Customer Relationship Management Myths
So you’re doing CRM, I heard? Or are interested in it? Then let me tell you: don’t believe a word out there! I just returned from ZD Events ‘CRM 99 Conference’ in San Francisco, and have the news for you that the guys in the USA – with very few exceptions – are way off track. In fact, they seem to have misunderstood the entire idea behind CRM, and therefore developed a narrow and short-sighted view of it that will soon be reflected in their business performance. Mark my words!
All messed up
CRM, as they see it, mainly revolves around Customer Support, Help Desks and Sales Force Automation. Little do they know that business intelligence, campaign management, as well as integrated communication channel management are also part of a much bigger picture, never mind the involvment of top management beyond just checking the figures.
There is more: in their narrow-mindedness and greed they think CRM is about cross-sell, up-sell, down-sell, sell, sell, sell! All they have in mind is MORE SALES! Why on earth they call it Customer Relationship Management is beyond me, particularly when the term SMCFL (short for “Screw More Customers For Less”) would have been more appropriate.
The interesting part in it is that those folks attending the conference are the ones who will suffer most from it, and not the customer or “the top brass”. Nope, it is they who will be expected to perform better and better. It is they who will be given more and more techie toys to be available 24 hours a day, 7 days a week, even at times and in places where no one should reach them – including the boss or a colleague.
In short: here they go, armed with dangerous half-knowledge and techie tools and toys that are hopelessly inadequate (yet still sold under the CRM banner), supported by consultants who are in the majority equally ill-equipped and un-enlightened, let loose on a market that is becoming more critical, discerning but also cynical by the day. A recipe for disaster in the making.
What is CRM?
Now that we know what CRM is not, what is it? I shudder at having to explain the whole thing, but now with the San Francisco ‘experience’ under my belt, it seems to be of more importance that I ever thought.
CRM stands for Customer Relationship Management, and is the latest of the buzzwords out there, driven into the market by both system vendors as well as consultants. But few know that it’s also the latest step in an evolution of market changes and customer empowerment.
A brief history
First there was Direct Mail, which was … mail sent directly to the customer. The origins were address lists, often compiled from many disparagate sources.
Then there was Direct Marketing, which was a more sophisticated version of Direct Mail. Technology was used to segment customers into groups rather than sending them all the same piece of communication. Also, as other channels opened up, it extended beyond mail.
The next step was Database Marketing. Now with DBM things started to change, because the real objective was no longer to get a piece of communication to the customer, bypassing middlemen, but to use the database for marketing purposes. This meant that the channel didn’t have to be direct, and the recipient didn’t have to be an external one, never mind only the customer (which ususally meant ‘end user’). In other words, something they call ‘business intelligence’ would also qualify as ‘database marketing’, because the origin is the database and the action likely to be marketing-related. Gotta be careful though, because this interpretation of DBM was mine, yet while staying in the States I found out that they had a completely different understanding of DBM – which, incidentally, was as narrow and short as their take on CRM.
Then came CRM, and you know now what ‘they’ think it is. However, let’s look at the term in isolation. Obviously, the C stands for Customer, and it is right at the front. In other words, the customer comes first. Notice, no word here about selling – cross, up or down. Then comes the R for Relationship. Now this means many things to many people. To me it means building and nurturing (and ultimately mutually benefiting from) an affinity between the company and the customer – the former being everyone in touch with ‘the other side’, the latter being everyone from a colleague to a supplier, a dealer or an end user. The M stands for Management, which essentially means the management of the customer relationship. Still no word about selling.
“But isn’t this what it’s all about?”, I hear you ask. The answer is ‘No’, CRM is NOT about selling. It is about rehumanizing the relationship between business and the customer, plus finding out what they need and more importantly what they DON’T need.
The “secret” of CRM
The deeper the relationship between the customer and the business, the more likely the customer will share personal or confidential information with the company, which the latter can then in turn use to develop products or services that other companies don’t or cannot offer. In other words, the relationship building process is meant to improve the research and development process, both from a time and financial point of view. Needless to say that this would also enable the organisation to cut costs regarding other services or product lines. So in the end you don’t necessarily sell more, but you sell smarter, which means you sell for less, which, as obvious to even the simplest thinking mind, increases profitability.
