A few years back, management would have committed to customer relationship management (CRM) because of the promise it exhibited. Now, with CRM failures dominating the headlines and boardroom talk, the selfsame management will look to reduce its spending on CRM and even cut the programme in its entirety. In many cases, this would be folly.
The reason for this is that payback, or return on investment, tends to be delivered in the second generation of CRM initiatives, rather than in the first.
The value of CRM is delivered when analytics is applied to sets of customer data, so identifying trends which can be reported to the appropriate departments. By cutting budget right now, when many CRM programmes are just through their first phase, companies stand a good chance of undoing all the value going forward.
The application of analytics in phase two of a CRM project can unlock much of the value identified in phase one, which in most cases was a key selling point when the project was first sold to management. Analytics can help spot such nuggets as:
- . Existing and potential value to the business, including lifetime value. By identifying likely lifetime value, customers can be placed into most valuable, most growable and below-zero segments, which in turn drives the differentiated ways in which a company will interact with these customer sets.
- . Which customers will demonstrate propensity to buy specific products, based on identified behaviour.
- . Which customers are likely candidates for cross-selling and up-selling, based on their buying patterns and identified need.
- . Through the application of geographical information systems, companies can gain insights into where customers live, work, transact and interact, and customise their marketing communications accordingly. They can also locate branch networks more accurately, and understand overall and individual profitability, all based on existing, accurate CRM data, gathered uniquely and once only.
- . Through driving a learning relationship with customers, build up a history and picture of customer behaviour that drives customer loyalty and retention, two of the key goals of CRM, and typically its strategic underpinning.
It might take courage and persistence on the part of management, but executives need to revisit the initial reasons they embarked on CRM and provide renewed support, rather than pull the plug, just when the overall benefits are likely to be yielded.
CRM as a discipline is coming under fire, which is both unfortunate and unfair.
Doug Leather, CEO, Knowledge Factory
This is also a time for management to review the overall manner in which CRM has been delivered, and just who has been driving it. Has it been the business - in which case one set of strategic drivers is brought into play - or IT, in which case delivery is often tactical and fragmented.
As with any business-enhancing exercise - be it enterprise resource planning, business intelligence, CRM or online learning - if it is not strategic, and its delivery tied back to overall business objectives, it is unlikely to deliver its full value.
CRM as a discipline is coming under fire, which is both unfortunate and unfair. The key problems with CRM begin with the decision-making process, and the delegation of ownership. As the downstream consequences will be felt in the boardroom, executives need to regain control of CRM. If this were to happen, they would see clearly that now is not the time to cut a strategic initiative.
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