One Simple Rule to Avoid CRM Failure, Comrade.


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A research organization dealing with customer issues recently interviewed this writer, and the questions they asked got me thinking about how we can learn about CRM from nearly any field of human endeavor, but we learn the most through the most exciting, spectacular, idiotic ideas crashing and burning, like… socialism.

The Common Good vs. My Own Good

One question they asked was “What are the most important obstacles and pitfalls to be aware of in trying to integrate customer data in large bureaucratic companies and organizations? Imagine a large, older incumbent organization with entrenched fiefdoms, or a traditional regulated monopoly, or a large company that has grown through numerous acquisitions.”

Good question. Of course the main obstacle is that people regard data as power — and frequently they’re right. If they control the data they have their little fiefdoms, they’re players. The pitfall companies usually tumble into when integrating data is the one countries usually hit when they try to adopt socialism — they assume people see some abstract concept called “our common good” as in their own personal interest.

Wrong. Unless people are incentivized to cooperate, either to produce or share data, there’s no reason for them to do so. Right or wrong that’s just human nature and there’s no getting around it. Efforts to get around human nature will always, always, always fail. Look at the Soviet Union’s economy and society if you want a particularly grisly example.

Because the fact is, unless it’s more to an employee’s advantage to share data than hang onto it she won’t do it just because it makes life easier for somebody who’s making more money than she is. The reality is that, frequently, people hoarding data are correct when they surmise that if they lose their grip on it they lose standing and leverage within the organization, and the pitfall is that companies refuse to see the issue from this point of view.

The Three Principles: Incentive, Incentive, Incentive.

If a company’s data integration project requires some people to change the way they do things, the company has two choices: It can simply demand cooperation, which rarely gets even the sort of sullen, perfunctory, foot-dragging “cooperation” such projects need, or it can look at the change from the point of view of the employee being asked to give up his data, see what it means to that guy and incentivize him to get with the program.

For some reason I’ve never understood few companies do that, they oddly assume that because it’s good for top management it’s good for everyone down the line and that this notion is self-evident at all layers of the organization. Nothing could be further from the truth. Everybody in reality is a freelancer — employees are working for their own good, not the company’s. Realize this, make it in the employee’s best interest to contribute to the company’s best interest, and you’ll get all the compliance you want.

Because management looks at “company” and defines it as “the people working for me who need to do what I tell them to,” while employees hear “company” and define it as “the place where it’s worth my time to work for the money they’ll pay.” Note the difference.

Deal with people as they really are, not as you’d like them to be, and you’ll succeed. Ignore human reality and you’ll end up frustrated, because human nature ain’t gonna change to please you.

Because Your Employees Are Also… Well, Human.

The research firm also wanted to know what should be the elements of a successful data integration project for such situations?

Again, simply think “How can I incentivize people to do what I want them to do?” If you’re trying to pry information loose from someone who’s dragging his feet on giving it up the only way to get a smooth flow is to incentivize that guy. I can’t think of any other method that really works. Oh it’s possible to draw up flow diagrams and charts and all whatnot, but in reality if people in an organization don’t want to share information they’re either not going to or do so in a manner that rather defeats the purpose of the integration project.

Everyone will look out for themselves first, as is natural, as the C-level people do and whoever’s pushing the data integration project is doing, nobody’s going to place themselves at a professional disadvantage just to help with a project that doesn’t personally benefit them. Structure the project in such a way that it benefits those who are asked to change the way they do things.

“In this case,” the researchers told me, “we are particularly interested in knowing how such projects can help senior management get access to useful information and insight for purposes of strategic management and decision-making (besides the conventional goal of improving customer relationships). What can you say about how customer-data projects should be structured with that management purpose in mind?”

Again, I hate to sound like Johnny One-Note, but I have learned that there are a few basic principles that are simply never abrogated in business, and one is that employee loyalty, crucial to customer loyalty, is tied almost 1 to 1 to employee self-interest — the companies who have the greatest employee loyalty are those who treat their employees the best, period. Get a list of the Ten Best Places To Work, the Ten Companies With The Most Loyal Employees and a list of the ten companies with the highest customer loyalty rankings and note the striking overlap.

How Hard Work = Profit

These are places that look at the company from the employees’ point of view — they start from “what profit would I need to give these people to work hard?” instead of “How can I use these people’s hard work to profit?”

