CRM the Next Big Thing

Posted by on April 1, 2002

Branding has dominated the landscape of corporate America in recent years, but the best business minds in America predict that we’ll soon be hearing that term with steadily decreasing frequency. According to analysts Joe Romano (Scull and Co.) and Eric Rhoads (Radio Ink) and Shuki Lapid (Yehuda,) CRM is the new business focus most likely to take its place.

CRM is Customer Relationship Management, and its underlying premise is that it’s cheaper to upsell your current customers than to bring virgin traffic through your door. For reasons that should be obvious, Customer Relationship Management yields better results for companies that target relational customers rather than transactional customers. (For more information on relational and transactional customers see last week’s MMMemo, “Two Kinds of Customers.”)

Business people have long known that it’s 7 times more expensive to make the first sale to a new customer than to make an additional sale to a customer they’ve already got. This makes CRM an extremely attractive option in soft economic times, as it allows meager ad budgets to be supplemented by some in-house elbow grease. Additionally, CRM is doubly attractive in that it makes business owners feel like they’re taking action, rather than just sitting on the sidelines with their fingers crossed. But beneath its catchy acronym, CRM is really just a timely hybrid of database marketing and customer service-focused sales training.

Don’t confuse CRM with telemarketing, direct response ads or cataloging; it’s bigger and much more comprehensive than those. But it’s also more difficult to manage.

Traditional advertising can be delegated to an agency, but true CRM can only be managed in-house. This will likely be its fatal flaw. I fully expect to see thousands of businesses launch a CRM effort over the next few years only to see it fall out of the sky like a bird full of buckshot. The sad truth is that very few companies have management systems strong enough to implement effective Customer Relationship Management. Consequently, I believe CRM will be little more than a fad that arrives with a roar and leaves with a whisper during the next few years.

But… if yours is one of those rare companies that has a seamlessly effective management team, CRM may be just the tool you need to lunge ahead of your competitors.

Are your management systems strong enough to carry the load of CRM?

Roy H. Williams

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