Why customer relationship management will not go away

Why customer relationship management will not go away ?

By R. DeSisto

Is customer relationship management (CRM) dying? Slowed IT spending, the questionable business viability of many CRM vendors, and early enterprise adopters of CRM technology's having virtual warehouses full of "shelfware" lead many to believe that CRM is on the downswing. All three factors are present, but they don’t determine whether CRM lives or dies. The three perspectives have the same flaw—they focus on technology. The answer to the question of whether CRM lives or dies lies within the acronym itself. When you analyze those three words—customer, relationship, and management—the conclusion is that CRM will not only survive the next decade, it has in fact been with us for hundreds of years.

Customer
The fundamental requirement for commerce, health service, or public service is to have a customer for a particular good or service and a provider to fulfill demand. For the word "customer" to disappear, enterprises and governmental agencies would have to consider that the people they provide value to aren’t customers. The bottom line is that customers will not go away, at least for those enterprises that remain viable business concerns. So let's move on to the next term, relationship.

Relationship
Many of us who own automobiles tend to use our local garage rather than a dealership's service department. Why? Because the local garage practices good customer relationships. It builds trust. It knows our vehicles because it has worked on them before. There is a 99.9 percent possibility that the local garage did not implement a CRM system, yet in many ways the local garage practices stronger customer relationships than corporations that have invested millions in technology to do CRM. The lesson here is that it's not about the technology—we had relationships before the current technology and we’ll have them after the current technology is retired. The key is developing and reinforcing a culture that promotes lasting customer relationships. Let's move to our last term, management.

Management
We have established that all enterprises have customers and that those customers have relationships with the enterprise. Those customer relationships must be managed. The term "management" tends to be most associated with technology because it is assumed the term is associated with data. This could not be further from reality. Management is not completely about data; it's about understanding the value of and fostering relationships with customers.

Think about the local grocery store whose repeat customer comes at a specific time every week. The grocer realizes that this customer buys the same groceries every week, so the grocer prepares them in advance. The grocer knows this customer has value to the business and is managing the customer with care associated with that value. Another example is how the best business-to-business salespeople know how to manage valued customers, taking them to dinner or possibly providing token gifts for their families. Again, no CRM technology or vendor is required to have good customer management skills. Technology can certainly help us identify valued customers through analyzing purchase history and needs, but in the end we come back to the fundamental relationship management skills of the people who touch the customer.

Bottom line
As often stated but rarely effectively practiced by enterprises, CRM is a business strategy. Customers' relationship expectations are increasing, and those expectations will not go away. If an enterprise doesn’t take care of the customer, the customer will go somewhere else. Through 2010, effective management of customer relationships will be the main cause of competitive advantage for the majority of successful enterprises. Enterprises should avoid the trap of halting CRM initiatives and embracing some other grandiose buzzword technology scheme that consultants or analysts espouse. In the end, every enterprise has a customer relationship strategy, whether it’s called CRM or not.

Customer relationship management (CRM) initiatives have generally been poorly implemented -- leading to some miserable results -- even though the UK leads the way in how projects are put together.

Meta Group, interpreting new survey results, has called most efforts "extremely tactical with a weak focus on CRM as a change management activity". And one of the reasons for poor end results, according to the analyst house, is piecemeal, "often fudged" return on investment (ROI) measuring.

The assessment won't make for comfortable reading for many companies which have spent heavily on CRM-related software. In the UK, 71 percent of projects have top-level sponsorship within organisations, yet this involvement hasn't made that much difference.

According to Ashim Pal, International VP for CRM at Meta Group, most user organisations don't have the analytical capability to judge the effects of CRM projects. In most cases it is like "trying to determine the value of your car by measuring its oil pressure", he said in a statement.

Coinciding with the Meta findings is the release of a new book penned by IT services giant CSC, arguing failures have often been because of "a product-led agenda appropriate for product-led companies" -- meaning services companies like many in the financial sector don't feel the benefit of CRM.

The gap between customer expectations and their interaction with firms -- where the CRM comes into play -- then leads to discord as the two are so far apart.

CSC predicts expenditure on CRM will rise alongside general IT spending increases but that there are no guarantees it will deliver on the promise of mass customisation.

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