It’s worth asking why businesses never took up the term “customer management” with the same enthusiasm as they did “customer-relationship management” (CRM). What difference does the injection of that word “relationship” make?

Well first of all, in this era of political correctness, it sounds more “PC”. Whereas talk of “relationships” is perfectly in tune with the zeitgeist of our age, “Customer Management” sounds too controlling and might make a lowly customer feel resentful.

If you ignore the political correctness, however, Customer Management is a perfectly laudable thing for a business to aspire to. We all want to be able to "manage" our customers in such a way as to sell more, for longer, to already good ones, and to discourage bad payers or even those who only ever take up loss-leaders and special offers.

Injecting the word “relationship”, however, does change the term quite a bit (and maybe it clarifies the original intent). Now it's not customers we are to manage but our relationships with them . This change does several things...

What the “relationship” in CRM reminds us of

First of all it reminds us that we aim to deal with customers more than once – to sell them more than one product, to sell them follow-up or ancillary services, to cross-sell, re-sell and up-sell.

For some of us it might also be a reminder that we deal with customers via several sales channels, multiple outlets, and at other “touch-points”: the branch or walk-in-store, the mail-order catalogue, the online store, automated dispensers, via statements, direct mail, telephone, e-mail, interactive TV, etc., etc.

Not only are there multiple branches, multiple channels and multiple media; even our customers may have multiple roles. Banks offering both retail and business banking want to recognise when an individual both has a personal account with them and their business has a business account - because the relationship with respect to one can affect that with respect to the other. Equally, the difficulties of joint and individual accounts must be well handled even in cases where a couple may be splitting up. (I even remember an incident where a wife became aware of a mistress through a misaddressed mailshot).

Finally, and very importantly, injecting the word “relationship” also underscores the fact that dealings with customers are two-way and any communication or interaction can be initiated by either party. We can manage outbound communications and their responses, but how well do we cope with an unsolicited communication from a customer?

CRM as a label and what is behind it

Now “management”, of course, is all about the few mobilising the many to achieve a certain objective – and if you consider the multiplicity and complexity of the above you can see why customer relationships need managing.

But perhaps you can also begin to see why this much-used term, CRM, has apparently turned sour. It has so much potential and so much meaning embedded within it that few have been able to do more than scratch its surface. Others have stolen the label and put it on products that form only a small technological component of what the term embraces.

In fact, almost from its nascence in the mid 1990s, the idea of CRM has been obscured, hindered and damaged to the extent that ignorance and ambivalence seem to characterise business reaction to it today. Some commentators even seem to have written it off as another unworkable fad, but seem all too ready to move us on to the next great idea.

Regardless of how much the CRM label has been derided, however, the original concepts (arising I believe from a conflation of the ideas behind direct marketing and data warehouses leading to a concept of the data-driven business) still hold good and it’s a worthwhile exercise to revisit the basics of what CRM is, and also to clear the ground by saying what it is not.

CRM involves identifying prospects and customers that are similar and then dealing with them as a group - applying coherent treatment strategies for wins, win-backs, retention, growth and attrition. That’s historic customer management. But, as implied above, CRM is also about being able to treat your customers as individuals or individual businesses (whose whole relationship with your organization you are aware of) whenever, wherever and however they interact with you.

This means that the sine qua non and the core of any CRM implementation is the customer-centric data warehouse: the repository for cleaned and matched customer-related data from every operational system in the enterprise. This must be in place as the authoritative data source before the channel-specific and medium-specific implementations of a CRM system can be realized.

Perhaps we are now in a position to say what CRM is not.

What CRM is not

CRM is not mere Contact Management. Certain items of software being sold as “CRM Systems” have grown from being databases of contacts. To them was added the ability to schedule appointments, record `phone calls etc., and more recently the ability to group contacts into organisations and into multiple sets and subsets that satisfy certain simple criteria. These enable you to manage outbound contact with sets of people.

