Is CRM Really About the Customer?

One reason CRM practice is at a standstill and why so many companies are failing to see a return on their CRM investment is that, because of its celebrity, the label “CRM” has been loosely (and often incorrectly) applied to anything that suggests customer-centricity. It is almost impossible to hear a common definition of CRM from industry experts, even among executives within the same company.

Some think CRM is a matter of technology. Some still believe it’s just the process of segmenting customers. Some think it’s a matter of selling efficiency. Many marketers still think CRM is just an advanced stage of database marketing—using your customer database to find which customers would be the right ones for a specific product offering. They don’t yet understand that relationship building must start with an understanding of the customer’s needs. They talk about “share of wallet” but fail to realize that you can’t get access to the customer’s wallet if you don’t first have access to the customer’s heart and mind. As our customer said in the beginning of this chapter, CRM ought to be about making her life easier. Do that first, and then you’ll gain access to your customer’s heart and mind.

CRM Practice at a Standstill

Industry consultant David Raab says, “Customer relationship management has now reached the awkward stage in its adoption cycle. The concept and its benefits are widely accepted, but few complete implementations are in place. What’s lagging is CRM practice.” It may just be that we’re going about customer relationship management in all the wrong ways. Len Ellis, executive vice president of enterprise strategy, Wunderman, New York, says all the talk about CRM reminds him of what Voltaire said about the Holy Roman Empire:

It’s not holy, Roman or an empire. There’s a certain degree to which CRM is not about the customer nor is it about relationships—at least not how it’s practiced now. Marketing automation is fine, but it’s not about the customer. Most marketing automation is about costs and speed. Selling efficiency is not about the customer, it’s just about leveraging your resources. Value maximization, in terms of figuring out which of your customer segments are going to deliver the most top or bottom line, that’s not about the customer. So a lot of the benefits that are claimed for CRM are really benefits that accrue to the enterprise, but have nothing to do with the customer.^[4]

Handing Over the Car Keys

The fact that marketers must recognize the power of the customer is not a new concept. As far back as 1936 the American Marketing Society began publishing the semiannual Journal of Marketing. In the first issue John Benson, then president of the American Association of Advertising Agencies, talked about looking ahead after difficult days. Except for his outdated use of the personal pronoun, this excerpt could have been written today:

As a form of commercial intelligence advertising must keep abreast of this fast moving world. One has to run pretty fast these days to keep from falling back.

The depression undermined much that we had thought was solid as a rock. Seven lean and desperate years put all tradition to the test; billions of property lost; millions of people without jobs. Such a collapse could not occur without business itself being put to a drastic test. Our ideas of doing business have been challenged and are being weighed in the light of a new point of view as to what is economically sound.

...The common man is out for an equal chance to win; the buyer, be he large or small, wants full value for his money as much as anybody gets; and as you well know, the consumer is king.

Perhaps hereafter we shall use less ingenuity in the way of fanciful appeal and more in finding out what people really want. The consumer himself is boss.^[5]

Today new technologies have given even greater power and freedom to customers. Customers, not companies, control the purchasing process today by having access to more information, and having it in real time. The Internet has given them unprecedented research tools. A customer shopping for a car today may enter a dealership with more knowledge about models, options, and price than the salesman on the showroom floor may be aware of—if she hasn’t already made the purchase on the Web. What does this mean for marketers? That we need even greater ingenuity in finding out what people really want—and giving them control—than we did sixty-some years ago when John Benson gave us this advice.

People are more comfortable when they feel they are in command. We see this in simple things. For example, when I feel the first sign of a cold coming on, I start taking cold pills. For some reason I don’t feel comfortable with the promise of the extended twelve-hour tablet. If I use the four-hour version, I feel more empowered to control the dosage. In a similar manner, customers want to determine the channels and dosage of marketing they receive. In a recent Yankelovitch study of marketing channel use, the need to control channels was constantly in the background of consumers’ responses.^{[6 ]}Larry Kimmel, chairman and CEO of Grey Direct talks about this consumer desire for control, giving his belief why both direct mail and catalogs remain in such high favor with consumers, even though responding via telephone and online or e-mail channels requires less effort.

Direct mailings and catalogs can be viewed when convenient, or easily ignored by a customer. “They’re controllable,” Kimmel says. “In the phone situation there is a possibility of being talked into upgrading. Some consumers don’t want to engage in that.”^[7]

^[4] “Great Expectations,” Annual CRM Roundtable, Direct, March 15, 2002, p. 28.

^[5] “The More Things Change,” Retail Ad-Week, September 24, 1990, pp. 4–5.

^{[6 ]}Richard H. Levey, “Consumers: A User’s Manual,” Direct, August 2002, p. S7.

^[7]Ibid.