Is CRM Dead?

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I’m not sure if I should admit this, but I was one of the early thought leaders in the area of customer relationship management (CRM). I was an analyst at Gartner back in 1997 when we wrote and introduced one of the foundational definitions of CRM. In a column that I published in 2001, I wrote that “CRM is an enterprise business strategy for using customer information to maximize the long-term value and profitability of its relationship with its customers.” Industry experts can and do argue about the exact definition of CRM, but we all agree that it’s about increasing profitability.

CRM, like many popular buzz words (or acronyms), has its merits. It helped business and IT leaders justify and obtain the investment dollars needed to enhance service, sales and marketing functions. And for vendors, it’s created a market place that has attracted investment expenditures.

To give credit where it is due, Tom Siebel was the founding father of CRM. His company invested hundreds of millions of dollars in popularizing CRM, even going so far as to run ads during a Super Bowl. The problem was that Siebel sold a solution that was based on a faulty premise – the idea that a single business solution could address all enterprise sales, marketing and customer service application needs. Siebel caught on to CRM’s limits in later years, and the company tried to distance itself from the market that they had created, but by then it was too late.



Many buzz words/terms have come and gone since CRM was first introduced: customer managed relationships (CMR), enterprise relationship management (ERM), and customer experience management (CEM), just to mention a few. Yet, CRM still hangs in there, and business leaders sheepishly return to this phrase, as it seems to encompass the essence of what they need to do.

The concepts upon which CRM is based are very much alive and always will be. The issue is that vendors took the phrase and turned it into an application that was impossible to build and utilize effectively. In the contact center alone, there can be over 40 different applications, and new ones emerge all the time. It’s hard enough to get different departments within the same company to agree to use the same phone or email system, let alone to find consensus for a “servicing” solution that makes or breaks their department’s performance (and bonuses).

Looking Ahead

CRM has served its purpose. It fought a great war, and won more battles than it lost. It woke the market to the necessity of investing in customer-facing activities and applications to improve customer profitability. It fueled a new generation of systems and applications to meet these needs, although it never succeeded in convincing sales, marketing and customer service groups to work together to achieve corporate goals. CRM did begin the process of focusing organizations on the importance of putting their customers first, even if each department within a company had a different understanding of what this meant.



The downfall of the original CRM strategy was that it was too internally focused and led managers to believe that customers were happy to be managed. And from a systems perspective, it convinced business managers that one solution, like a CRM suite, could meet the needs of all customer-facing groups – departments that do not share the same goals.

It’s time to say good bye to CRM. It can be honorably retired to the buzz word hall of fame, but it is no longer viable as a leading business or even systems strategy. At this point, we know that its faults are greater than its benefits. However, CRM is going to continue to hang around as a concept until a new strategy emerges to better address enterprise goals.

6 COMMENTS

  1. Hi Donna,

    Every few months for the past 10 years I run across some blog or article proclaiming that “CRM is dead”. Again. Yet, strangely, the very next day I go back to my job (working in the CRM industry) and find dozens of (CRM related) emails from customers. As mentioned this routine has been going on for years. I read an article about CRM being dead and then start to panic. Oh shit, what am I going to do? And then the very next morning I walk into the office and find CRM already sitting there (alive and well), drinking a coffee and answering her phone messages.

    So no offense, but all the CRM is dead prophets kind of remind of that Rapture nutjob, Harold Camping, who makes new pronouncements every few months about the world ending. He’s got a pretty good track record — of consistently being wrong.

    So, forgive me my skepticism. But unless I see an announcement in the newspaper for the memorial services, I’m just going to keep rolling my eyes whenever I hear that CRM is dead…. yet again.

    John

  2. John,

    I’m sure “CRM is dead” posts are annoying, especially when $billions are being spent and most businesses use CRM systems these days.

    But what kind of CRM are we talking about? To me, CRM in those early days was more than an automation strategy designed to extract money from customers. CRM was supposed to be a customer-centric business strategy. Or so my keynote speeches said.

