Executives on a recent panel say flawed practices and operations within companies, not CRM technology, are to blame for CRM failures.
Posted Dec 6, 2002
A recent panel discussion on marketing innovations over the past 20 years suggests that much of the blame for CRM failures is due to flawed practices and operations within companies rather than to CRM technology.
The panel, sponsored by online magazine Reveries, included David Norton, vice president of loyalty marketing at Harrah's Entertainment; Michael Schrage, codirector of MIT Media Labs E-Markets Initiative; Joe Dobrow, executive director of the Cal Ripken Sr. Foundation; and Spencer Hapoienu, president of Insight Out of Chaos, a database management and analysis firm, based in New York.
Schrage says the problem with CRM is that "it's not about customers, it's not about relationships, and it's not about management."
What CRM is currently, he says, is a technical system designed to let companies do a better job of managing what is perceived to be "relevant data" about customers. "It's value-added database management," Schrage says.
All four panelists agree there is a healthy amount of fresh and inspired thinking about marketing, and that CRM can play a key role there. However, most of the panelist say that creative developments fail to materialize due to cultural disconnects within companies. Dobrow blames this on corporations obsessed with technology and using it as a surrogate for innovation.
He also notes the need for a "rabbi within the company" to get behind an idea and see it through. Others agree with the practice of having a senior executive to shepherd ideas, as well as to evangelize ideas at all levels within the company. Norton also emphasizes the importance of early buy-in at senior management levels.
However, Hapoienu feels there is currently a "big vacuum" in marketing leadership. The vast amount of media channels and message-delivery options add to the confusion. Most feel that CRM, while central to marketing innovation, is falling short of its potential, often because marketers get wrapped up in the tools, rather than thinking how to drive more value for their customers.
Most panelists also note that marketing campaigns are never stuck to long enough to learn the real ROI.
Dobrow proposes a back-to-basics move that might help. He says marketers need to get back in that mindset of making sure every customer that touches you is recorded and responded to.
Hapoienu goes further, asking companies to use CRM as "a strategy that envelops the organization." One way to do that is to spend quality time with customers. Schrage advocates companies adhere rigorously to the 20/80 rule: Pursue the 20 percent of customers that generate 80 percent of the revenues, profits, investments, and learning.
Finally, most agree that there is a huge need to educated employees about the importance of connecting with customers.
Norton says that over the past four years Harrah's has been able to take transactional data, understand who the customers are, understand what kind of share-of-wallet it is getting from these customers, and then tailor its messages and offers. Initially and primarily, Harrah's is still doing that through direct mail, but increasingly through telemarketing and email as well.
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