The Growing Split in CRM. And How To Heal It

A few months back I wrote a post called What Exactly is CRM?. It generated a great deal of discussion within the CustomerThink community and outside it too. But as expected, it didn't answer the basic question I posed. Nobody seems to know what CRM really is.
In my daily work as a CRM consultant and interim manager, I see a growing split in what CRM means to different people. Two almost diametrically-opposed groups are developing CRM in their own separate directions. A bit like a dysfunctional German family whose northern Hamburg wing cannot bring itself to talk to its southern Münich wing. Misunderstandings are bound to happen. Despite their common ancestry, there are signs that the two CRM family wings don't really understand each other anymore either. But it needn't be this way.

The first of these wings are the Customer Experience-driven Managers. Disappointed by the one-sided nature of much of what passed for CRM in the past, the CEMers have developed the customer-focus of CEM to counter-balance the company-focus of CRM. And they have good reason to do so. Putting aside the high documented failure rate of CRM (which had nothing to do with the company-focus), CEMers base their wing of CRM on three foundation stones: On recognition that long-term value can only be created when both the company and customers win, on an understanding of how customers stitch individual touchpoints into end-to-end experiences, and on recent research into the neurobiology of experience that highlights the importance of subconscious emotions and feelings at individual touchpoints.

CEMers have made a strong case for their particular development of CRM. But making CEM work is proving much harder than the CEMers thought. The business complementarities that doomed many CRM projects to failure are even more complex and difficult to manage in CEM. And many CEM projects are failing as a result.

The other of the wings are the Customer Analytics-driven Managers. Spurred on by their early successes in customer-analytics, the CAMers have redeveloped and refined their analytical tools to better target customers with winning offers and just the right moment. And they have good reason to do so too. CAMers base their wing of CRM on three different foundation stones: On the growing sophistication of analytical methods which have become very effective at targeting customers, on increasingly cheap computational powers which means that even complex analysis can now be run on cheap laptops, and on the undoubted successes of analytically-driven companies like Capital One, which reputedly runs tens of thousands of marketing experiements a year to see what works.

And unlike CEM, CAM works extremely effectively almost everywhere it is applied. But despite these successes, many have a nagging doubt that it is building a tragedy of the marketing commons out of all the customers who do not take up their precisely targeted offers.

Who is right? The CEMers with their customer-focus or the CAMers with their analytical-focus?

My belief is that both are right, but only when they use the new discipline of Customer Lifecycle Management to bridge the gap between the two. CLM does this by building the customer experience one touchpoint at a time. How each touchploint is developed is based upon an understanding of what outcome the customer is looking at from the touchpoint, econometric analysis of the company's different options available at the touchpoint and a capabilities view of how the company can deliver the customer's desired outcome profitably. This often requires collaboration between different parts of the organisation. This 3C approach works very well at both optimising individual touchpoints and in stitching them together into something that works over the end-to-end customer experience. One that delivers just enough value for customers to keep them coming back for more and just as much profits for the company as it can generate sustainably. And it works, just ask Tesco who use extensive customer analytics to decide exactly how certain touchpoints should be customised around small customer groups. Over 10,000 different customer groups to be exact.

What do you think? Has your organisation fallen prey to one the two wings of CRM? Or have you combined them both into a winning proposition through effective Customer Lifecycle Management?

Post a comment and get the conversation going.

Graham Hill
Independent CRM Consultant
Interim CRM Manager