Customer Relationship Management: Five Lessons For a Better ROI

Customer Relationship Management (CRM) initiatives have been disappointing There are five major reasons why CRM's failure rates are abysmally high. This article describes these five reasons and what was learnt from them. First, CRM is not properly understood, leading to unrealistic and inappropriate expectations. CRM is an attitude rather than a technique or software and implies comprehensive relationship marketing rather than mass marketing for most of the clients. Furthermore, any understanding of what CRM is must be accompanied by an understanding of what it is not. CRM does not replace, but rather complements, other marketing and customer service initiatives. Second, CRM initiatives should add value to the relationship for the customer, not just the company. Too many CRM initiatives are designed to help the company rather than the customer. Third, it is difficult to choose the appropriate CRM solution as the technology is constantly evolving. Recently, many CRM vendors are launching industry-specific suites (referred to as vertical tools) that enable companies to deploy the software faster than generic packages, and without the costly customization. Fourth, Implementing a CRM system is complex and difficult. While resistance may come from salespeople who do not wish to give up ownership of customer information or from IT people who do not wish to change legacy systems, experience has shown that for a CRM program to be successful, above all else it must have the full support and ongoing commitment of top management. They must view CRM as a strategic initiative, not as a technological tool or tactical program. Lastly, it is easier to demonstrate the costs of CRM relative to the benefits. While measuring the costs are fairly straightforward, measuring the payoff of a CRM system, especially in its early stages, can be difficult and contentious, which can lead to poor judgments by management. Measurement criteria should be based on the objectives of the CRM program and used to manage and continuously improve strategic CRM performance.