In such cases it’s fairly clear to employees how what’s good for the company is good for them. If the claimed benefits of data integration projects actually benefit the people who are being asked to give up some of “their” data they’ll see that, and they’ll agree wholeheartedly and give the kind of proactive cooperation such projects need to succeed.

Soviet Policies = Soviet Results. Duh.

Look, you can stick a whole lot of farmers on a Soviet collective and tell ’em they’ll all be shot and their families banished to Siberia if they don’t produce 100 bushels of beets and you’ll get — exactly — 100 bushels of the lowest-quality tubers that ever qualified as a “beet.” As the history of the Soviet Union proved.

Or you can show them how much money they’ll make per bushel of beet, and that better quality beets will get better prices at market, and that they’ll get to keep the rewards of their labor and sacrifice minus a reasonable tax and you’ll get more beets than you know what to do with. As the history of capitalism proves every day.

Socialism failed because it failed to take this basic human nature into account, that working for the glory of The Workers’ Collective wasn’t enough of an incentive for people who weren’t making any money to work harder, and data integration projects fail for the same reason — people who aren’t going to benefit from a project aren’t going to work any more than the absolute keep-my-job minimum for it.

If companies take a Soviet-style mentality to customer data integration projects — do it for the glory of Acme Anvils, comrades — they’ll end up with Soviet-style efficiency results. If they do it with a capitalistic mentality, recognizing the reality that people do well what they’re incentivized to do well, they’ll have a successful program.

And when the researchers asked me “can you think of important resources or other experts we should consult for more insight on this topic,” I said sure, Josef Stalin. Ask him why collectivized agriculture in a place with the greatest acreage of the most fertile land in the world was such a crashing failure.

Make “Good For The Company” = “Good For Me.”

It’s no secret that most CRM projects, well-intentioned and with demonstrable ROI waiting in the wings, fail. Why? It’s good for the company, so why don’t workers all work together to make it work?

Because “good for the company” doesn’t mean “good for me, Joe Employee.” If it’s good for the company to fire me I don’t care about what’s good for the company. If it’s good for the company that I get transferred from the office ten minutes from my house in White Plains to lower Manhattan then I don’t care about what’s good for the company. If it’s good for the company to implement some CRM, data-sharing project that dents my standing and influence then I don’t care about what’s good for the company.

Make what’s good for the company good for the employees of the company and your project will work. Otherwise, well, get used to Soviet Union standards of success in your company.

Article originally appeared in the author’s TMC archive.

David Sims
David Sims Writing
David Sims, a professional CRM writer since the last century, is an American living in New Zealand because "it's fun calling New Yorkers to tell them what tomorrow looks like."


  1. David, great article. Last year we conducted a major study on customer-centric business management (call it CRM, if you like), and identified “warning signs” for potential failure.

    Warning sign number 5 was “Don’t Treat Employees Like Customers” — meaning can’t answer the WIIFM (What In It For Me) question.

    My closing comment in the paper:

    For customer-centricity to become a successful business strategy, it must be in the self-interest of every employee, from the CEO on down. In other words, managers at all levels must anticipate that their employees are thinking, whether they overtly ask or not: “What’s in it for me?” Do you have a good answer?

    However, while this is a critical issue, it’s not the only one. Those interested in reading the other 4 can get the white paper in our Research Library (free registration required): Five Warning Signs for Danger Ahead on Your Customer-Centric Journey

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  2. Good comment Bob, thanks. I call it the Templeton the Rat Rule — I got the DVD of Charlotte’s Web for my daughter and remember Templeton’s favorite line — “What’s in it for me?”

  3. David

    An interesting blog post.

    Putting aside the misleading allusion to capitalist versus communist systems of governance, it occurs to me that employees are not always motivated by simple incentives as you suggest. They are much more complex and complicated in their behaviour. Otherwise many of the open sources projects that successfully provided wikipedia, mozillla and apache would never have got off the ground. And Daniel Kahneman wouldn’t have won the Nobel Prize for Economics in 2002. Incentives are just one of many levers that can and should be pulled to persuade employees to change their behaviour.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  4. Hi Graham,

    Thanks for your comments. Yes you’re right, incentivization isn’t as simple as I may have inadvertently suggested here. I’m surprised it isn’t its own field of study, actually, it seems a rich and rewarding field to mine.

    My point in using governance systems as a point of comparison was to highlight how paid employees rarely work for an ideal “greater common good,” as rarely will citizens actually care enough about a greater national good to work for free so somebody else benefits.