    So, yes, I guess I’m one of those “nutjobs” you refer to. I had a vision that CRM was about creating value for customers. Instead, it turned out to be just about software and how to profit from customers.

    Call me a nutjob if you like, but there are many others like me who have moved on (to Customer Experience and other terms), realizing that what people think of CRM today is a faint shadow of what it could have been.

    Donna said it perfectly here:

    The downfall of the original CRM strategy was that it was too internally focused and led managers to believe that customers were happy to be managed.

    Meanwhile, all the best to you and the huge industry of consultants and analysts profiting from sales of CRM software and related services. Too bad this version of CRM hasn’t helped to create happy customers, just happy software companies.

  3. Hi Bob,

    Yes, you hit the nail on the head with your question, “But what kind of CRM are we talking about?”. Though I guess this is essentially the same point you were making 5 years ago in your post, “Why ‘CRM’ Must Die for Customer-Centric Business To Thrive”. From what I recall, your main point was that Spanish explorer Hernando Cortez would have made a great CRM project manager, right? Just kidding. But you were pointing out that there isn’t (wasn’t) a commonly agreed upon definition of CRM.

    In any case, to answer your question about what kind of CRM we are talking about, let’s talk about “Social CRM”. I think it’s a great example of how CRM is not dead, but rather continues to evolve, adapt, and improve.

    And I’m sorry to hear that you don’t think that there are any happy CRM customers. I could introduce you to a few if you’d like! Though I also acknowledge that many companies have struggled with (and continue to struggle with) CRM — whether it be defining a CRM strategy or implementing a CRM software suite. But then again, companies also struggle with tax law, but no one is saying that Accounting is dead 😉

    Warm regards,
    John

  4. John, you’re right that there is not a true definition of CRM. Which is kind of weird after so many years, don’t you think?

    However, the most commonly held view of CRM is using software to automate marketing, sales or customer service processes. It’s not really about customer-centricity or loyalty.

    Most customers of CRM software are happy, and they should be. Our research found that about 2/3 believe investing in CRM software delivered an ROI and about the same believe their projects were successful. The reports of 50% “failure” rates are just not true.

    But, I wasn’t talking about customers of CRM software. I meant the customers of companies that invested in CRM software. You see, one of most important reasons for investing in CRM “back in the day” was to build customer loyalty. Sadly, that never happened. CRM software doesn’t build loyalty because it’s not about doing things that customers value, it’s about automating things that companies value.

    As for Social CRM, the situation is even worse. In my Social CRM is dead… post (sorry!) I noted that even the experts pushing the idea can’t agree on what it is. Here’s a sample of what Social CRM is claimed to be:
    * personal collaboration with customers (no CRM, no social media)
    * social media monitoring (no CRM without integration)
    * customer communities (again, no CRM)
    * internal social networks (not CRM)
    * co-creating value (no technology needed here)

    Social CRM was “invented” by Oracle in 2008 and has had ample time to become “something.” Instead of evolving, it’s devolved into an incoherent grab bag of technologies and ideas. Vendors are abandoning “Social CRM” positioning even as Gartner claims it’s a $Billion dollar market.

    In the end, the default position for CRM remains that it’s technology to manage customer information. Adding “social” won’t change that.

  5. Hi Michael,

    I completely agree with you! Dismissing CEM (as well as CRM and Social CRM) as all being dead is laughable. Hell, they might as well claim the Internet is dead. And mobile computing? Dead and buried. And analytics? Dead, dead, dead. Maybe CustomerThink is looking to break into a new business — the tombstone business 😉

    But back to Bob’s point, I would strongly disagree that customers/consumers are less happy and less loyal today (with CRM) than they were 20 years ago without CRM. I love the fact that as a customer today and can go online (via my mobile phone) and completely configure and order a product and have it delivered to my door two days later with free shipping (because I am a VIP customer). Compare this to 10 years ago when I had to call the company, wait on hold for 30 – 60 minutes, pay an extra $8.95 for shipping and handling, and then wait 4 – 6 weeks for delivery. So yeah, I am much happier and more loyal today to my favorite companies. Thank you CRM!!!

    John

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