Is it Customer Relationship Management or Customer Relationship Marketing

by James on September 2, 2008

What does the “M” in CRM stand for? Is it customer relationship marketing or management? Traditionally it meant Management, as in Customer Relationship Management.  I hate this.  It’s an anachronism from the CRM boom in the ’90s.  Big software companies like Oracle, ePiphany, IBM, sold CRM software to companies that wanted to manage customers.

There are two big problems with this:

  1. The big software companies made more money selling big solutions, to Chief Technology Officers in big companies, so big solutions are what they sold.
  2. Customers weren’t keen on being managed.

Oops.  Many, many millions of dollars were spent by companies on bloated customer management systems that either never worked or worked so badly that the ROI wasn’t there.  Plus, many millions more were spent on the consultants required to install the systems and get them working.  The customers got many emails and phone calls from eager sales staff that added little or no value.  How bad was it?  A former client, she worked at the large telco I had as a client, told me they spent north of $80 million on CRM systems that never worked.

A better approach is to have CRM mean customer relationship marketing, as in marketing to build the customer relationship. Semantics you might say but none the less important. Creating a relationship with customers build value for all parties. Customers don’t mind marketing that’s relevant. They understand that it’s a commercial relationship.

This seemingly small shift in meaning can pay huge dividents to you and your company. Think about it. As a customer, woud you rather be managed by the companies you do business with or have them use their marketing to tell you about interesting new products and featurs relevant to your needs.

Hip Shot

  • AdAge reports that CRM is making a comeback.  If it’s true, I hope “Marketing” can replace “Management.”  Then the potential of CRM to be a growth driver might be realized.

{ 1 comment… read it below or add one }

Sonia Simone September 4, 2008 at 12:10 pm

I always thought CRM was a brilliant kernel concept that was nearly always executed horrendously. Instead of using CRM to make smarter and better connections, most companies saw it as a good tool to strip mine their customer base. What a great idea.

I’m sure there are companies using CRM in Godinish ways to actually make their relationships a little more remarkable. The technology to do that doesn’t have to be too complex. A customer history, a notes field, and support/frontline people who give a damn. The last one is the tricky bit, of course.

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