At many firms,
technology obscures CRM
March 18, 2002
BY MICHAEL KRAUSS
is supposed to help improve customer relationships. The entire
customer relationship management (CRM) phenomenon is all about
improving customer relationships. But more often, technology simply
gets installed as a cost-reduction device, not as a relationship-building
Even a technology's
inventors can get fed up. Consider the late Gordon Matthews, creator
and patent-holder of voice-mail: Recent newspaper and television
news articles reported he frequently cursed the misuse of his
creation, and who could blame him?
when I tried to get customer service at a (here unnamed) long-distance
carrier, I found endless delays, messages and several disconnects.
Then, after waiting through lengthy queues, the agent who came
on couldn't resolve the situation. Only old-fashioned letter-writing
techniques managed to get my account properly credited.
In that case,
technology hardly improved my relationship with the phone company.
The technology interface was an obvious cost-reduction ploy, and
you can bet I reduced my reliance on that phone company after
I received my credit.
spend millions on CRM and the evidence is terrible," says
Robert Blattberg, co-author of Customer Equity: Building and Managing
Relationships as Valuable Assets.
a marketing professor at Northwestern University's J. L. Kellogg
Graduate School of Management, in Evanston, Ill., isn't just your
casual observer of customer relationships; he's spent much of
his academic career studying the subject and is the creator of
the concept of the "lifetime value of the customer."
In a recent
interview, Blattberg explained that companies often fail to see
their customers as assets. Despite the fact that more data is
available on customers than ever before, and more computing technology
available to manipulate that data, management still misses the
not like the tools don't potentially do it," Blattberg says.
"The technology is embedded in the wrong place in the organization.
Top management doesn't understand CRM; they think it's a technology
certainly examples of companies doing the right thing. Wal-Mart
is one of the most sophisticated users of technology to manage
the business; its use of computer systems to support purchasing
and procurement is legendary. At the same time, Wal-Mart remembers
that the most important technology is the human greeter at the
front of the store.
likes to ask whether Northwest Airlines or Southwest Airlines
is closer to the ideal envisioned when we think about CRM: The
answer, of course, is Southwest.
"Southwest has figured out the 'R' in CRM. They've set the
customer's expectations that, 'You're going to get peanuts and
you're going to pay peanuts,' (and) that, 'The flights won't be
luxurious but they'll generally be on time.'"
offers first-class service, it can't be a great experience when
passengers walk into the airport and face long lines and surly
people behind the counter.
don't understand that CRM is not about whether they can track
my name. It's about how . . . they use information to create a
relationship," Blattberg adds.
Here are my
thoughts on the solution:
- CRM is
not a technology solution -- You can't achieve the aims of improved
customer relationships simply by slapping in some software.
change -- The hardest part of becoming CRM-oriented isn't the
technology, it's the people. The organizational change is more
critical than the technology installation.
- Focus on
the "R" -- Remember, a relationship is what CRM is
- Audit the
experience -- Measure your effectiveness in CRM. Establish goals
for being relationship-oriented and audit your progress toward
- Know the
relationship friction points -- The most important person in
a Ritz-Carlton hotel is the doorman; he's the customer's first
point of contact. Is he the most motivated and best-paid employee?
pilots and test beds -- CRM should pay off financially for a
company. If your management is skeptical, run pilots and analytical
tests to prove the benefits of improved relationships.
- See customers
as assets -- Some companies pay more attention to maintaining
their machinery than their clients. Recognize that your customers
are assets even more valuable than any others on your balance
sheet. Maintain them with at least as much care as you would
your best plant and equipment.
not mean that technology is less valuable now than it used to
be. Technology -- or rather, the smart application of technology
-- can yield a tremendous advantage.
We can use
technology the way my phone company did last summer, to cut costs
and keep the complaining customer at arm's length. But if we do
that, the customer asset might simply disappear, leaving only
the cost of all that technology on the income statement.
that's why so many phone companies are in trouble.
is a partner with Chicago-based DiamondCluster International.
He can be reached at email@example.com or firstname.lastname@example.org.