Challenges of the CRM Approach

Years ago CRM systems came into vogue as the latest and greatest end-all mechanisms to connect to customers. Collect data from all customers at all “touch points” to the organization – sales, service, after-market sales, mouse clicks on company sites, overlay it with some additional data collected either directly from the customer or from external customers, and you’d know anything you needed to know about your customers. All millions of them.

Of course, advances in IT made it all possible. CRM systems were used to identify prospects, “cross-sell and up-sell” customers when they came into points of contact, and fuel tons of quantitative analysis behind the scenes. It would also reduce costs, because sales and support functions would “know” about the customer they were talking to and be able to prioritize or de-prioritize them on the fly or target products or services to their needs.

But the end result was, we got a lot of shallow, rear-view pictures about a lot of customers. We got no qualitative or visceral perspective of what those customers felt or needed. Furthermore, with the exception of a handful of very active customers, we didn’t get very much or very reliable information.
Part of the problem, as well, is that the CRM approach assumed that customers wanted a relationship. Clearly, that wasn’t always the case, so as innovators or as anyone else reading the information, there were a lot of potential and actual customers out there we didn’t know much about.

But the deepest failing of CRM, of course, is that no matter how much “touch point” data we collect, we still don’t get that intimate knowledge of their needs, preferences, or desired value propositions from the company. Further, in most organizations, people in innovation functions weren’t very closely connected with the data; it was mainly owned by sales and support personnel. When used correctly, however, CRM and related knowledge data could be used to identify “most valuable customers” to target for further research, although most applications based this on who had already bought your products, not who was likely to – if you offered the right innovations.

As Tim Beadle, Director of the Atrium Group put it in a December 2009 article in Marketing Week “What’s Wrong with CRM?:
“Too many people forget that CRM is about Customers, NOT non-customers who MIGHT become customers.” He goes on to say: “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.”

These comments reflect the challenges of using the CRM approach as a sales tool, and even more strongly reflect the challenges of using CRM as an innovation tool. That said, the advent of CRM and especially its god-child “Customer Knowledge Management,” or CKM, within an organization is a step in the right direction; at least we’re paying close attention to some of our customers. Keep in mind though – we do learn something about those customers, but we must go further to identify the bastions of true customer value.