CUSTOMER RELATIONSHIP MANAGEMENT: A BRIEF HISTORY, AND A BIG MYSTERY
James R. Rosenfield
February 2002
Customers count, information about customers counts, and managing that information counts. Relationships matter. What no-brainers! Intellectually and intuitively, no one who can fog a mirror would disagree.
And yet Customer Relationship Management remains an elusive will o' the wisp for most companies, and a bitter, discredited experience for many others.
What's the problem? Well, first a brief history of unkept promises:
1980s: Database Marketing. The promise of database marketing? To speak individually to countless customers. The reality: It's too costly, too difficult, and doesn't pay out on the bottom line, except in the case of business-to-business key account marketing. The compromise: A little database marketing goes a long way, which is very good news for everyone except technology vendors. You can do quite well simply by knowing how recently and frequently customers purchase; how much they spend; what they purchase; and an iota of demographics. Almost everything else is fluff and gloss.
1990s: Relationship Marketing. Major phenomenon: Loyalty programs. Major promise: Loyalty! Major result: Companies such as airlines now have an enormous incremental layer of expenses, without much to show for it. It's the familiar promotional conundrum: If your competition promotes, you have to promote equally, which eventuates in everyone making less money. But if you unilaterally withdraw from such competition, market share collapses. And, alas, no one, at least on the consumer and small business end of things, can tell the differences between loyalty, bribery, or inertia.
Early 2000's: Customer Relationship Management (CRM). Major phenomenon: Great promise. Major reality: Promise unattained.
What's the problem? What's the big mystery?
WHY CRM AND CONVENTIONAL CORPORATE CULTURE ARE AT ODDS
CRM does not mesh well with conventional corporate culture (with the exception, again, of business-to-business key account management). Its most significant and dramatic successes are likely to be found in non-public companies, many of whom are not eager to trumpet their successes in the business press or at trade shows.
There are three prevalent corporate inhibitors to making CRM work:
1) Cultural
Most companies, alarming as this might sound, don't really care about their customers. If they did, customers wouldn't be frustrated, abused, stifled, stymied, and mistreated the way they are. Based on my experiences as a customer in the U.S. in 2002, I can safely say that things have never been worse. Airlines, banks, telecoms, Internet providers are universal customer abusers, where rude service people and ignorant technical help are the order of the day. The University of Michigan each year does a study of customer satisfaction in the U.S., and it's steadily declined since 1994! Customer satisfaction, in fact, is now at just about an all time low in numerous categories. One of America's biggest banks just came in at 60%, which is way, way below sea level. Customers will normally award you 75% customer satisfaction just for showing up!
2) Economic
CRM requires investment spending, which means that increased profits will not be visible until some time in the future. For publicly traded companies, anything beyond next quarter is too far out even to contemplate. When you layer on top of this the current worldwide recession, the appetite for infrastructure investment spending disappears entirely.
The corollary of this is that any company wise and rich enough to make the investment now might in the future have a great and sustainable advantage over its competitors.
3) Linguistic
Customer Relationship Management is fraught with so much jargon and so many acronyms - beginning with the tiresome "CRM" itself - that senior management's eyes glaze over. I personally have watched several Chief Executive Officers quietly pray for death as yet another series of impenetrable terms were flung their way by managers and vendors unwilling or unable to speak plain English.
OLAP, Data Warehousing, ERP, P-CRM, drilling down, WAP, ADRI, on and on until the head droops and the mind craves anything, anything at all, that sounds like normal people talking to normal people.
WHAT CAN CRM PRACTITIONERS DO?
CRM believers can't undo the business cycle, which takes solutions to #2 above out of their hands. But they certainly can be in-house apostles for the importance of customers, and the more metrics they can attach to customer segmentation and retention, the better. And they can surely clean up - nay, they must clean up! - their linguistic act.
They might also establish and keep 10 Commandments of 21st Century Marketing and Customer Relationship Management:
1) Respect the customer.2) Abandon ethical neutrality, and only promote products that -at the very least - do no harm.3) Understand that the medium is the message, and use media appropriately.4) Know the differences between bribery and loyalty.5) Be skeptical of marketing "scientism," including most forms of so-called market research.6) Be a critical client and completely scrupulous vendor of all CRM-related products and services.7) Become a privacy advocate, since invading your customers' privacy will put you out of business. 8) Let go of intrusive and obnoxious ways of contacting consumers, such as junk e-mail, outbound telemarketing, and viral marketing.9) Learn that "brand" in the 21st Century is a stress-reduction strategy on the part of the consumer, not some ad agency hocus-pocus.10) Know that we don't control technology - technology controls us.
THE ELEVENTH COMMANDMENT
There's an eleventh commandment: Fall out of love with CRM. Fall out of love with your products and services. Assuredly you must fall out of love with yourself. But fall in love, deeply in love, with your customers, the only thing in the business world worthy of such affection.
http://www.jrosenfield.com/articles/CRM-History.htm
© 2006, James R. Rosenfield. All rights reserved. Use by permission only.
