Customer relationship marketing was supposed to be a “new paradigm,” yielding more loyal customers and much more profit for companies. It hasn’t. What should managers do?
It seems that for most companies, no matter how much they invest in customer relationship management, neither the quality of their customer relationships nor the profitability of their business has increased commensurately. Of course, it was not supposed to turn out this way; relationship marketing was a “new paradigm” that would herald a golden age of marketing–more loyal and satisfied customers, and much more profit for companies. The authors’ evidence indicates that it is neither the quality of the CRM solutions nor their implementation that is to blame. Simply, companies have failed to prepare the ground adequately in advance of major CRM investments. Without development of the right capabilities, new technology fails to improve marketing practice. As a consequence, customer relationships are neither better nor more profitable. The authors’ research reveals how operational managers can develop relationship marketing capabilities commensurate with the implementation of CRM to help make better investment decisions and exploit the opportunities profitably.
6 Comments On: Why CRM Fails — and How to Fix It
Clear demonstration of why injecting technology — without accompanying business process change — often fails.
In his New York Times interview, Forrester Research CEO George Colony has a concise statement on injecting technology (nytimes.com) … the phenomenon recurs and I therefore call it the Law of Technology Injection (www.BT.practice.com).
Yes, merely injecting technology does not guarantee success. We might go even further and suggest not only processes, but capabilities must develop.
Well worth a read….if only to find both violent agreement and disagreement in the same article!!(at least I did!)
This raises some great questions about CRM, its definition and understanding, neither of which is clear, and also the abilities of Boards to make rational decisions based on what they “hear” and also on what they are fed from their marketing groups.Successful CRM is NOT about technology, although this is what Mr Seibel made his fortune from, and it isn’t even about “..developing the new capabilities necessary to improve customer relationships” as the authors state. Successful CRM is about understanding the customer journey and experience you want to provide, THEN developing the capabilities as they suggest and lastly the overlaying of technology to facilitate those capabilities – where it can add value! Frankly there are quite a few areas of this paper I read and thought “yes!”, and an equal number where I thought “no! I don’t agree…” – if you have any views at all on CRM and marketing capability then this is a must read article which will get your thoughts racing I think – for me, CRM starts and ends with the customer (People are People First)…always did, always will!
Glad the article provokes such thoughts. I suspect we are largely in agreement about what it takes to make CRM successful, albeit there are definitional issues raised. How one defines CRM has been the focus of numerous articles from academics, consultants and managers. Ian Ryder chooses to define CRM as customer experience; this is increasingly a popular approach and an area in which I am research active. Experience, like CRM, can be defined widely and certainly inconsistently between writers. The really broad definitions (I loath to use the word “holistic”) of experience don’t leave much out and hence become difficult (impossible?) to make operational. Similarly, CRM can be defined very narrowly around customer selection and promotion or more broadly to incorporate customer journey and overall experience. Regardless of definition, I suggest that the core of our article remains valid: build the organisational capabilities that create relationships (experience if you prefer) and then invest in the operational processes and technology that will deliver them consistently and at scale. Organisations that invest first in technology and hope that the capabilities will follow, are more likely to be disappointed with their investment outcome. We suggest in the article that firms first innovate with their customer treatment to build capabilities and then extend from there – that is how we operationalize Ian Ryder’s comment that CRM starts and ends with the customer.
Excellent article with some very interesting points raised. But I too believe that a successful CRM is not actually about the technology but more about having a clear understanding of the customer journey and the entire buying process. A successful CRM system should actually be able to make this process more efficient while also creating new opportunities for further business.
As Stan rightly said, it’s actually quite common to see companies buying complex CRM systems without properly preparing for it. I believe that some of the key points in the initial CRM preparation phase should include:
- Defining clear objectives (and how the CRM system will help achieve them)
- Aligning the business operation (across all sectors)
- Give incentives for employees to use the system (clearly explaining the objectives and the benefits, provide proper training and encourage user buying right at the start)
A recent study demonstrated that 70% of businesses in Europe have failing CRMs!
http://www.dnb.co.uk/resources/crm-infographic
While this might shock a few of us, it’s actually not such a surprise.
Any views?
J.
Companies need to understand the fact that they can not manage the customer’s relationships, but may be able to manage their experiences. That is why CRM efforts are bound to fail. It is the mindset that counts not the technology…Relationship marketing as understood by Europeans teaches equality of partners rather than company imposing relationships to customers.