Why We Can't Implement What We Don't Understand

When I meet someone who says he is implementing CRM, I always ask, "CRM management" or "CRM marketing"? You would be surprised at the number of times the term CRM (which I believe should include all aspects of customer relationships) is used to describe narrow marketing programs, loyalty programs and marketing automation software implementations. In fact, I recently visited a leading CRM site to eagerly read a promising article about CRM only to discover it was about a financial institution's marketing program.

Not that I have anything against marketing--I worked on that side of the house. But when CRM is perceived only as a marketing term, and when people walk up to me at trade shows and tell me they've had CRM initiatives for 20 years by doing these types of things, it's clear that many understand only a small part of the big picture. Perhaps that is one reason why the failure rate for CRM implementations is so high?

The beauty of true CRM is the promise that companies can now undertake business with the right hand knowing what the left hand is doing; serving the customer on his/her terms using complete and meaningful information. I call it "getting your act together" before you "take it on the road." In all the years I worked in marketing and communications, when customers, who received our compelling marketing epistles, called an inquiry into the company, there was often no knowledge of the miraculous offer at the company's end of the line. This is because we didn't have complete CRM back then. But we do now. The question is: Is your company trying to do CRM marketing or CRM management? And does everyone in your company understand the differences and the interconnection between the two?

Here's an attempt to communicate the concept of complete CRM in terms every staff member can understand (and it's important everyone in the company understand, before you move to implementation). Complete CRM is a new way of conducting business, underpinned by technology, that encompasses three main aspects: organizational, analytic and collaborative CRM. So, what's the difference between CRM marketing and CRM management? CRM marketing deals with only two of the three main areas of CRM: analytic and collaborative. CRM management, on the other hand, has only been achievable for a few years in its complete sense. It evolved out of technology built for managing contact information, applications for the sales department and other separate technologies, such as call center management.

Now, of course, there are CRM technology solutions that span the enterprise, allowing all departments to see a 360-degree view of customer preferences, purchases, payments, etc. The idea is that these systems pull data from other systems in the company that store financial, fulfillment, billing and other relevant information. But while technology enables CRM management to exist, CRM is not purely about technology. It is about understanding who your various customer groups are, based on profitability, and then by unique needs. (Most companies track customers based on transactions.)

CRM management helps uncover which processes a company uses in serving these profitable customers. It focuses on servicing them better by providing only information they're interested in and eliminating any potentially damaging contact. Once this is understood, new processes are designed that suit customers (via preferred interaction channels), the internal organization is restructured to deliver these new processes faster and better (the idea is to create customer teams vs. separate, siloed departments to serve your most profitable customers).

CRM management software is deployed enterprise-wide to provide an internal communication structure so all employees in the company, who touch the customer, know what has and is supposed to happen in the relationship and how to respond appropriately (these rules are built into the software). Ideally, the CRM management software is configured to automatically deliver personalized responses and allow self-service for those customers who prefer that route to purchase. This is the first part of the vision called CRM management. Sounds easy, huh? Most companies can't even get this far.

The second aspect of practicing complete CRM is to incorporate CRM marketing capabilities such as CRM analytics and CRM collaboration or interaction (messaging). This is the discipline of understanding how to gather appropriate information and use that information to better serve individual customer needs. These analytical tools slice and dice incoming data (from the CRM management system) to put the appropriate response into the right customer hands at the right time. They can also be used to predict customer behavior and needs.

The third aspect of undertaking complete CRM is to understand how you will communicate and learn from these customers to build and continue a satisfying relationship. Using a combination of CRM collaboration or interaction tools, (along with analytics tools) your company will make contact with customers, carry on a personalized conversation and satisfy their needs. While these second and third elements fall into the arena of CRM marketing, they need to be considered and evaluated based on the complete CRM initiative, and considered during the initial planning and implementation phases.

Management vs. marketing is about first getting your internal house in order--based around your high-value customers' needs. Only then is it appropriate to take customer learning and communications programs on the road through CRM marketing initiatives. Until companies are able to understand these distinctions, they will continue to confuse and collide the two concepts, producing muddy strategies and cumbersome software infrastructures. Basically, they simply won't "do" CRM management or CRM marketing very well--not to mention the constant alienation of customers.