By attempting to use CRM to get closer to their customers, many
companies are getting further away from them than ever. Martin
Butler says it's time to give the CRM proposition an injection of
common sense.
The IT industry is not known for the rigour of its propositions. A
whole generation of corporate executives has embraced the Customer
Relationship Management (CRM) phenomenon based on little more than
a handful of clichés that sound impressive during a sales pitch,
but actually have little substance behind them.
Perhaps the mother of all CRM clichés is the assertion that
increasing customer retention by 5% can increase profitability by
85%.
It shouldn't be too difficult to improve customer retention by a
tidsy-bidsy 5% should it? In the real world 5% is something akin to
scaling Everest, or winning the lottery - it's possible but not
probable.
CRM is the epitome of a kind of lunacy that grips executives
whenever they are presented with implausible propositions from IT
vendors and consultants. All those years spent trying to increase
customer retention by an extra 2%, and hey presto 5% looks so easy
using the latest wizardry called CRM. Years of experience are
abandoned in the expectation that a computer system will do
something that product excellence, courtesy to customers,
competitive pricing, good product positioning and a thousand other
things that affect customer behaviour cannot.
The lack of rigour not only applies to claims for a technology, it
also applies to accusations made against it. CRM disaster stories
abound, and so industry observers have started touting a new
collection of "roll-of-the-tongue" clichés. The percentage of CRM
projects
 | | "There is nothing wrong with
bestowing attention upon one's customers - as long as it is wanted
attention" | | | | | |
| | Martin Butler | | |
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that will fail is now estimated to be anywhere between 40% and over
80%. Of course there is no rigourous definition of what failure
means, whether expectations are realistic and other considerations
that might make such easy claims more difficult to justify.
In reality a CRM system is just as likely to dent customer
retention as it is to enhance it. Cross selling and up selling
attempts can annoy customers and make them feel hassled. More
generally CRM reinforces the belief that the supplier is king, when
in an age of over-supply the customer is clearly king. CRM
encourages management arrogance that customers are little more than
sheep to be shorn - at a time when customers are becoming more
choosy and less tolerant of supplier arrogance.
Just as ERP resulted in corporate feet being embedded in concrete
at a time that greater mobility was required, so CRM is making
suppliers less responsive to customers at a time when they need to
be listening harder. I had an alarming conversation recently with
two executives from a large manufacturer who were distressed by the
fact that their CRM system had become so ponderous that their
company had decided to reduce its range of products - there's
customer service for you.
What we often tend to forget is that phenomena such as ERP and CRM
present significant career opportunities for executives. To have
experience implementing a fashionable product such as SAP or Seibel
opens up a whole new world of opportunity. One only has to look at
the images used in advertisements for these products. Are they
images of happy customers, or efficient production lines? No - the
pictures show smartly dressed executives having the attention of
others bestowed upon them while enjoying a highly prosperous
existence. CRM has become a kind of currency that senior executives
could use to negotiate with each other - until it all turned sour
that is.
There is nothing wrong with bestowing attention upon one's
customers - as long as it is wanted attention. CRM does not start
with a software package, it starts with product excellence, good
communications, helpful staff, good service and all those things
that depend on company culture and the attitude of senior
management. I may be in danger of creating yet another cliché, but
a rush to implement CRM says much more about how little a company
understands its customers than it does about its desires to serve
them better.