But there is more. The relationship building process is not only a means to an end in terms of enhancing decision making and streamlining the production and marketing process. No, it is also an end in itself insofar as it is becoming more and more important to show social responsibility. And believe me, there is no social responsibility without relationship building.
Looking beyond the obvious
Both social responsibility and relationship building require you to look beyond the obvious. Remember Life Time Value, the process of identifying your most valuable customer for the purpose of segmentation and … relationship building? Now traditionally, we would look at our high net-value customers, and as current marketing wisdom dictates, take special care of them, simply because they are worth a lot to the business, just like good old Pareto stated in his 20/80 rule.
However, this also implies looking at a closed cosmos, because these folks are already providing a high net-value, in other words they are worth a lot today. Sure, they need to be taken care of so that they stay with the business, but focussing entirely on them is foolish and short-sighted. Let me give you an example:
A bank customer with a low net value could have a son of extraordinary sporting talent. Now the parents don’t have the money to further their son’s education and training, but the bank, practicing good citizenship and social responsibility, could take that boy under their wings and support him.
Two benefits immediately spring to mind. The first one is that it’s highly likely that this boy, once grown up, will become a customer of that bank. Secondly, the bank could use this example in their tradtional advertising, as full colour ads still seem to impress top management beyond belief. In essence, both the traditional thinkers, plus the modern marketer and the customer could be pleased. A win-win-win situation allround, plus a piece of communication that could potentially be the source for more new business down the line. Makes sense, makes cents.
What did we learn? First of all, by looking beyond the obvious, we have opened new business opportunities. We have pleased both the guys responsible for short term results, those with the long term view, those with creative skills, and at the same time we have made a customer very happy. This would not have been the case if one had only looked at the net present value of this particular customer.
This was an example from the banking sector, but there is no doubt that the same is applicable in many other areas. All you need is to let your creative juices flow. Now this brings us to the final element in CRM – you! All your dreams, visions and plans are void and pointless if you don’t have the energy and capacity to turn them into action. Talk is cheap, you know.
Don’t get caught in the techie toy mania
So while the techie toys, which you thought would help you, make you work more and more, your general fitness and spiritual health is usually taking a fat dive. Convenience rules, and your brain gets more and more disconnected from the issues that really matter. So rather than using technology to get out of the rat race, technology’s got you right by the soft and curleys, ruling over you – and that includes the techie solutions the vendors try to sell you under the CRM banner. And you, now under more pressure than ever, will be frantically trying to find more quick fixes than ever; stuff that will drag you further and further down the vortex of personal, social and soon professional decay. Is that why you were brought to this planet? I doubt.
So what’s the way out, you may ask. Easy, CRM is the answer. Real CRM, I mean, not this stupid stuff the self-proclaimed gurus and system vendors want you to believe.
It’s all very simple
CRM to me is like love, trust and respect. First of all you earn it, you can’t buy it. Secondly, you don’t directly aim for it. It’s something that develops over time, and only if you get a number of factors right. Thinking it’s all about help desk or customer support software, or even integrated customer information systems is foolish. Sure, it’s part of it, but it’s not the end all and be all.
You need to look at business from an holistic angle, the very same way you will have to look at yourself from an holistic angle. And both entities need a complete overhaul, both in the way they ‘live’ and treat others. And once you’ve started with yourself, reenergized your own being, become physically fit and mentally balanced, you will see that this has an enormous, positive impact on your customer relationships and ultimately on your profitability too. Moreso, you will have more time, less stress and far more fun in your life. It won’t be easy though – I can tell you that much – but it’s worth every single step you take towards personal and professional enlightenment.
In the end, not only you will come out stronger, but your business or career too, plus your family and friends and customers will love you for that – and so will your boss. Need I mention that all this will have a positive impact on society too, that it will make life better for all of us? I don’t think this is necessary any longer.
Get it wrong – suffer the consequences
Restricting CRM to selling more and at all costs is as stupid as it is detrimental to the society we live in. Looking at it from a distance and taking its holistic nature into account though, will open up a whole new dimension for you. And don’t you dare think for a moment that this is all ‘soft stuff’. There are hard figures all over the place. It’s logical, practical and immediately applicable. You will actually see the first results tomorrow morning when you look into the mirror. Why? Because now, after reading this article, you are more enlightened than 99% of your colleagues. You’ve just acquired a competitive advantage if you want to call it such. But this one lasts forever, and it has no losers, only winners.
Edited in February 2005.