What Is CRM?

Everybody who profits from CRM has his or her own definition of what it is. But everyone agrees on what it is not: CRM isn't about technology any more than hospitality is about throwing a welcome mat on your front porch.

Liz Shahnam, CRM analyst with the META Group, says CRM is "a buzzword that's really not so new. What's new is the technology is allowing us to do what we could do at the turn of the century with the neighborhood grocer. He had few enough customers and enough brainpower to keep track of everyone's preferences. Technology has allowed us to go back to the future to this model."

Properly understood, CRM is "a philosophy that puts the customer at the design point, it's getting intimate with the customer," in Shahnam's words. Mike Littell, president of the CRM Division of EDS agrees: "We view CRM more as a strategy than a process. It's designed to understand and anticipate the needs of the current and potential customer base a company has." Once you nail that, Littell says, there's "a plethora of technology out there that helps capture customer data and external sources, and consolidate it in a central warehouse to add intelligence to the overall CRM strategy."

Jim Dickie, managing partner of Boulder-based Insight Technology Group, says that while the basic idea behind CRM is simple, implementations are often bollixed because "CEOs are suffering from techno lust, in love with shortcuts, and are operating with a sense of urgency. As soon as anyone in any industry does this right, everyone else wants to jump on the bandwagon and have an instant solution." When a CEO sees the technology her competitor's using to bash her brains out, she simply orders the same stuff for her company. "There's so much pressure on CEOs to do it now that they usually manage to avoid doing it right," Dickie says.

Buying technology before you have your CRM business goals clearly in mind leads to disaster. Dickie told of one CEO who had both a failed and a successful CRM. Dickie asked him why the first one had tanked, and the man told him "I went out hunting with the wrong dog." Of course: if you're hunting badgers you take a basset hound, they're built for that, but they'll die if you try hunting foxes with them. You don't take a foxhound duck hunting, he'll drown, you get a retriever. Identify your quarry, pick your dog.

CRM and marketing expert Dick Lee, principal of Minneapolis-based High- Yield Marketing and author of The Customer Relationship Management Planning Guide and the soon to be released Customer Relationship Management Survival Guide agrees. Lee describes CRM as "a customer- centric business strategy, which drives changes in functional roles in the company, which demand re-engineering of work processes, which is supported, not driven, by CRM technology." Translation: First you change your business approach, then you re-engineer the roles in your company to support that new approach, then—and only then—do you start talking to vendors.

Front Line Solutions President Bob Thompson even maintains that "none of the elements of successful CRM necessarily has to include technology. CRM is simply a process with the goal of making relationships profitable. To reach this goal, marketing, sales and service must work more as a team and share information. Computerized CRM applications make this possible."

While Lee agrees that the most prevalent misconception among CEOs is that CRM is about the software, "you can show the CEO he's wrong about this-because beneath the idea that CRM is software is the idea that your company can become more customer-friendly without changing the organization." Lee cited the recent Wall Street Journal article on the General Motors audit on what the company would have to change to be able to make cars to order. The answer? "We'll have to change everything."

If it sounds like we're picking on the CEO, it's because we are. Simply put, successful CRM is a painful, fundamental changes in how a company is organized, the sort of changes that need the CEO's backing. No handing it off to some terrified vice president to run with until she fails, she doesn't have the clout to make the enterprise-wide changes across divisions the CEO does, and which is crucial to CRM's success.

Bill Brendler, president of Houston-based Brendler & Associates says bluntly "successful CRM always starts with top management. If they don't lead the charge, it won't happen." Change in an organization that's established is difficult. That's where the real heavy work comes in. "People want to slam-dunk the technology, but we try to tell them it's not about tech it's about a new way of doing things, a new way of doing business," Brendler says. However, "most of them don't have a clue. They just have no idea what I'm talking about."

Not that we expect perfections. META's Mike Gotta reminds us that when it comes to CRM, "we're babes in the woods, we're experimenting. Does the customer want to talk to us through email? Does the Green Stamps model apply? We're learning."

But "the vision thing" is indispensable, Brendler says—along with a healthy dose of commitment and guts to lead the charge. As a wise man once said, where there's no vision the people perish. If a CEO doesn't really get what CRM means for the company, Brendler says, "I know it's going to fail. One CEO told me 'we're turning the vision over to the employees.' Then he stood up there and gave a speech someone else wrote and everyone in the company knew it. He thought it was just a matter of slam-dunking some technology, oh and by the way someone told me this'll get us on the Internet."

Corporate boards are rarely all on the same page when it comes to CRM. One consultant recounted two corporate board members throwing coffee at each other when discussing CRM ("but one went to Ohio State and the other went to Michigan," he added by way of explanation.) Brendler himself says "I've seen fistfights among top management in a conference room in an organization that's a household name."

Whichever CRM definition you prefer, one wit's assessment of CRM as practiced in the real-life business world today, that of being like a high school locker room, unfortunately rings true: lots of talk, but not much real action.