Why "CRM" Must Die for Customer-Centric Business To Thrive

As we ring in the New Year, it's time to bid farewell to "CRM." Why? Because after more than a decade it still doesn't have a commonly understood and accepted meaning.

What if you gave an "apple" to a friend, who became annoyed because it didn't look or taste like the orange that was expected? Or you bought a "gallon" of gasoline and received an amount that could fit in a coffee cup?

The meaning of words is so important that lawyers and politicians make their living parsing them. Remember former US President Bill Clinton trying to rationalize why he wasn't lying about his affair with Monica Lewinsky when he said, "There's nothing going on between us."

Of course, there was something going on, but Clinton explained it away like this: "It depends on what the meaning of the word 'is' is. If the--if he--if 'is' means is and never has been, that is not--that is one thing. If it means there is none, that was a completely true statement....Now, if someone had asked me on that day, are you having any kind of sexual relations with Ms. Lewinsky, that is, asked me a question in the present tense, I would have said no. And it would have been completely true."

Huh?

So what does this have to do with CRM? Simple, if we can't all agree on what "CRM" is, we don't have a fighting chance of being successful.

War of Words

In fact, "fighting" is precisely the right word. Consultants and vendors are in warring camps, each with vested interests in defining CRM their way. CRM has become a convenient label to sell stuff.

Consultants say CRM is an approach to business or process improvement. It shouldn't come as a shock to anyone that their "solutions" are packaged as consulting services.

Vendors define CRM as something you can implement via their technology. Sure, some give lip service to "CRM is a strategy," but do vendors propose non-technology solutions to solve a CRM problem? Right. About the same percentage as consultants who propose technology without any of their services.

Industry analysts are hardly independent bystanders. Most use "CRM" to define sets of "front office" applications (marketing, sales and service software). But CRM-as-a-business-strategy could, of course, be enabled with many other technologies classified in other analysis buckets, such as call center, performance management, feedback management or even (gasp) ERP.

It's no wonder that people are confused. Like the famous Indian legend of six blind men trying to "see" an elephant by touch, and each forming a very different impression, "CRM" can mean just about anything to anybody.

And now, Customer Experience Management proponents arrive fully armed and ready to escalate the war of words in a new direction. Is it part of CRM? An extension to CRM? An alternative to CRM? The answer depends on what you think CRM is. (Read my take on CRM and CEM here.)

Collateral Damage

And what of the collateral damage done in this war of words? You know, the companies that are supposed to "implement" CRM. Or the customers of those companies that are supposed to be more satisfied and loyal.

Our research has found that companies have enjoyed modest success with IT-focused CRM projects. About two out three projects are successful, whether measured by ROI or the perceptions of project owners and users. Yet, the vast majority of projects we've studied have not received strategic benefits—such as improved competitive differentiation, customer loyalty or profitability—to the extent expected.

Customers say "customer-centric" means things like "high-quality goods and services," interactions with "empowered employees" and "open and honest communications." (Source: Customers Say What Companies Don't Want To Hear.) Despite billions of dollars spent each year on customer-oriented technologies, there's been little or no improvement in customer-centricity over the past decade, at the industry level. Sometimes industry loyalty leaders use technology extensively (e.g. Tesco) and sometimes they don't (e.g. Southwest Airlines). But technology investments alone are not enough, or we'd all be a lot happier with the service we're getting.

Let's Burn the Great Ship "CRM"

When Spanish explorer Hernando Cortez landed his ships on the eastern shore of Mexico in 1519, it was to fulfill his dreams. But his sailors grew tired of the hardships and talked of returning home to an easier life. To ensure they were totally committed with no option of turning back, he ordered his men to burn the ships.

I've come to the conclusion that, for true success with CRM (the customer-centric business kind of CRM, in case you're wondering), the "ship" that must burn is the term "CRM." It's the only way to get everyone on board with a concept that's obvious: Without customers, there is no business, so let's take care of them. But this ship has sailed with far too few people on board.

My advice is to call CRM whatever makes sense to your organization. Call it customer management, customer experience management, customer managed relationships—or, if you insist, customer relationship management. But spell it out and define what you mean, because CRM doesn't have a commonly accepted meaning, and I'm now convinced it never will.

My definition of Customer Relationship Management, for what it's worth, is quite simple: the development and implementation of a customer-centric business strategy. "Customer-centric" means giving your customers what they want. "Business strategy" means accomplishing the goals of your organization. Accomplish both at the same time, and you've got the win-win that CRM is supposed to be about.

This year, instead of more debates of what CRM is or isn't, focus on developing and implementing a successful customer-centric business strategy.

Bob Thompson is CEO of CustomerThink Corp., an independent research and publishing firm focused on customer-centric business management, and founder of CustomerThink.com. Thompson is a popular keynote speaker, blogger and author of numerous reports, articles and papers, including Five Warning Signs for Danger Ahead on Your Customer-Centric Journey. Follow Bob on Twitter.