Is CRM simply a piece of technology or a philosophy for effective marketing? Alice Johnson reports on current attitudes to this controversial acronym
Customer relationship management (CRM) has a long and chequered history, and continues to create controversy today.
CRM technology was touted as an enabler for new paradigm for marketing in the mid-1990s, but the hype died down when first-generation solutions failed to match up to vendors’ promises.
Several reasons have been proposed for this fall from grace. One of the most prominent is that ‘one-size-fits-all’ solutions could not possibly be utilised by every type of business, each with differing structures, vision and client-base. Those companies taking the plunge often found lack of employee commitment and buy-in an obstacle, and that outward-facing CRM solutions conflicted with inward-facing IT systems: their functionality didn’t facilitate meeting the objectives required. Consequently, reports of failed implementations were numerous and widespread.
The face of CRM changed after this, and both IT and marketing decision makers became increasingly cynical about vendors’ hype and the potential of the technology. However, marketers continued to embrace the intellectual concept of CRM, and the importance of a coherent, consistent and structured approach to customer communications and interaction, although not necessarily managed through a dedicated application.
More recently, vendors have responded by adapting their product offering. The unwieldy first-generation solutions disappeared, replaced by more tailored and flexible solutions that increasingly took business vision and culture into account. Packages became more responsive to users’ needs, with innovations including sales-force and marketing automation, analytical tools and data-support functionality.
How effective has this new approach been in breaking down the resistance towards, and cynicism about, CRM applications? Do B2B companies in 2007 really need to go to all the trouble and expense of implementing such a solution? Or are there easier and cheaper ways of achieving the same objectives?
The view that CRM is a technology first and foremost is countered by many observers who argue that the ‘R’ in CRM cannot purely be based on software with database-type functionality.
From a marketing communications perspective, of course, technology is not fundamental for CRM and agencies in particular are eager to downplay its importance. Michael Beattie, planning director at marcoms agency Toast, comments, “My view is that CRM is a philosophy, not a technology. If you unpack the acronym, ‘R’ is the most important: ultimately it’s about relationships, not software.”
He continues, “Treating CRM as a technology reeks of a world run by the IT department and accountants; it’s ghastly. It’s not a scientific recipe where you stick in the ingredients and get a happy customer. You can’t input data and expect a relationship to pop out at the end. The entire customer experience with the brand is related to CRM; it’s not just about software.”
Jaakko Alanko, MD of McCann Erickson Business Communications, agrees in part, although he does see some redeeming features of CRM software. He comments, “Often, CRM is a modern buzz-word for saying that you need to stay in touch with customers, and customers are the best new prospects.”
Alanko concludes, “CRM has almost decapitated the most important thing, the customer, out of its proper context. It shouldn’t be a gizmo, it is more like a stream of consciousness.”
Despite its initial failings, the notion that CRM is simply a software solution still exists amongst some vendors, who – not surprisingly – believe that technology must still be at the heart of any CRM strategy.
“I wouldn’t call it [CRM] a business philosophy,” says Mark Woodbridge, consultant at vendor Seelogic. “CRM software is a tool that enables the increased effectiveness of processes. If you are using it to maximise the effectiveness of a supplier, for example, then a CRM tool is essential. It is a technology, as it is very difficult to put together an encompassing view of customers as prospects without a database functionality to do that; which is what CRM is.”
Other vendors, meanwhile, have become less adamant that the technology is a cure-all, preferring to talk more in terms of partnership with users. This is often a reflection of the nature of the new breed of CRM systems, many of which are hosted applications.
Justin Barlow, marketing manager for new business at Sage, comments, “CRM is both a technology issue and a business philosophy; you can’t really have one without the other. If you do, then you are not realising its true benefits. Both should be used to reinforce the brand.”
Customer responsibility management
Whilst some vendors are embracing the need to see CRM as part of a wider business philosophy, there remains much cynicism about the technology and its benefits. Arguably, the key sticking point is leadership, with many practitioners still reluctant to allow the agenda to be dictated by a software application, rather than a human being.
Beattie at Toast comments, “Communications is at the heart of everything, as everything is a conversation between a brand and its consumer; therefore, choosing what to say and where, when and how to say it is a marcoms strategy. What a piece of software might say is ‘communicate with your customers six times a year’, but it can’t tell you what to do or give you an engaging piece of communications that says what you want.”
Ian Wallace, MD at CRM reseller CABC, counters this statement, “Marcoms is one department, with one activity that may use CRM to help them. It’s definitely not the heart or the driver. In the same way as software is there to help carry out jobs properly, marcoms is one function,” he says.
The broad nature of CRM as a philosophy means that it cannot be the responsibility of a single department to develop, implement and maintain.
A happy medium
It is clear that CRM, and its associated technology, has come a long way in the last 15 years. Initial enthusiasm was replaced by cynicism, which in turn appears to be gradually replaced by cautious optimism and a mature insight and understanding of what is involved, what can be gained and at what cost.
This is reflected in the way that the CRM vendors themselves are promoting their products and services. Barlow at Sage comments, “Ten years ago, CRM systems were being sold as IT solutions on their own. They didn’t address the people issues. Businesses jumped on the CRM bandwagon without understanding the implications. CRM technology companies were pushing the product 10 years ago, but now they are looking at customer requirements as a way of allowing businesses to achieve their objectives.”
Whether this more realistic and responsible approach to marketing is successful in completely rehabilitating what has been a much derided and often phenomenally expensive waste of time and money remains to be seen. For some, it will certainly be a long-term process, and a huge education challenge for the vendors.
Ultimately though, marketers cannot afford to ignore CRM technology altogether, as despite its numerous pitfalls, the benefits it can potentially facilitate are enormous.
However, to leverage these, they face the considerable challenge of finding the right product for their needs from the right vendor, with the right attitude, at the right price and with the right support. Even if they acknowledge the technology’s potential, this may simply prove too much for some marketers.