Would the real CRM please stand up?

Would the real CRM please stand up?

Most people have heard of it, some claim to understand it, and others even think they’re doing it. Customer Relationship Management is one of the most misunderstood terms in business today, and for good reason.

I’ll refrain from using any of the thousands of definitions one can find online, and I’ll summarize it as “how to build a profitable and valued long-term relationship with your customer”, and frankly even that doesn’t really hit the spot. There are as many definitions for the term as there are people working in the field (go ahead, google it).  I’ve heard people say “yeah, CRM, that’s call centres isn’t it?” all the way to the more informed but still off the mark “direct marketing infused with a bit of IT and finance”, which is certainly part of CRM, but hardly the whole picture.

The principles of CRM have not changed for decades, forever defined, in my mind by the OgilvyOne mantra, in reference to the customer, “win, grow or retain, where is the biggest gain?”. The discipline of CRM however has changed immensely over the past decade thanks to the internet and the smart phone. Where once you had frequent flyer programmes embodying the very essence of CRM, today new dialogue and engagement platforms, powered by data, has meant businessess, at least the successful ones, are becoming more customer centric and focused on creating brand experiences rather than simply selling products and services. This is what CRM has been trying to achieve all along but people have mislabeled, wrongly defined and ultimately misused it.

Here are four important reasons I have found over the years for the failure of CRM.

1-    It requires re-management of the entire business: Becoming customer focused needs to happen at every level within an organization, not compartmentalized within IT or Marketing as is often the case. Becoming a customer-focused organization should happen before implementing CRM; Job descriptions, processes, policies, performance metrics, vision…practically everything needs to be geared towards meeting customer needs. “CRM” alone will not make a non-customer focused organization become one.

2-    Long ROI models: A fair amount of investment goes into setting up and maintaining CRM programmes; IT, communication channels, HR, training, content providers, agencies etc. The ROI models in most developed markets look at breaking even after two to three years at least, even with amortization of overheads. In Jordan you have to also contend with a relatively smaller population, particularly those with disposable income, where any investment needs to be met by a critical mass of customers to generate a positive ROI. This is also true for most other MENA markets, with the exception of Egypt and Saudi, but in their cases they have marginally more successful CRM initiatives, particularly in the FMCG sector. The long-term approach to CRM often times is a big disincentive to initiate effective change. Though CRM is scalable, it helps to not think of CRM as a “thing to spend money on”, but rather “how do i focus my business on becoming customer centric”.

3-    Not knowing how to leverage the data: Data is the new gold and many companies ignore or struggle to use the vast amount of data on their customers (think Banks and Telcos). Knowing what to do with the data is the other half of the battle where CRM comes into its true purpose. Segmenting, analyzing, testing, learning and ultimately creating great experiences for customers that translate into more profitable relationships. Knowing what to do with the data is just as important as knowing not to stalk and harass your customer, but rather lure them with relevant and timely value and offers.

4-    Investing in Loyalty: Loyalty is very much a two way street and many companies don’t invest enough in giving individualized value and recognition. Emotional bonds with brands have shown to foster more profitable relationships, and emotional bonds cannot be bought, but rather have to be earned. Winning loyalty through monetization, only means you’ll lose their loyalty to someone else for the same reason.

Many of these problems are universal and not simply unique to Jordan or the region, though lets be honest, we seem to struggle significantly with them. But the biggest failure of CRM is in its very own definition, or rather the multitude of definitions. It means all things to all people except the one thing that it is; simply better business.  

(First appeared in Venture Magazine (Jordan) for June 2013 issue)