Why CRM Hasn’t Helped

Hint: R really does stand for relationship

Customer Relationship Management (CRM) was originally developed as a way to improve customer experience, under the banner of an “IT-enabled business strategy focused on the development and maintenance of mutually beneficial relationships between the seller and his buyers.”

But it hasn’t improved the customer experience much at all. The issue is simple: CRM doesn’t actually track relationships or experiences, it tracks transactions. As a result, CRM doesn’t take into account the customers’ views of the company, and doesn’t capture how these interactions make customers feel, much less what they want or need.

Yes, CRM does a great job tracking company perceptions of value, and tracking those interactions that are important to the company – sales, marketing, service, etc. – but it fundamentally misses what customers think, feel, and want as a result.

It delivers an inside-out perspective that means the conclusions reached by companies about customer relationships are skewed, based on the interactions that occurred rather than the customer perceptions that resulted.

While CRM can tell the company that two customers have the same set of interactions, it can’t tell which customer is delighted, and which feels trapped, upset, and may be actively bad-mouthing the company online. This is important information.

Billions of dollars were invested in technology to deliver better customer experiences. So what happened?

Today, most CRM implementations are simply data stores of the company’s view of the customer, corralling and distributing what a company knows about its customers while capturing – in some cases – individual customer interactions.

So you’d think that the billions of dollars invested in CRM each year would help companies avoid being so stupid. Add billions more in sales force automation (SFA), business intelligence (BI) and other enterprise-wide technologies to the mix, and you’d expect customer satisfaction and customer intelligence to skyrocket.

After all, in theory the combination of these technologies gives companies the ability to remember everything about their customers and their interactions, and give customers what they really need. Well, not really.

Why not? The answer is simple. Just because a company can remember “everything” by collecting more data doesn’t mean they bother to use it.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

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