Monday, March 16, 2009

From CRM to CMR??!!

I just came across this book called ‘Why CRM does not work’ by Fredrick Newell, it has a very conversational style to it and is not mundane. Just after the book released, Fredrick was interviewed by Sarah Powell, here are some excerpts of the conversation that I found really interesting and are definitely a food for thought for all of us who are into the Sales and Marketing field.

The major problem is a perception that Customer Relationship Management aka CRM can be implemented without changing a traditional product-based management culture. It's a huge challenge to reorganize a company around thinking the customer is more important. It's hard to change corporate culture and many companies have not implemented the appropriate training. Many CRM initiatives fail because of such organizational failings.

We still see far too many people in a company who resist change. Some are trying to protect their 'turf', fearing change because they believe it means they will lose power. In business-to-business marketing, a field in which I recently conducted some research, it has always been said that 'sales flies the plane and marketing serves the coffee' - for people to work together and share information will involve significant cultural change.

To build up a profile of customers, it is important to create a dialogue with them and this involves moving on from the old 'tell and sell' towards 'listen and learn'. This step alone would mark a big difference for many companies. Ask the right questions in the right way through dialogue and you will get good answers.

"This sharing of information is paramount. Companies may have considerable customer data but they keep it in many different departmental 'silos' which prevents them from compiling it to provide a true 360-degree view of the customer. Tremendous leadership at the top is needed to promote this sharing and I think that's the biggest challenge."

Personalization is an approach driven by the computer and using customer information, which serves up offers to individuals based on their shopping history; addressing them by name and using algorithms and models to investigate their propensity to buy. Personalization is, in effect, a 'pattern' for customers who are targeted through offers tailored to their preferences.

Customization meanwhile really puts customers in control, letting them select between options eg. with a bank client in Buenos Aires in which we asked the bank's customers to tell us how they wanted to be contacted - for example they could opt to hear from us by email for one product, and by telephone for another. That's customization - you let customers tell you what they want to hear and when or how they want to hear it.

Michael Dell founded his company on the principle of finding out precisely what his customers wanted and giving it to them - consequently every computer the company sells is custom-built for a customer. Interestingly, Dell's customer-focused approach was there from the beginning and he probably never even thought about CRM as such when as a young man at university he dreamed of creating a company. Yet, from the beginning he based his company entirely on the idea of giving his customers exactly what they wanted.

ROI vs CRM/CMR- Unfortunately not enough people are trying to do this. It involves, first of all, determining what you are trying to improve. Is it sales? Or is the aim to improve customer retention? Or are you perhaps trying to cross-sell more of your products?

The next step is to set some very specific goals and monitor them against a control group, purpose of exercises such as this is to change customer behaviour. You can then measure and prove ROI by noticing beneficial changes in behaviour. The goal is to keep customers longer, increasing their lifetime value and their advocacy for us.


Most has been how very slow management has been to react to the need to move towards customer management of relations or CMR. I feel as if I've been trying to sell this concept for a great many years - a good analogy would be if somebody walked down a street and saw a $100 bill on the sidewalk and thought: 'oh, I really should pick that up, it would be to my advantage to have $100, but I'm busy now; maybe I'll do it tomorrow.' This seems to have been the reaction towards CMR over the last several years. That said, I think it is changing now - people are finally trying to get on the bandwagon even though they sometimes don't quite understand the bandwagon they're on. There is still a tendency to believe it's all about the technology - but that alone just cannot make it happen.

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