The topsy-turvy world of CRM

By attempting to use CRM to get closer to their customers, many companies are getting further away from them than ever. Martin...

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
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.

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