Comment: CRM's murky future

CRM technology was so terribly hyped in the late 1990s that it was almost impossible to meet the inflated customer expectations.

commentary Microsoft recently threw its hat into the CRM ring, a harbinger of yet more change in an already tumultuous part of the software industry.

These are clearly uncertain times for the customer relationship management business, which has been marked by declining sales, unhappy end users and ongoing consolidation.

How the future will play out remains unclear but before any consideration of the coming months and years, CRM providers must first examine how things got so badly fouled up in the first place.

A good start would be to take responsibility for making ambitious promises that were simply impossible to keep. CRM technology was so terribly hyped in the late 1990s that it was almost impossible to meet the inflated customer expectations. CRM was further hurt by popular confusion and a series of tactical missteps that resulted in the current customer backlash. Let's take a closer look.

CRM and sales force automation are two separate categories that have long been wrongly lumped together. While sales force automation is designed to equip a sales force to close deals, it does not influence customer adoption, an element that goes to the heart of the CRM agenda. Sales force automation is about acquiring new customers, but CRM is concerned with identifying, servicing, retaining and increasing profitable customer relationships. In other words, we're talking about apples and oranges.

The absence of a business strategy also hurt. Amid the "technology as panacea" culture that bloomed in the late 1990s, CRM got sold as a technology rather than a solution to a central business problem: the effective and profitable communications with customers. Indeed, a Harvard Business Review study found that customer loyalty increases significantly when interaction with a company--even when negative--reinforces the connection between customer communication and revenue.

What's more, the failure to truly integrate CRM into business processes also contributed to the current mess. In a rapidly changing and highly competitive economy, the old adage that CRM is a philosophy and not just a technology rings truer than ever. It's about long-term commitment to the customer and must be more than just "have a nice day" and "thank you for your business." CRM is about doing what you committed to do, providing real value and committing to customer service.

CRM technology was so terribly hyped in the late 1990s that it was almost impossible to meet the inflated customer expectations.

What this boils down to is helping companies deliver on promises to customers--whether that means repairing a product, honoring a simple request or meeting a deadline. Everyone can relate to the frustration of asking a company more than once to do something, such as update a mailing address. Conversely, we all appreciate being pleasantly surprised when a preference we previously communicated is remembered and acted on. Each instance either supports or erodes loyalty.

Against the backdrop of war and recession, technology buying patterns are changing. Customers aren't so quick these days to make new IT investments as they are to squeeze what they can out of their current infrastructure. They are under increasing pressure to better manage all customer-centric business processes.

Where do we go from here? CRM can still prove its value by helping with the complex task of integrating and automating business processes. But software suppliers must get off the fence and demonstrate a greater customer commitment to shepherding through CRM implementations from start to finish. Quite frankly, the bar has been raised and a higher level of commitment is truly the missing ingredient. CRM providers must answer that call every day in order to thrive with customers, and not simply because of customers.

IT departments will expect nothing less.

Dror Pockard is president of the ClarifyCRM unit of Amdocs.