Why CRM Fails —
and How to Fix It
Customer relationship marketing was supposed to be a “new paradigm,”
yielding more loyal customers and much more profit for companies.
It hasn’t. What should managers do?
BY STAN MAKLAN, SIMON KNOX AND JOE PEPPARD
DURING THIS MILLENNIUM, many marketers seem to have bet the family silver on customer
relationship management investments with little to show for it, and those marketers are now attempting to justify further investment in order to achieve their original goals. To suggest that they
have arrived at this uncomfortable place because they are regarded as unaccountable and financially innumerate, or that CRM technologies are immature and consumers simply won’t engage
with such new technology, is too simplistic. The problem is more fundamental: Most senior management teams have an unbalanced approach to managing marketing investments, and this is
particularly evident in the case of CRM. They focus on the key resources in which they invest capital, such as technology, location and advertising, but ignore the commensurate investment of time,
energy and talent to develop the capabilities required to leverage those investments. Of course, this
approach to marketing investment is risky: It generates excessive investment before the organization is capable of leveraging it profitably.
All of this is a far cry from CRM’s original promise: New forms of consumer relationships were
going to revolutionize marketing, rewriting its rules and calling into question decades of scholarship
for the greatest return?
; Develop new
; Backfill with
to sustain and
BMW’s investment in CRM evolved as its understanding of how consumers reacted to direct relationship initiatives expanded.
COURTESY OF BMW
SUMMER 2011 MIT SLOAN MANAGEMENT REVIEW 77