The forgotten ‘R’ in CRM

Once, when a deal sounded too good to be true, we used to wait for the catch. Now, thanks to customer relationship management (CRM), we wait for the upsell.

Though CRM has the potential to do so much more, many organizations have focused on deploying CRM solutions as a way to wring a few extra dollars out of those with whom they already do business. You can’t blame them. With one recession seeming to follow another every few years, the old adage that it’s easier to keep an old customer than find a new one has never been so true. Besides upselling, CRM has also been used to facilitate a lot of cross-selling, particularly in organizations so large that the left hand doesn’t know what the right hand is selling, or to whom. But this is an impoverished way of thinking about CRM, and over time I suspect the best and brightest chief information officers (CIOs) will approach it differently.

When deployed properly, CRM gives enterprises not only an insight into the opportunities to grow business with each customer, but a way of measuring their value. Though we tend to think of them en masse, not all customers are created equal. Some are a drain on customer service resources despite spending very little. Other customers do business frequently, adopt new products and services, and may even be strong influencers to their peers. Sales and marketing efforts toward the latter group can be prioritized accordingly. As the available data aggregates, CRM should also provide companies with a way of better understanding customer needs and wants in order to improve their portfolio and the way it is offered to customers. Much more than a contact database, CRM should be an engine that drives customer trust.

For many years, the term CRM was interchangeable with the word “failure.” I remember writing about some of the early products in the late 1990s, when whole conferences were dedicated to the subject. Analysts and consultants would shake their heads over statistics that anywhere from 70 to 90 percent of all CRM deployment projects ended badly. Though the same could probably be said about any new technology, including enterprise resource planning and business intelligence solutions, CRM systems seemed particularly disaster-prone. Implementation failure was often attributed to “communication problems,” but among CIOs I know, the cause is straightforward: sales people just don’t want to use the software. Either they have gotten used to a legacy sales order system and are put off by the need to key in more data, or they simply shy away from offering customer information that could benefit someone other than themselves. I’m generalizing, of course, but there’s no doubt that CRM systems’ ability to create a common knowledge base for all customer information has had the most disruptive effect on organizations.

 A few vendors, most notably and Siebel (now part of Oracle) managed to gain significant headway in the CRM space in the early 2000s and became pioneers in what we now call software as a service (SaaS). Since then, many others have entered the fray, notably Microsoft (which built up its Dynamics CRM line through strategic acquisitions) and SugarCRM, among others. As this CRM buyer’s guide will demonstrate, there is plenty of choice for CIOs and information technology (IT) managers available today.

Next page: How do you define ‘customer?’

Leading organizations will also use CRM as the catalyst for more sophisticated information management programs. For example, customer data is among the pillars for establishing a master data management (MDM) strategy that integrates CRM with business intelligence software and connects to data warehouses.

Even among mature CRM users, however, there can be significant disagreement over how to define “customer.” For one person it may be someone who has bought a product in the past but has since been dormant. For another it might refer only to active accounts. Still others may count business-to-business (B2B) transactions as customer relationships and discard business-to-consumer (B2C) activity. Sorting out the parameters is key to making CRM, or any initiative associated with it, successful.

We used to say that the goal of CRM was to establish a “single version of the truth” out of the widely diverging information housed in various departmental systems. Here’s the real truth: it’s the customer relationships, not just the customer data, that is the real gold in any organization. Use CRM products to nurture those relationships properly, and the cross-selling, upselling, or any other selling will take care of itself.

Taken from the Preface to Customer Relationship Management Buyer’s Guide: Innovations in CRM, published by Technology Evaluation Centers. 

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