These are good tools but the origins of such products as field-sales-administration tools are inescapably apparent. They are not designed to support multi-touch-point interactions with customers. Some are only just becoming able to cope with organisational hierarchies within business customers. Despite latterly being able to access some sales ledger data they are not designed to segment large numbers of customers according to their historic transactional behaviour or to bear that behaviour in mind automatically for a particular customer when a new event occurs.

At a more basic level they simply fail to address the issue many businesses have with a legacy of disparate islands of customer-related data on different systems. Unless this issue is addressed the information on any customer’s relationship with the business is incomplete and likely to be inconsistent. Just to proclaim a tool as supporting a 360°-view of each customer does nothing to bring together the data necessary to achieve that view. A piece of software may be able to access data from two different systems but unless it actually matches very different records that actually relate to the same customer it will never achieve that elusive 360° view.

Yet the owners and value-added resellers of such software persist in marketing them as CRM systems.

One can also find instances of Call-Centre Management and Campaign Management software being touted as CRM solutions. Yet neither addresses anything like the full gamut of the CRM universe. They are only cogs. And unless they contribute their data to and derive it from an integrated enterprise-wide data warehouse they are disconnected cogs, possibly contributing more to a problem than a solution.

A basic principle of CRM is that every interaction a customer has sustained with the business is available to take into account whenever, wherever and however a new interaction commences. At the very least a business should know which of its products a customer has bought – even if they have been bought via different channels or at different outlets. Yet even this basic information is not made available within systems purporting to be CRM systems – either because nobody has bothered to bring together the data from disparate operational systems, or because the technology is not up to matching it together.

An equally fundamental, and relevant, point here is that CRM is not mere technology – not even the technology of the really big players like Siebel.

Despite what the hardware manufacturers, software developers and systems integrators would love you to believe, CRM, while it may depend heavily on technology for its implementation, does not happen simply as a result of technology being installed. You may be sold a “CRM System” but technology alone is not, and never can be, a system as far as your business is concerned.

While the techies may drool over the comprehensiveness and integration of the component parts of their technological system; unless it is comprehensively integrated into your business strategy and operational procedures it remains nothing more than a brain without a body, a mere component rather than a system. To form a system two things must occur. First, your entire business mind-set must be customer-oriented and second, the technology must be integrated with your business to the extent that it both enables the realisation of your management’s ideas and empowers your staff and customers to communicate and transact knowledgeably, effectively, efficiently and consistently. Finally, there remains no substitute for local human contact when a customer wants it, and especially when something has gone wrong; and any system must take that into account.

Where it all went wrong

The CRM idea held forth great promise but it got a bad name because:

1 Too many suppliers applied the label to offerings that were worlds away from CRM.
2 Too many suppliers did not appreciate the difficulties (or the methods) of achieving a single-customer view and wound up building systems that treated the same customer as different customers.
3 Even when the technology was good, users and suppliers alike either did not try to achieve, or simply failed to achieve, the necessary concomitant organisational changes of vision, objective and procedure among the management and staff who had to use the technology.
4 Boards have had too restricted a vision, or a misconception, of what CRM is. Yet any CRM implementation must be driven from the board down because, in its very nature, it is enterprise-wide. Piecemeal “solutions” with incomplete data have been implemented under the banner of an incremental approach. Similarly, some Directors have pursued CRM implementations primarily as cost-saving, rather than revenue-generating measures, often cutting out the local human contact, even in extremis, that many customers want.

Unfortunately, all of the above is still going on.

CRM disabused

With sensible treatment strategies and a true 360°-view of each customer, the revenue-earning, and cost-saving, opportunities are self-evident; which is why so many still pursue the dream. There is a Biblical proverb: “Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life.” (Proverbs 13:12). Certainly a good number of people seem to have been made sick by the unrealized hopes of over-hyped, wrongly-sold and very expensive CRM implementations. But that shouldn’t kill the aspiration. I remember someone telling me as a young man that the answer to abuse is not non-use but correct use. It was good advice. The idea of CRM has been much abused but it should not therefore be discarded. Only when we use it correctly will we truly realize its value.