    Your point about Apache, Wikipedia, et al is correct and well taken, my point is that when somebody has contracted to do a job for pay, they will focus on what work directly affects their compensation, since that’s why they’re doing the work. Somebody contributing to Wikipedia isn’t doing it for pay, he’s getting that somewhere else, so he can afford to donate his time for the “greater common good” of Wikidom.

    Companies can’t assume that their employees are inspired by the glory of the company, if they were they’d never switch jobs when a more attractive financial package came along elsewhere. Of course my analogy breaks down in places as all analogies do, but overall, taking the big picture, I think that if you want employees to genuinely value the company’s policies, that you need to make it in their personal interest to do so.

    People are inherently selfish, that’s as much a simple and incontrovertible fact as a rocky coastline. We’re not exclusively selfish, and not negatively selfish — the butcher and baker’s selfishness leads them to offer the best products they can for me to buy — but we are self-motivated, and company or governmental systems that forget this or try to deny it, i.e. socialism, will shipwreck on the rocks.

    Yes there are other levers, as you point out, but it’s my experience that correlating employee incentives with desired behaviors is by far the most effective and simple one.

  5. Rewards come in many forms. Some monetary, some not. I would argue that few people will work without receiving something that is personally valuable.

    Why do programmers contribute to open source? Because, in part, it’s fun! That’s a reward.

    Why do bloggers contribute to this site? Because it’s fun and because they want visibility. Both valuable, but no money is changing hands.

    In companies, our research finds that customer-centric successes do in fact align reward systems with the goals of the company. These rewards could range from full employment (“Hey, I could be flipping burgers”) to recognition to advancement, money, and other tangible rewards.

    One of the dangers of customer-centric champions is thinking that just because something is good for the company, managers and employees will embrace it. Managers, and the measurement/reward systems they create, must make the connection explicit.


  6. Indeed.

    One does not need to be a cynic to note that “for the good of the company” gets a lot more personally rewarding for those at the top of the company. It may very well be that Steve Jobs, say, derives satisfaction money can’t buy when Apple does well, even though it doesn’t put a dollar in his pocket.

    Few employees have such an emotional bond with a company, however, and management can’t expect that they do. Management can, however, count on an employee having a strong emotional bond to rewards that personally benefit her, since that’s why she’s working for the company in the first place — because it benefits her to do so.

    Bob, do you know anybody who specializes in the study of employee incentivization?

  7. Hi David

    I enjoyed your response almost as much as I enjoyed your blog post.

    I think you are right. It is essential to recognise that employees may not be entirely motivated by the good of the company and its distant shareholders. Nor by money. And that they need to be provided with appropriate incentives to stimulate the right sort of behaviour. That doesn’t mean that they will be lazy and unmotivated without incentives, just that they have so much more to offer if they are incentivised appropriately.

    Needs theory suggests that humans have a variety, indeed a hierarchy of needs which they try and fulfil. Basic work for pay fulfils basic needs of security and putting a roof over the head. More complex needs of belonging to a like minded group and seeing ideas implemented fulfils higher needs. It is in fulfilling these higher needs that incentives should largely be concentrated.

    There are many great places to work but sadly, a whole lot more places that are not so great. Or indeed, that are downright awful. Fortune magazine recently published its 100 Best Places to Work survey for 2009. It contains household names like Google, Boston Consulting Group and Cisco. Companies that have a long record of supporting their employees, to get the best out of them. Sometimes support from your employer to be the best that you can be is the best incentive of them all.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  8. True, Graham, it’s not always about money — in my original post I say that one reason employees don’t share information in corporations is because information is power. If they control access to this or that information they’re taken seriously, they’re players at work.

    Obviously in that case the company doesn’t approach that guy and say “Hey we’ll give you a four percent raise” and expect him to get with the program, they need to incentivize him in terms of the power he’ll lose, the sense of importance he has from controlling the information.

    I agree that fulfilling higher needs is a great way to incentivize, the only issue there is that relatively few people in a company are motivated by higher needs in their jobs. The majority, and the larger the company the larger the percentage, are motivated by the more basic needs you point out. Most people work to live, fewer find their identity in job performance, most find it outside in family, leisure activities, religious communities or the like.

    Again, not that jacking up pay is the silver bullet to solving all issues in an organization, but looking at other creative means of putting it in somebody’s best interest to align his work priorities with the company’s goals.

    It’s a fascinating field, yes, one I’d like to explore a bit more — might have to go back to Maslow, as you imply.


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