Monday, February 22, 2016

Why is CRM a failure?

When I first started getting paid to look at the future of technology, the very first conference I attended was about the glowing promise of Customer Relationship Management (CRM.)

It was in the spring of 2001.

Back then, CRM was as full of hype as Big Data is today.  CRM was going to give us that mythological end-to-end view of everything we knew or had done with our customers.  We would have purchase history, customer inquiries, account history and information, and all their preferences and favorite products--you name it.  If we had touched the customer or they had touched us, the CRM system would know, and would have our backs.  We would all be happy customers, enterprises would rejoice along with their newly empowered sales and customer service staff. There would be endless marketing and product information.

Put simply, it didn't happen.  It's 15 years later, and for the most part, CRM sucks.  We are a long way from "delighting the customer."

Here are some of the worst examples:

  • The dreaded customer experience of trying to get help by phone.  It starts with "listen closely as options have changed," and may hit its peak when you are required to enter an account number by phone, only to finally reach a live human, who starts the conversation with "may I have your account number?"  That same human has a computer screen which rarely knows that you've bought the product you're calling about, has no clue if you've called about this issue before, or any knowledge whether you have spent $100 with them, or $10,000.
  • There is a gaping disconnect between e-commerce and bricks and mortar customer knowledge.  As a customer, when have you ever experienced a company that knew your online purchase history when you walked into one of their physical locations? Or vice versa?
  • The inability of sales staff to access useful information about the customers they are trying to serve at the point of decision.  I learned this horror story firsthand.  During my time in retail, I worked for a national upscale retailer.  They wanted--really badly--to market by e-mail to the prime existing customer base. To make that more likely, all sales staff were encouraged every day to link the customer to an e-mail address.  And since that same system was so limited in its customer search function (only by name and zip code,) the most usual result was  "I can't find you, let's just create you in the system right now."  Any associate at any POS terminal could create an entirely new customer record to add their e-mail address.

    The data was so littered with duplicates that it was essentially useless.  If I did succeed in finding you, it would only be one of the many versions of you. Customers' purchase histories might be under any one of a dozen versions of their name.  If they ever shopped online or at another bricks and mortar location, too bad. Each store only accessed records for the one store where we both stood, frustrated at our inability to find information that had to be in there, somewhere.
  • Medical records, which are rigidly bound by rules and systems to make sure data is accurate, are astoundingly siloed and useless beyond the context in which they were created.  Your primary care physician may have a great end-to-end history of your office encounters, but if you go to a new specialist, or get admitted to an emergency room, how is that shared?  The patient hand-writes what he or she can remember.  For every single new place or practice.  
These are just the tip of the iceberg, I'm sure you have your own list based on your experience as a customer, and maybe upon your frustration at CRM efforts within your enterprise.  It's my opinion that the realization of CRM has missed the promise by such a margin that it is reasonable to say the idea has failed.  I think there are some systematic problems that make good CRM really, really hard.

  • For CRM to work, you have to overcome a big problem; CRM is a genuinely vertical process, spanning almost every function of a corporation. But CRM's success depends on it working well across a range of processes, most of which are themselves internal vertical domains.  See this graphic I originally posted in 2011: most functions that form the core of a good CRM program live on the right--vertical--side. But some of the most CRM-critical are strategic horizontal processes, like marketing.
  • Master Data Management (MDM) is excruciatingly difficult.  Talk to the data people at any enterprise and ask if they think they have it mastered.  MDM is not sexy, and it's not trendy.  The only thing is, it's just absolutely vital as a foundational element of CRM.  Circling back around to the hype on Big Data, we come to another idea: why are you worrying about big data when small data is still so underutilized, and still adding so little value?
  • CRM succeeds or fails depending on the completeness and accuracy of information coming in as the customer does business with you.  That's not so hard during e-commerce, but in a face-to-face situation, customers have become highly averse to sharing information.  Until we find a seamless way to link the customer to their own records, and until we earn enough trust from customers for them to share willingly, CRM will remain a tough uphill slog.
  • Even if you get data definitions and structure right, it is still bound to specific programs, hence badly isolated from all the necessary use cases.  If ever there was an argument that data should be offered as a service to be used in real time by different programs, CRM is it.  But that runs smack up against proprietary interests, and is not likely to change soon.  When systems for manufacturing, distribution, marketing, and point of sale are not drawing from the same data store, is it any wonder that so many enterprises have thrown up their hands and given up?
  • There's another silo issue that is external to your business. As it stands, CRM is not personal, it is bound to specific companies.  So if it would be useful to me to know that a coffee blend at the Peet's I'm visiting is similar to one I've bought at Starbucks, that purchase history is not one Starbucks is likely to share.  If I happen to book one day with United Airlines, it would be useful to me and to United if they knew that I've flown almost a million miles with American, and am a potential high-value customer.  But AA would definitely rather my flight history remain within the confines of their own systems.

    This suggests a big business opportunity for a digital personal assistant to keep my own records of my customer history to use for my own benefit, independently of all the siloes where my purchasing life now resides.  There is a huge need for consumer-centered CRM.  Stated another way, if my customer history is going to be bound to anything, it should be attached to me.   Startup, anyone?

Along with the fact that the CRM idea of 15 years ago is so badly implemented, newer technology adds the chance for a new generation of CRM that overcomes some of these obstacles, and adds real time integration with customer activities that happen outside your enterprise--social media mentions of your product, product reviews, store check-ins, and the like.  So I still have hope, and still believe that the CRM idea is worth fighting to get right.  Could this be a need where artificial intelligence (AI) could help solve the data integration and multiple-versions-of-the-same-customer challenges?

Share your ideas here in the comments, or drop me an e-mail.  Do you know examples of companies that are getting CRM right?  Do you see other issues or opportunities I should look at in a future post?  I'm looking forward to hearing your thoughts.

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