Why CRM Doesn’t Work

Oct 30, 2003
George Anderson

Book Review by George Anderson

Why CRM Doesn’t Work, How to Win By Letting Customers Manage the Relationship by Frederick Newell
(Bloomberg Press, 2003) provides a concisely written, easy-to-follow analysis of the missteps and opportunities available for companies in search of the Holy Grail of customer
loyalty and retention.

Mr. Newell, who previously authored loyalty.com, Wireless Rules, and The New Rules of Marketing, places his greatest emphasis on the need for organizations
to move from customer relationship management (CRM) to customer managed relationships (CMR).

In many cases, the author claims, members within a company do not even share the same definition of what CRM means. This basic discrepancy added to internal politicking, fear
of change, technological challenges and other factors has doomed CRM initiatives to an alarmingly high rate of failure.

CMR, conversely, is a business philosophy supported by all aspects of the organization that personalizes interactions with the customer as determined by the customer. Because
CMR forces companies to think of customers as individuals, Mr. Newell maintains, it offers the greatest opportunity for creating long-lasting, loyal and, ultimately, more profitable
relationships with customers.

Mr. Newell, in sentiments echoed by Seth Godin, author of Permission Marketing, who contributed the forward to Why CRM Doesn’t Work, writes, “Customers have shown
they don’t want to be hunted like prey. They don’t want to be managed; they just want companies to make their lives easier and less stressful. They’re not removing their names
from mailing lists for defensive reasons. Rather it’s an offensive lifestyle management tactic aimed at reconfiguring and improving — not severing — their connection with marketers.”

The author identifies Lands’ End’s use of instant messaging to enable shoppers to communicate to online service representatives as an example where letting the customer manage
the relationship works to the benefit of the retailer. By empowering the consumer with the means to push the dialogue, the retailer has found that customers who make use of its
“Lands’ End Live” spend eight percent more than those who do not, and these same shoppers are nearly 70 percent more likely to make a purchase than the average visitor to the
web site.

Why CRM Doesn’t Work does not represent a giant leap forward in the understanding of consumers or the creation of customer-responsive organizations. It does, however,
provide a coherent analysis of the obstacles to creating such an organization while providing recommendations for creating customer-managed businesses.

It’s worth a read.

Moderator’s Comment: Do you agree that customer relationship management (CRM) doesn’t work? Do you agree with Fred Newell that it is time for business
to transition to customer managed relationships (CMR)?
Anderson – Moderator

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