It’s the Relationship, Stupid!


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Hundreds of millions are spent on CRM (CEM, sCRM etc) projects each year as companies strive to strengthen the relationships with customers. CRM is in some companies entire departments and many companies already have more than a decade of investments and process changes behind them.

But have companies become better at engaging with customers, in strengthening the relationship and in developing loyalty? In good CRM spirit, we asked the consumer and the answer we got from a large majority is NO.

People who today feel they have a better relationship with their phone company, energy supplier or airline than ten years ago are hard to find. This in spite of the fact that companies in all these industries continuously aim at establishing customer loyalty.

The trouble most often begins at the point of contact with a company where companies have cut down on the possible interaction channels (e.g. only through online forms). The trouble continues as product offerings in some industries are almost impossible to understand when it comes to terms and conditions. Finally, there is a continuous increase of companies who even charge customers to contact them!

There are, of course, exceptions to the statements put forward above but taking a look at complaint websites or follow customer questions/complaints via social networks doesn’t change the conclusion that companies in general are not doing a good job (when it comes to CRM).

The above mentioned issues are all operational issues and various companies attempt to introduce improvements or solutions (e.g. webcare in order to handle the complaints via social media). In order, however, to succeed as a company, a much bigger change is needed. Most companies have in their mission and vision statements a focus on longer term success and CRM objectives are often quite well aligned with these high level goals. Once below the vision and mission level, however, companies very often downplay their strategy to focus on short term revenue optimization and if there is one thing that clashes with CRM thoughts and behavioral theories it is exactly that.

RelationshipThe companies, which strategy, are the “least” short term focused are the ones that are most likely to succeed with their CRM efforts. In companies where “churn reduction of 28% within 4 months”, “revenue/customer growth of 18% next quarter” or “process improvements to decrease costs of 10% within 6 months” are the topics of the board room, are doomed to fail. A large number of companies are in this situation (i.e. also the ones with entire CRM departments) and are fooling not only themselves but in particular their customers when they promote their customer focus or high service levels!

The blame for bad CRM is thus to be found at the strategy level . In other words, where the strategy of the company is (too) short term focused or not implemented properly throughout the organization, CRM will always fail and neither the company nor its customers will benefit from the great advantages of a strong relationship.

Companies and consultants don’t need to wait until after the fact to determine whether a CRM approach or project will be successful. In most cases it is straight forward to determine whether a company will truly master CRM or whether the thousands or millions are actually just invested in company focused operational optimization. If the latter is the case, companies could do themselves a favor by simply calling it what it is instead of misleading themselves, and more importantly their customers!

In order to ensure that the focus was on one matter and one matter only, Bill Clinton used the phrase “it is the economy, stupid” successfully during the 1992 presidential election campaign. Similarly, CRM success can only be achieved if the focus is on the relationship.

Kristian Gotsch
Kristian Gotsch has more than 15 years experience within the world of CRM. As CRM Manager at the Eredivisie (Dutch Premier League), Kristian has a great interest in sports and CRM and is the founder of Loyalsticity. Prior to his current role Kristian held various CRM positions at T-Mobile, PwC and Microsoft. This is a personal rather than a corporate blog. My opinions reflect my own views rather than necessarily those of my employer.


  1. Hi Kristian,

    I do agree with you that a lot of CRM systems are often bound to fail due to lack of defined objectives or simply because of a lack of strategy. A recent research has demonstrated that 70% of CRMs are still failing in Europe (

    I believe that it’s really important to set clear objectives together with a list of critical success factors right from the start, even before choosing the CRM software. The choice of CRM system should essentially be made after setting up a CRM strategy that will work well with the company’s sales process.

  2. Joseph, that infographic you mentioned is misleading, for several reasons:

    • It’s not “recent research.” The source of the infographic is this article, which chronicles CRM failure rates from 2001 to 2009.
    • The headline of the infographic is “70% of CRMs in Europe fail to meet objectives.” The 70% figure was taken from a 2001 Butler study, which was likely misquoted by the media. In any case, it’s not current and not just for Europe.
    • The most recent study quoted in the article is by Forrester in 2009. In that article, the graphic below is included from a Forrester report, showing that only 27% of enterprises fail, and 16% of midmarket.

    It’s amazing to me how often CRM failure rates of 50%+ have been quoted over the years. In our 2003 CustomerThink study we found about 2/3 of projects were successful, measured by ROI and perception.

    In terms of what problems CRM projects experience, Forrester and CustomerThink collaborated on a study and found that the top 3 problems were business process, people and strategy/deployment. Technology was 4th, reported by 35% of respondents. Read more here.


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