Friday, April 19, 2024

Silver Lining To The Economic Slowdown

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While many pundits predicted this year that customer relationship management, because of its strategic importance, would remain immune from corporate budget cutbacks in 2001, this is clearly not turning out to be the case. CRM has been affected by the current economic slowdown, perhaps not seriously, but hurt nonetheless.

CRM software and specialty consulting practices have announced earnings downturns and layoffs as corporate clients postpone, re-scope, and cancel CRM initiatives. Chief information officers are feeling the heat from their bosses to show short-term payoffs from what are essentially long-term and strategic investments in CRM.

But there’s a silver lining to the economic slowdown, and it is this: companies are taking a more thoughtful, intelligent, and insightful approach to CRM. And, as a result of this new, somber attitude toward CRM, the gap is beginning to close between the outrageous marketing hype and the reality.

An Evil, Parallel Universe
For those of us facing the difficulty of integrating technology to improve customer business processes, the gap between hype and reality over the past few years has made for a pretty weird experience, like living in some evil, parallel universe.

If you were to believe all the CEO presentations to Wall Street analysts over the past two years, CRM has been installed and victory has been declared. Corporate America announced that it had learned the error of its product-centric ways and had embraced customer intimacy as a strategy initiative. CEOs announced that they had bought the enterprise software package, hired the Big 5 consulting firm to do systems integration, and re-aligned, re-sized, re-engineered, “re-paradigmed” their business operations.

If you were to believe the vendor community, the answer to CRM had already been developed. It could be easily installed, it offered better customer intimacy, deep personalization, lower customer service costs, and greater customer loyalty, and it maximized competitive advantage and return on investment.

Yet for those of us dealing with the hoary task of implementing CRM systems, the reality was very different. Businesses weren’t aligned at all. In fact, most corporate managers didn’t seem to have a unified version of what CRM was, nor a game plan to launch it.

CRM seemed to mean everything, which is to say that it meant nothing in particular. Sharing information about customers? Forget it! Not only did the systems not talk to each other, neither did the people working in the different business units. And they had no compelling reason to act otherwise.

2001: Year of Reckoning and Accountability
This year, things are dramatically different. CIOs are being put on a shorter leash, and CEOs are demanding more practical, sounder approaches to building customer loyalty. No longer can boom times mask the failure of sophisticated enterprise-wide implementations.

Now is the time for reckoning and accountability. And, in the long run, that’s good news.

Arthur O’Connor has more than 20 years of management experience in customer management, strategy, and new business development and serves as the chairperson of the Institute for International Research’s CRM Conference. He is a columnist for, an site where this story first appeared.

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