What’s wrong with CRM?

Did you know that all the empirical evidence suggests that Customer Relationship Management has failed to make any difference to one of its key claimed benefits – namely customer satisfaction.

Despite billions being spent, customer satisfaction is no higher than it was ten years ago. “Ah, but look at the cost savings” protagonists will claim. Yet when you do look at the savings you find that, once you take into account the increased costs elsewhere, the cost savings look illusory. Why is this? Why doesn’t, as many people now suspect, traditional CRM work?

Do Customers WANT a relationship?
Back in the good old days when CRM was a bright shiny new acronym everyone cited Starbucks “go into Starbucks and the Barista will remember what it is you order and start preparing it for you before you ask!” cried the protagonists. When did your local Starbucks last remember what you order? And this was hardly a new concept – any barman in a local pub can do this, but learned that you ALWAYS have to ask “your usual?” first! And any barman will tell you, there are customers who want to chat and customers who don’t. In other words, not everyone WANTS a relationship. Ofttimes all we want is an efficient transaction. For example, in Tesco, I want to get through the checkout as fast as possible – as does every other sane human being. And resent being asked, every time, “do you have a clubcard?” The answer is “if I had one, do you not think I might present it to you?” Most of all what customers don’t want is an ersatz relationship with someone they don’t know pretending they do because the computer tells them stuff! Customers want to be treated like people, not numbers or cattle (although how this squares with the success of Ryanair I have no idea!)

Customers, NOT Prospects
Too many people forget that CRM is about Customers, NOT non-customers who MIGHT become customers. So they buy a shiny new CRM tool and immediately load it up with all sorts of dubious data from various sources because “well, they MIGHT become customers you know”. No they won’t, ever. The typical ratio in a database is 20 prospects or suspects for every one customer so there is a less than 5% chance that someone will transmogrify from ugly duckling prospect in beautiful, profitable customer swan! What’s worse is that while you may have a lot of information about customers, you tend to know a lot less about prospects and suspects. So your CRM database has two conflicting data types – zillions of prospects with no information and a few customers with loads. This is VERY hard to reconcile.

The path to true love never runs smooth
CRM systems envisage a serene path from suspect to prospect, to customer, to repeat customer, to evangelist. Their entire existence is predicated upon this, their internal business rules demand it. But people don’t behave in a linear fashion, so all too often the CRM system gets in the way, requiring a salesperson to jump through all kinds of hoops to get a new customer into the system simply because they failed to follow the prescribed path.

Furthermore, they envisage that all data is perfect and all system users know exactly what to do. It isn’t and they don’t.

CRM slows business change
Marketing is arguably the most dynamic of business professions. So why is it that marketers think that a system that takes months to set up will be easy to change? All too often companies find themselves hidebound by the very system that was supposed to set them free. Workarounds are created, each one slightly more byzantine than the last, none documented of course. And then mistakes begin to creep in. So eventually a halt is called, Consultants called in and, two years later tah da! Another CRM system is rolled out. Meantime the business has frozen in time.

Is there an answer?
CRM is too often thought of as one single solution, and a technology one at that. But it isn’t. In truth CRM is a mindset, an approach, a method of managing customer interactions. It is not a technology and certainly not a single one. Let me give you a small example – Waitrose. You can order glasses for parties for free from Waitrose, there’s no requirement for you to buy your booze from them, or even buy anything. And, should you break a glass you will only be charged £1. What they have recognised is that almost no-one who isn’t a Waitrose customer would order glasses and that it is a great way of engendering customer loyalty at very little cost to Waitrose. And, surprise, surprise, I bought my wine there!

It’s the data, stupid
Your CRM system is irrelevant – what matters is the data that it contains. If it is accurate and reliable you can use it to inform marketing and sales activity. If it is not then it is of marginal value at beast and misleading at worst. For example, purchasing intentions – do you know that the window of opportunity for purchasing a car is four weeks? Someone decides they fancy a new car and then goes and buys it in a four week window. So if you hold such a purchasing intention in your database, it is probably out of date when you enter it, let alone when you act on it. Focus on getting less data, but data that you can verify and keep up to date.

Its Marketing, stupid
Most CRM systems are based around the sales imperative – which means they are poor for marketers – particularly in relation to bulk loading and unloading of data. They are optimised around recording conversations, not logging “transactions” (mailings, emailings, clicks, opens etc.) – especially where those transactions occur in other systems. Focus on systems that enable you to undertake campaigns easily and measure the results of those campaigns and consider a separate system for marketing that pulls data from the sales automation, call-centre, customer services and finance systems.

CRM can work – but not if you focus on the system and most CRM systems are not suited to the imperatives of marketers in the real world. If you are pragmatic and focussed then you can get an astonishingly effective solution that delivers on the promise of CRM, without the pain. Just avoid getting caught up in the flash demo and the PowerPoint promises


  • CRM is a state of mind NOT a technology
  • Do your customers really want a relationship
  • The “C” in CRM is for Customers, NOT prospects
  • CRM systems can slow change – keep it simple
  • Invest in data first, system second
  • CRM systems are more for sales than marketers
  • Consider having SEPARATE sales and marketing systems

Tim Beadle, director

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