. I’ve yet to see a believable ROI analysis produced by a vendor but have observed a variety of impactful use cases that have undoubtedly more than paid for the hefty expense. And the API-driven control over technologically enabled customer engagement sincerely offers community banks a suite of capabilities that have historically only been accessible by super regional and mega banks developing custom solutions.
The Conquerors
The middle ground between Dreamers and Naysayers is populated by a handful of Conquerors. This group doesn’t get the attention it deserves because they aren’t blindingly optimistic promoters preferred by Dreamers yet are pragmatically solving specific pain points felt by Naysayers. Cornerstone Advisors believes there are a handful of best practices that will be adopted to separate the winners and losers. As a starting point of best practices, the CRM Conquerors will commonly exhibit the following behaviors:
Predicting the Future of CRM
Several more Conquerors will emerge from their CRM trials and tribulations over the next 12 months. The question is, will there be enough successes to convince the industry the Dreamers were on to something, or will the number of unprepared buyers be more fodder for the Naysayers? I’m predicting there will be casualties from multiple organizations that underestimated the scope and costs, but there will be more positive momentum than bad as the most recent wave of purchases work their way toward go-live this year.
Will CRMs shed the “luxury good” label and become a key ancillary platform? Before that can happen, the total cost of ownership has to come down through further refinement of out of the box solutions. The theoretical shift won’t take place for at least three years, but 2019 will be very telling about the likelihood of a transformation. In the meantime, I like the competitive advantages that come with being one of CRM’s Conquerors.
Interested in specific examples of how Conquerors are working toward a realistic return on their investments? Watch for my next GonzoBanker article, “Banking’s CRM Conquerors,” which will provide a variety of real industry use cases that are applicable to just about any bank and credit union.
Based on my experiences, I could not agree more. I also find there are a number of CUs that do the work to select a CRM and stall because they want too much from phase 1. Great article.
Great Article – you nailed it!
Thank you! And good point, Guy. You will probably relate to the next article where I touch on the stalling phase 1 you’ve observed.
Spot on!! Regarding Conquerors Behaviors – speaking from experience and from a small community bank perspective, CRM any CRM system must be owned promoted, followed and measured by Executive Management or it dies on the vine. Once implemented it should be assigned to a position of Authority to drive it’s continued usage and success.
Thanks, Ryan, great article. Been with 3 different banks, only one where we instituted a CRM and I was the internal champion. It took a long time as we had 12 distinct LOBs, which resulted in 7 different systems feeds. Implementation was almost 2 years – but we launched and then kept adding to it. Managing CRM became a 2nd job for me – I was responsible for prodding along the phased implementation, training and motivating the entire organization (with some executive support) to use it. Our goals were to allow a full view of a customer’s profile (something we never had), company-wide pipeline management, track marketing efforts and transition some manual/email based internal processes into more automatic, trackable ones. It would be impossible to determine an ROI, but there was a consensus that the CRM system did meet the goals we had set. Don’t know if we’d have a better option today. But at the end of the day, I believe the type of institution and what gap/needs CRM can fill should drive the discovery and ultimate decision; if a “yes” then all your points absolutely apply.
Thanks, Tricia. I like your two year journey because that’s the reality that is often overlooked when making the leap in the first place. And your last line is a great summary of determining whether or not it’s even worth the cost and effort.
I tend to think that if you’re not currently using the data tools you already have to their fullest, you probably shouldn’t invest in a CRM that is going to require even more effort from you to realize an acceptable return. On the other hand, if you ARE already using the data tools you have to their fullest, are you really going to see substantially greater returns by moving to a CRM? If you don’t already have a culture that capitalizes on data, spending a lot of money on fancier tools isn’t going to create one. And if you do have such a culture, you’re probably getting Conqueror-type results already.
Appreciate your take, Steve. Although I understand the thought process, I can’t say that I agree with the conclusion that it’s either not worth it or it’s still not worth it. You’re right on that there a lot of companies that have absolutely no business purchasing a complicated CRM platform until they develop some other organizational and infrastructure prerequisites. Can an analytically mature company get additional value from a CRM platform just for analytical purposes? That’s a tough ROI. But that’s not the primary use case for most community financial institutions.
