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November 6, 2003
PRESS RELEASE
- FOR IMMEDIATE RELEASE
Editorial inquiries,
contact:
George Anderson
908-709-1690
geoanderson@retailwire.com
CRM
Doesn't Work
By George Anderson, Editor-in-Chief,
RetailWire.com
Almost from the first
moment the term customer relationship management and
its acronym, CRM, were coined, there has been an on-going
debate about what it is and how companies can use it
to attract and retain business.
Initially heralded in
retail circles as the end-all, be-all to much of the
industry's competitive woes, CRM programs have been
more promise than performance when it comes to increasing
shopper loyalty.
Writing on the RetailWire.com
news and discussion website, Gene Hoffman, ceo of Corporate
Strategies International and former president of the
Kroger Company and chairman/ceo of Supervalu said, "It
wasn't too long ago that CRM was the hula hoop of consultants,
authors and the industry. It seems as though retailers
will never reach an insightful par with all of its observers
and their acronyms of advice."
Stephan Kouzomis, Founder
and CEO Entrepreneurial Consulting Inc./MMSG sees serious
short-comings in how retailers, especially grocers,
are making use of so-called loyalty programs. "Shopper
loyalty is built in a card program that is nothing more
than a pricing vehicle," observed Kouzomis on RetailWire.
"This doesn't represent a loyalty effort that should
engage shoppers, and retain them with better service,
as sources of information, and as a communication link."
"Until the grocery industry
arrives at a consumer focus approach, which researches
and understands the value of analyzing the loyalty information
-- and then creates programs that engage, retain, and
motivate shoppers to buy -- it will discount itself
into losing shoppers."
The subject of CRM, its
shortcomings and opportunities for improvement are the
subject, Why CRM Doesn't Work, How to Win By Letting
Customers Manage the Relationship by Frederick Newell
(Bloomberg Press, 2003).
Mr. Newell, who previously
authored loyalty.com, Wireless Rules,
and The New Rules of Marketing, provides a concisely
written, easy-to-follow analysis of the missteps and
opportunities available for companies in search of the
Holy Grail of customer loyalty and retention.
In many cases, the author
claims, members within a company do not even share the
same definition of what CRM means. This basic discrepancy,
added to internal politicking, fear of change, technological
challenges and other factors, has doomed CRM initiatives
to an alarmingly high rate of failure.
He places great emphasis
on the need for organizations to move from customer
relationship management (CRM) to customer-managed relationships
(CMR).
CMR, according to Newell,
is a business philosophy supported by all aspects of
the organization that personalizes interactions with
the customer as determined by the customer.
The author writes, "Customers
have shown they don't want to be hunted like prey. They
don't want to be managed; they just want companies to
make their lives easier and less stressful. They're
not removing their names from mailing lists for defensive
reasons. Rather it's an offensive lifestyle management
tactic aimed at reconfiguring and improving -- not severing
-- their connection with marketers."
Because CMR forces companies
to think of customers as individuals, it offers the
greatest opportunity for creating long lasting, loyal
and, ultimately, more profitable relationships.
The author identifies
Lands' End's use of instant messaging to enable shoppers
to communicate to online service representatives as
an example where letting the customer manage the relationship
works to the benefit of the retailer. By empowering
the consumer with the means to push the dialogue, the
retailer has found that customers who make use of its
"Lands' End Live" spend eight percent more than those
who do not, and these same shoppers are nearly 70 percent
more likely to make a purchase than the average visitor
to the web site.
Why CRM Doesn't Work
does not represent a giant leap forward in the understanding
of consumers or the creation of customer-responsive
organizations. It does, however, provide a coherent
analysis of the obstacles to creating such an organization
while providing recommendations for creating customer-managed
businesses.
It's worth a read.
---
CLICK
HERE to see this complete RetailWire.com discussion
forum entitled "CRM Doesn't Work".
###
About RetailWire.com
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Editorial inquiries,
contact:
George Anderson
908-709-1690
geoanderson@retailwire.com
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