The “S” Word: Strategy Can Sabotage CRM

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This article was originally published by Baseline Consulting.

I always chuckle when I hear a colleague of mine recommend a “strategy session.” I imagine a large executive conference room bursting with business people and a handful of IT staffers, some at the table with notepads in hand, others expectantly hovering in the back of the room. A consultant presides with his laptop powered on and an array of white board markers at the ready. A spread of cold cuts, salads and soft drinks unfolds on an ersatz sideboard, representing the main draw for the majority of the attendees.

The consultant usually begins with the requisite open-ended question, “What does ‘CRM’ mean to you?,” and participants dutifully respond as a scribe takes notes and the brownies are passed around.

By late afternoon, the consultant has removed his jacket, and the white board is replete with sentence fragments. Attention spans have dwindled, and the mayonnaise has reached room temperature. Someone raises the issue of a business case, but nobody bites. Promises to “write all this up and distribute it for feedback” induce halfhearted head-nodding.

A week later, everyone is emailed a play-by-play of the meeting along with a statement like:

CRM Corporate Strategy:


To be the acknowledged leader at attracting, retaining and serving our customers through best-in-class products, mindful marketing and superior service.

So now what?

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A CRM strategy statement can be valuable. It can form a common vision—technically, the above “strategy statement” is more like a “vision statement”—as well as begin to establish a common CRM vocabulary.

But many CRM strategies are really nothing more than an intellectual exercise intended to “kick off” a CRM program. And then … nothing. The strategy is printed out and pasted on the office wall of the CRM business sponsor, as the project team begins to struggle with follow-up and try to define tactics. After all, a strategy statement can’t:

  • Establish the scope and boundaries of the initial CRM effort
  • Explain to management what the costs and benefits are
  • List the stakeholders and their responsibilities
  • Imply a rigorous set of business requirements
  • Identify the necessary data
  • Delineate success metrics
  • Dictate candidate software tools
  • Optimize customer-facing business processes

Strategy? Done!

A CRM strategy is often used as a checkbox that management can mark “complete” and hand off to a business analysis group or, worse, to IT. The assumption that defining a “strategy” is the entry point for CRM development has foiled many a well meaning and badly needed CRM initiative. In short, a CRM strategy statement is a formality that can never replace the true critical success factors of an effective customer management effort. The above list represents the hard work, and there are few people with the skills, interest and time necessary to tackle these tasks (some of which are projects in their own right).

In their book, Strategy Maps (Harvard Business School Press, Boston, 2004), Robert Kaplan and David Norton define strategy as the way a company “intends to create value for its shareholders, customers and citizens.” This is a tall order and one that transcends CRM and applies to the company at large. Most companies have strategic objectives that were painstakingly crafted, often at the board level, to encompass a veritable value framework that includes financial and internal process performance, as well as customer value.

Indeed, strategy is more apt and useful as a means for the company to define its overarching objectives. Where CRM is concerned, it’s not as important to have a “CRM strategy” as it is to make sure that CRM maps back to a central set of strategies. Put another way, CRM is a way to fulfill corporate strategy. You could say that CRM doesn’t require a strategy; it fulfills one.

In a prior book, Kaplan and Norton asserted that many strategies failed not because the strategies themselves were poor but because of “bad execution” (The Strategy Focused Organization, Harvard Business School Press, Boston, 2001). The same can be said of CRM. The CRM failure rates bandied about so freely a few years back weren’t because of the lack of a lucid and consensus-driven CRM strategy statement. Rather they were because of the lack of a set of defining principles—”we need to stem customer attrition”; “we have proven that higher customer satisfaction scores mean higher profits, so let’s work to raise scores”—that implied the tactics necessary to achieve them.

The dirty little secret your CRM consultant doesn’t want you to know is this: Your executives already know your CRM strategy. They know that more customers means growth. They understand that customer value is proportional to profitability. They’ve seen the statistics about it being easier to keep an existing customer than to acquire a new one. They appreciate that customer loyalty can impact the bottom line.

What they don’t necessarily know is what to do next. The question of a few years ago was, “What does CRM mean for us?” The question today is, “Where do we start?” or, increasingly, “What do we do now?” Those well-worn strategy and vision presentations have ceded to business case development working sessions and deployment planning meetings.

So where does this leave CRM and strategy? In a word: alignment. It’s important to align corporate programs like CRM back to the company’s strategy and to continue to align customer relationships (and CRM-enabling technologies, and key customer-facing business processes) to strategy in a sustainable way.

So let’s get started. I’ll buy lunch.

© 2004 Baseline Consulting

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