Once upon a time (or in the late 80s to be specific), someone invented the CRM system. Back then, it was referred to as ‘database marketing’ and although countless organisations jumped on board to start collating data, they simply hadn’t the resources to retrieve any actual conclusions from it or analyse it efficiently.
Fast-forward a few chapters to the 90s and technological advances meant companies could start achieving more with the newly named CRM. Now, they could learn more about their customers, gain insight into lifecycles, make more informed decisions and provide a better service through more efficient communication.
So why is it that, although we’re no way near the end of the CRM story, 75% of CRM initiatives fail to impact the customer experience? Worse still, 80% fail to return any ROI to the owner company themselves.
Let’s find out…
CRM assumptions are open to debate
For a CRM initiative to be completely successful; it must be based around four simple but rather permeable assumptions:
- Collecting data about people must mean you know everything about them and ultimately what their next move is going to be
- Customer behaviour must surely be influenced by timely, relevant offers
- Shifting from being entirely product-focused (where employee performance is based on how many product sales they make) to being entirely customer-focused (where employee performance is based on the level of customer satisfaction felt by the consumer) is a logical and non-transparent move to the customer
- The profits derived from the CRM system must outweigh the costs of installing and maintaining it in the first place
Some industry experts argue that CRM systems today have not moved on that much from the database marketing systems of the 80s. Yes, they have far greater and more extensive features, but they’re still unable to really pinpoint and predict behavioural changes.
Are we still just targeting segments?
CRM marketing (or ‘one to one marketing’) and database marketing, although largely linked, are in fact two separate ball games. Database marketing is largely aimed at customer segments and marketing directly towards them, plus building on existing relationships with customers through loyalty communications.
CRM marketing on the other hand, requires a larger data source and more expensive software, aimed at determining and influencing the behaviour of consumers with the data collected about them through one to one marketing.
As an example, let’s think about sports purchases. Joe Bloggs might be a keen runner and make regular purchases of running shoes and gear but then he might get injured and decide to switch his focus to cross-training so invest some money in swimming and cycling gear.
Would your CRM system be able to predict that Joe is going to get injured and switch from spending hundreds on running gear to an entirely new sport or would you constantly bombard him with e-mails reminding him of his passion which could frustrate him and cause him to opt out and switch to another brand when he’s all healed?
The same principles can be applied to anything – eating, taking a trip, joining a new club or attending a new university. CRM systems today can collect a lot of information, but they simply can’t collate enough relevant information to make precise predictions.
Of course, there are exceptions. Banks will be able to predict when a particular customer is likely to buy a particular product – such as when an undergraduate will need a student loan or when a couple that have rented for a number of years and are looking to purchase their first property will need a mortgage lend.
Car lease companies will also know when their customer’s lease is due to expire and that they’ll be considering either purchasing the vehicle outright or looking for a new deal.
How to avoid becoming a CRM car crash
To truly gain from your CRM system and ensure your company doesn’t end up a statistic (or at least, not a negative one), make sure you’re not expecting too much from your CRM system by devoting so much time to it that you’re forgetting other crucial areas of the business.
Remember, customer loyalty can’t simply be fast-tracked by mailing lists and technology. The real CRM successes lie with organisations that learn from their customers and apply those responses in a timely, considerate manner.
It’s not enough to just respond to a customer complaint promptly via social media – you need to realise why they have complained, whether it’s likely to happen again, whether others are having the same issues but switching to a different brand instead of flagging it with you and decide how you’re going to reassure people that the issue won’t arise again.
Investing in and developing a wide range of resources (investing in your brand, distribution networks, supply chains and expertise other than your own) along with the subtle (and remember, they are subtle) predictions your CRM makes in consideration of your customer needs is where the real value can be found.