Earning a Positive ROI on Your CRM Initiative

Les Stern

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Eric Stern was the first expert at Customer Relationship Management (CRM) I ever knew. Here are some interesting things about Eric Stern (my father) you may not associate with a CRM expert.

• He never went to college
• He never used or owned a computer
• He never used the Internet; in fact, he passed away in 1984, years before the Internet made its way into society.

So why was my dad an expert at CRM? Here's why. My dad owned a men's clothing store. Following is a typical customer encounter.

• He would politely greet the customer, either by first name or last name, depending on the relationship.
• He would briefly excuse himself, go to his office, and open a small metallic box (his CRM "hardware").
• He would sort through the index cards (the CRM "datamart") and pull the index card he had filled out - in pen - for that particular customer (the "customer record").
• He would then analyze the information ("content") in that record. That data would include purchase history, "customer demographics" (i.e., birthday, spouse's name, etc.) and any other information.
• With this intelligence, he would return to the customer. He would engage the customer, drawing out his needs. He would remind the customer of his recent purchases (which would impress the customer). Then, based on the customer's needs and his knowledge of past purchases, he would put together the "solution" the customer needed.
• He would back this with excellent service, including free alterations, delivery, etc.

Although he never even heard the term CRM, what Eric Stern did captured the essence of what you need to do to achieve a positive return on your CRM investment: combine the intelligent use of information with a true caring for the customer. Twenty years later, CRM is a buzzword. Everybody says they are in the CRM business:

• Companies that sell sales automation and other types of technology (part of CRM, certainly, but certainly not the total package)
• Companies that sell demographic and behavioral data (again, an important piece of a total CRM solution, but not CRM itself)
• Even companies that sell gift baskets and premiums such as pens and T-shirts have claimed to be in the CRM business.

Small wonder, then, that when organizations are being barraged by an ever-increasing number of CRM solutions, peoples' eyes glaze over. The purpose of this article is to provide some simple facts about what CRM is (and isn't), to explain why many CRM initiatives don't work, and to provide some tips so that you can achieve a positive return on investment on your CRM initiative.