Exploding the CRM myth

Strategist Jeff Maling says increased investment in CRM software has bought only steadily declining customer satisfaction rates. That's not what was supposed to happen. So why the disconnect?

4 min read
Despite investing tens of millions of dollars in customer relationship management software, a client recently noted that his company's customer satisfaction and loyalty rates have actually declined.

see related story: Is CRM all it's cracked up to be? CRM, he concluded, seems to be an "un-winnable" game. He is not alone.

Five years of increased investment in CRM have bought only steadily declining customer satisfaction rates. This is especially true in service industries where CRM theoretically should have the greatest impact.

The cause of this incongruity is relatively straightforward. The increase in channels (e-mail, Web, wireless) over the past few years has driven down customer satisfaction rates. With the introduction of each new interaction channel, the customer's expectation of service rises. This proliferation of channels has made it increasingly difficult for companies to deliver a consistent level of service.

The IT department struggles to integrate the new channel and instead builds another data silo. The marketing department, well versed in traditional direct marketing and mass media, struggles to articulate a consistent and compelling brand experience in technology-enabled channels. The result: a disjointed experience for customers and a widening gap between customer expectations and company performance

Fortune 2000 companies are a long way from delivering an integrated customer experience across channels. Consider the following:

• Only 48 percent of firms know a problem before the customer finds out.
• Only 43 percent alter service based upon a customer's profitability.
• Only 42 percent would sell something during a service call.
• Only 37 percent know if they share a customer with another division.
• Only 23 percent of telephone agents can see a customer's Web activity.

If you want to satisfy the customer, the answer lies somewhere between marketing and IT.
The key to getting return on CRM investments in this era of channel proliferation is to unite marketing and IT with a common goal of delivering an integrated channel experience.

Easier said than done.

These two functions have arguably the greatest impact on the customer experience, but approach delivering these experiences from fundamentally different perspectives. These differences are magnified in each group's approach to channel integration.

Many marketing departments enjoy prestige without real power. They excel at corporate branding and advertising, but play little role in developing channel experiences. Channel experiences, like the wait time for the call center or navigating through a Web site, play an increasing role in building and maintaining brand equity.

Marketing fails to effectively manage channel experiences for two main reasons: (1) They lack sufficient technology understanding to develop experiences in increasingly technology-enabled channels. (2) The rest of the organization believes marketing's singular role is to generate sales leads.

The results can be devastating.

The marketing department creates a corporate brand that is in stark contrast to the experience in the channels. When this happens, channel experiences destroy brand equity. Frequent travelers experienced this disconnect first-hand with United Airlines' "United is Rising" campaign. While being bombarded by the airline's aspirational brand messaging, service levels plummeted. The marketing message was a constant reminder that the company was not living up to its brand promise.

CRM can raise customer satisfaction levels, but this will not occur just by implementing CRM technology.
IT arguably has the greatest effect on the channel experience in today's environment because of the role technology plays in channel interaction. Unfortunately, IT is most often relegated to a support function within most companies; it's not a strategic decision-maker.

IT departments get too bogged down in the technical aspects of channel integration, in a fruitless effort to build a better mousetrap. They often spend years developing the technical architecture to support integration but spend far too little time designing the business processes for integration.

Because of their traditional support role, IT relies on operations to drive the requirements gathering for channel integration. However, most channel managers do not understand the channel-enabling technologies well enough to drive this process. The result is a typical cat-and-mouse game. IT asserts that channel integration would be technically possible if the business would tell them what they want integrated, and the business blames IT for not delivering.

To close this gap between marketing and IT, organizations in the short term must rethink how they structure CRM projects and how they promote and give incentive to their employees.

Through a joint team from marketing, operations and IT, organizations should review the core channel processes from lead generation to service. For each of these processes, they must address how the brand experience will be articulated and how the channels will be integrated. IT should have both a short-term and long-term approach for integrating the channels.

In the long term, organizations must rethink how they develop their employees, giving both IT and marketing a more active role in channel development and management. CRM can ultimately raise customer satisfaction levels, but this will not occur just by implementing CRM technology.

Improved customer satisfaction and corporate performance, the Holy Grail of CRM, will be dependent on developing integrated customer experiences that leverage technology and reinforce the brand.