CRM: Not the Floor Wax and Dessert Topping You Thought it Was

From the "what did we learn today" session we try to do around here at the end of a week, comes this little revelation: CRM is still misunderstood. We know, shocking, eh?

We're in the throes of preparing a new digital marketing technology strategy for a client, and part of that process of course is interviewing.  So, it probably shouldn't come as any surprise to us (of all people) to learn that if you put 2-3 sharp people in the same room and ask them to define CRM you get four  to five answers.  Actually, you get a vigoroous disagreement amongst them that nearly derails the project.

For one person CRM is all about database marketing.  For another it was sales force automation, and for a third it was customer service.  Of course, we asserted that CRM is Brand Management.  And that certainly widened some eyes (turns out in the end, we gained agreement on our definition, and we quickly called it a "wrap" observing that it was Friday after all, and sunny out.)

Here's the main thing: there is really nothing new about the basic concepts of CRM. 

After all, marketing has long urged their Companies to “to get in touch and engage with their customers” and then effectively build to suit their (products, services, encounters).   For nearly 2 decades now the leading edge of marketing (us, humbly included) have been evangelizing the importance in the 3rd Age (the digital age) to realize a shift to consumer-centricity and the power the Internet provides for direct-to-consumer commerce.

To put a fine point on the real issue: the challenge has been to figure out how to implement this concept in a cost effective manner for more than a few key strategic customers.  So in practice, relationship management or marketing (whichever "m" word you like) has only been applied in key account situations, and frankly by virtue of the phrase "key account" generally the Company and customer are already in the 3rd, 4th or 5th stages of the customer life-cycle (i.e., "consideration" "selection" or "satisfaction").

The rest of the time, mass-marketing principles have been employed.  So, the strategic concept of CRM has been to employ information technology to create highly personalized learning-based relationships by moving customer "ownership" up to the corporate level from the sales person or channel.  And if this could not be done affordably for all customers, then the mandate has been to focus on the most valuable customers on an RFM basis.

Add in the Internet and some churning out of innovations during the dark years between Web 1.0 and Web 2.0, and now we have a wide range of marketing technology to identify, track, and interact affordably and effectively with N customers in a highly personalized, tailored and targeted manner.  The unintended consequence of this, however, is for Companies to see CRM as marketing technology itself, rather then the reason the technology came about in the first place.

So, it seems once again we need to emphasize that CRM is an attitude, a philosophy, a set of principles, and even an ethos, but not an application, platform, software, or system. 

In fact, CRM is Brand Management, or perhaps more specifically, "managing brand engagement."  It is the direct 1:1 conversations between the customer and the brand.  And CRM can be implemented with a number of marketing technologies. 

The best CRM results are obtained in those Companies who recognize that if they make and sell a product or a service to a consumer that their busines must be "consumer centric" not "product centric."

Before any strategy can be set, or changes can be made in the Company's I.T. or M.T. infrastructure,  management must become very clear about what CRM means to it's business and why it wants to proceed.

But its equally important to understand what CRM it not.  CRM does not replace, but rather complements other marketing and customer service initiatives. For example, CRM cannot replace market research.  A well executed CRM strategy will employ systems to create and manage detailed profiles on customers and their longitudinal behavioural data. This will enable the marketing team to understand what particular customers are doing (and make possible cross-sell and up-sell opportunities).  But market research remains essential to understanding (non-customer) consumer behaviour and forecast shifts in that behavior relevant to the Comany's business.  In other words, while a CRM strategy should strive to attain a so-called "360-degree view" of customers, it must be integrated with all aspects of the business  in order to do so, and complemented by other marketing tools to provide the broadest possible overview.

Therefore, our parting shot is CRM is still misunderstood.  Our insight this week is that we need to better help our clients understand that CRM is a process.  We think the key is to equate CRM to the challenges of brand management, particularly in this always-on digital age.

Time for cocktails.
Cheers!