Nibble or bite?

CRM is widely used, little understood and often vilified. Marketers disagree over whether it should be introduced on a company-wide basis or brought in one department at a time. What is clear is that companies and staff should plan before the

Customer relationship management (CRM) systems have been sold as tools for re-inventing businesses, changing the nature of the relationship between customer and service provider, and moving consumer capitalism on to the next stage of its development.

No wonder that reports of CRM failures abound, with one study showing &£19bn invested in CRM over the past three years at little return, while others imply that marketers have been sold the Emperor’s new clothes.

The reality is not quite so bad, but companies have recognised that these expensive software systems – designed to link together all the information they hold about their customers with a view to offering them better service and selling them more products – have been found wanting in their implementation. Once the exaggerated claims made for CRM are dispensed with, the real job of reshaping companies can begin. As is the case with many new technologies, CRM has been adopted too quickly without sufficient time for evaluation.

According to Database Group managing director Richard Lees, companies tend to buy too far into CRM programmes, trying to re-invent their entire businesses, rather than adopting a step-by-step approach. He says companies should “pick the business issue most likely to deliver value, rather than trying to transform the whole organisation. You can deliver customer value, but CRM is not a silver bullet. Businesses must learn to walk before they can run.”

No more big bangs

Oracle CRM product marketing manager for the UK, Richard Walker, says there has been a move away from the “big bang” approach of re-engineering entire organisations around CRM, and a realisation that it has to be done in smaller chunks.

Walker believes that there is a basic misunderstanding about CRM, which is that it is seen as a technology, rather than a way of treating customers. He says: “CRM is not about technology, it is about what you want to do with your business and whether you want to involve your customers. CRM affects every part of the business and is as much about people as it is about technology. It is about the person who answers the phone.”

He says that customers make three basic types of demand of companies. The first type is when they know what product they want, and they buy it. That accounts for the simplest transaction – such as buying a bar of chocolate or a newspaper. The second type of demand is when there is a problem that needs resolving, for instance if the chocolate bar is out of date, or a telephone needs repairing. Most businesses are good at managing these types of transactions, according to Walker. But the third, most problematic type, occurs when a customer doesn’t know exactly what he wants, nor even why it may be good for him. For instance, if a customer wants to buy an Individual Savings Account, the company supplying the account needs to know all sorts of information about that customer in order to sell them the right product. The company will need a consolidated view of the customer – and this is where CRM comes in. The information may be spread out among various departments, but because of the lack of communications between different departments, businesses need CRM to aggregate all the information when it comes to marketing new products or communicating with customers.

The battle against promiscuity

The growth of CRM programmes over the past few years represents an attempt by businesses to maintain long-term, profitable relationships with customers. It is an attempt to solve the problem of “promiscuity” among customers and to keep the competition at bay.

But there is disquiet at the way the language of personal relationships has been adopted by CRM proponents and by marketing people in general, and some observers warn that businesses are getting carried away with the idea of “relating” to customers. It has been pointed out that customers do not want a relationship with their bank, their supermarket or their telecoms provider. All they want is good service and to be left alone.

The idea that customers can be “monogamous” is often less to do with what the brand owner does right, and more to do with customers’ inertia. This is especially true in “low interest” sectors such as banking, telecoms and utilities, where shifting accounts can be cumbersome and may offer few real benefits.

But, while monogamy is seen as desirable in the personal sphere – and is encouraged both legally and socially – in the world of brand marketing, quite the reverse is true. Consumers are encouraged to shop around and to threaten to take their business elsewhere.

We don’t want a relationship

As 141 planning director Gavin Hilton says: “The problem with CRM is that we use the language and rules of human relationships as a model, but consumer relationships do not evoke the same depth of commitment or passion. Relationships grow over time and need careful nurturing. Unless you work to actively involve your consumers in your brand, the best you can hope for is not monogamy but an open relationship. Relentless, one-sided pursuit of an affair is stalking – no model has ever shown that to work.”

According to 5one Marketing partner James House, businesses should develop a two-way flow of information between themselves and their customers. He says that traditional communications have been one-way – the organisation “talks at” its customers. With the advent of data and systems to manage customer information, organisations must focus on encouraging customers to divulge more about themselves and on using this information to drive future business decisions.

He says: “This can be likened to the way we build long-term personal relationships with people we meet. We make initial judgements based on the first meeting – from appearance, behaviour and comments made. We then meet again and start to understand more about the person. As we understand more, we then change what we talk to that person about, and how we talk to them.”

House believes that, if an organisation is seen to handle complaints efficiently and effectively and the customer feels that the organisation has recognised and acted upon their feedback, this will be viewed positively.

The bigger picture

But some persist with the view that CRM is a solution for a whole company, only coming into its own when it operates across the business.

Mason Zimbler managing director Mark Mason says that, to embrace CRM properly, the entire business must move towards a single view of the customer. CRM brings the organisation together. It integrates front and back offices, and pulls together sales, marketing and customer service processes into one seamless whole.

He says: “CRM disposes of petty politics and internal fiefdoms. As departments rely on interaction with other departments, and require closer relations with them to achieve strategic objectives, errant islands of departmental power are eradicated. Successful CRM should not only improve the way an organisation communicates with its customers, but also the way it communicates with itself.”

CRM is no miracle cure for the ailments of modern service companies, but it can help to treat common corporate illnesses. It is widely argued that there has been a lack of understanding about how CRM should be used, that it is viewed as an end in itself and that it has cost industry billions in expensive and ultimately futile software. Clearly, getting staff to understand why systems are being put in place and how they fit into the jigsaw is an essential part of a CRM programme. It is a question of waiting until the fit is right to exploit CRM’s full value.

Customer Relationship Management

Marketing Week and Precision Marketing are joining forces to launch the DM Show. The event, which will run from October 15-17, will be supported by a full conference programme.

Location: Earls Court, London

Contact: www.dmshow.co.uk; dmshow@centaur.co.uk; 020 7970 6237

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