CRM: Strategy comes before technology

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By: Wise Marketer Staff |

Posted on March 21, 2002

A new report from Booz Allen Hamilton looks at the problems besetting many CRM programmes, and concludes that the lack of underlying strategy is to blame.

Even though corporate spending on CRM has risen rapidly over the last five years - and between US$20 billion and $45 billion are forecast to be spent on it in 2002 - many senior executives are still frustrated at the return on investment from it. Some industry observers say that history is repeating itself - it's the same problem that faced Enterprise Resource Planning (ERP) programmes in the 1980s and '90s.

A new study from management consulting firm, Booz Allen Hamilton examines these problems and identifies some key factors that need to be in place.

Strategy before action
Study after study shows that companies are increasingly focusing on meeting customer expectations and extending customer relationships. And one recent study by Booz Allen and the Kellogg School of Management at Northwestern University (see article) revealed that those companies that do focus on relationship building activities and emphasize growth opportunities are much more likely to be top performers. According to Booz Allen VP, Mitch Rosenbleeth, "Our clients are telling us that the customer management challenge is the single most important CEO agenda item - acquiring them, retaining them, and capturing fair value from them." However, he continues: "Strategy must come before action. CRM can enable a complete transformation of business, but CRM technologies produce value only when properly deployed in support of winning customer strategies."

Business leaders must resist the temptation, under pressure for quick results, to use technology as a shortcut to better customer management. With the right strategy in place and the right technology to support the strategy, and a low-risk, gradual approach, the gains can be almost immediate, while still laying a long term foundation.

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