Chapter 1: Why Doesn t CRM Work? - Does the Customer Really Want to be Managed?

Overview

I’m not stupid. I read about what you guys call customer relationship management. Why doesn’t it work for me? Companies ask for my preferences and I tell them what I want from them. Still, each offer is more meaningless than the last. Why doesn’t your so-called CRM make my life easier?

Marketers hear this from so many customers that the question becomes, who’s the enemy? Is the customer the enemy or was Pogo right: “We have met the enemy, and he is us”? Our customers are crying out for us to understand their individual needs. They tell marketers what they want, but we keep bothering them with irrelevant offers.

In the preface to loyalty.com (McGraw-Hill, 2000), my book about CRM and Internet marketing, I said: “CRM is now moving to the center of corporate strategy as a process of learning to understand the values that are important to individual customers and using that knowledge to deliver benefits the customer really wants and making it easier for the customer to do business with the company.”

No one would question the fact that CRM has since moved to the center of corporate strategy. A Jupiter Media Metrix study reports that 74 percent of U.S. businesses spent more money on CRM infrastructure in 2001 than they did in 2000, with a majority increasing their spending by 25 to 50 percent. A Gartner Dataquest survey forecast that CRM services revenue would increase 15 percent in 2002.^[1] A similar Gartner, Inc. survey reports 52 percent of respondents rated CRM as their highest business priority.^{[2 ]}The same is true in Europe where a Cap Gemini Ernst & Young and Gartner survey of 242 senior marketing executives from 145 firms reports that 67 percent of respondent companies launched a CRM initiative between 1999 and 2001, and over one third consider CRM a top priority.

Taken together, what do these statistics mean? The acceptance of CRM has been confirmed. The enthusiasm for CRM has been proven. The investment in CRM has been quantified. But why have so many firms that have embarked on CRM initiatives failed to realize the kind of results they anticipated? In 2001 only one in five of all CRM solution providers actually realized a profit. As a group, solution providers lost $8.8 billion dollars, spending three dollars for every two dollars in revenue.^[3] CRM has obviously not been the panacea many had hoped.

^[1] “Gartner Dataquest Forecasts CRM Services Revenue to Increase 15 Percent in 2002,” Gartner, Inc. press release, April 9, 2002, p. 1.

^{[2 ]} “Retailers Say CRM Is Crucial But Few Are Implementing Initiatives,” Direct Marketing, October 2001, p. 12.

^[3]Gary Lemke, “CRM: The Perfect Storm,” Customer Support Management, November 1, 2001, p. 2.