Great analysis of the ecosystem(s) in which we operate. I particularly support the concepts of ensuring it is not a platform that attempts to replicate poor processes and the variety of processes patched together between business lines. Looking at revising the overall sales/management processes in conjunction with the platform is necessary to gain the value of the tool. I like the view of iteratively adding capabilities (Agile) and also tying those capabilities to some value and to prioritized business goals (OKRs/KPIs). Thank you for your terrific insights… as always.
I agree and think applying an OKR-like approach at a more micro level in organizations is an underutilized opportunity. Companies like Intel and Google saw great success promoting it for business goals, but it also provides so much clarity on why a technology investment is being made and forces the team to think about how they’ll deliver on their business case. That’s especially true for inherently broad CRM systems that have a lot of different applications. Thanks for the note, Doug.
Someday there will be this brilliant new CRM application called “Yellow Legal Pad”. Salespeople (“Relationship Managers”) will use a pen or pencil to memorialize their customer conversations, takeaways, deadlines and to do lists. Once every organization has Salesforce it ceases to be a differentiator. The goal of CRM isn’t ROI. The goal is happy customers and more closed business. There are many ways to measure the latter goal.
Then those Salespeople bring back the fax machine in order to share their notes with colleagues. And boy does that Yellow Legal Pad have the darndest time integrating with the paper loan applications they are probably using too. Later, those Salespeople leave the company and take their brilliant CRM application binders along with all of the institutional knowledge the organization has about those customers.
ROI is measured in a lot of ways – including happy customers and especially more closed business. If you aren’t making investments to generate a return for the organization that is serving its customers, then you’re doing it wrong.
Interesting article and interesting responses that actually somewhat align to your point of view in many cases. What institutions tend to forget is that CRM is not alone a technology decision, it is a cultural one. If an institution is not prepared/ready to move from being an activity driven sales organization to an outcomes/relationship based one it’s not the right move for them. Day to day thinking is no longer viable in the industry. What I hear on a normal basis is “what happens when to relationship data when RMs leave to go to a competitor?”, “how do we know what is happening with our customers across lines of business”, “retail never refers us business”… sound familiar? Taking the time to evaluate the efficiency of legacy processes is painful and time consuming, but automating inefficiency is costly and creates a road block to success. Salesforce is a platform not just a CRM point solution and because of this most don’t understand or realize it’s value. When you are facing a CRM decision, remember these questions: 1) How much change can our Bank handle at a given time? 2) How can we solve for the most pain that we feel in an MVP that will provide real results? 3) How can we provide our employees change management so that they truly understand what is in it for them?
Ryan,
Your recent technology experience is a lot more positive than mine. There is a point of diminishing returns. Baker Hill’s Bank2Business, was easy to implement and worked. The original Salesforce was ground breaking, within sales cultures. The search for integrated everything hasn’t been a positive experience for me. Even at Chase, with their annual $9.5 billion IT spend, business banking had trouble integrating with branch banking. Actually, less than 3 years ago, their digital solution was for me to fax a personal financial statement (PFS) to my email because I couldn’t scan across disparate networks. Luckily, my customer was understanding when, due to a bug, their PFS was faxed to Penske Trucking. The most expensive gesture in IT consulting is that one where you interlock your fingers and talk about how we’ll build an interface. I’m not a FinTech denier. I’ve been a FinTech advocate for 25 years. I just think in banking the legacy core accounting systems have been tough to integrate with loan origination and CRM. The argument that your sales person will quit and take all of their customer knowledge with them is perhaps the worst reason to implement CRM. My $50MM relationships seem pretty happy with my “yellow legal pad” and commitment to customer service.
Pamela,
Your insight is on target. Does “change management” include training? I must be “old school” because with something as important as a Salesforce/nCino implementation I would expect some kind of a user manual and classroom training from a professional teacher. What seems to pass for training today are 5 minute videos of two emoji super users having a great time bouncing through all of the features.
You are correct Bill, it’s definitely included and the right implementation partner on both fronts, Salesforce and nCino should have offered that to you as part of their implementation services. Training and documentation is pivotal to your success, in many cases you are changing legacy process that changes your employees day to day work. If you are in mid implementation you should ask the Partner(s) to provide both.