Friday, June 22, 2007

Fear of Commitment

No, I'm not talking today about some of the men I've dated in the past...

Today's topic is (drumbeat, please) CRM technology. Specifically, I want to explore reasons why so many times a huge technology investment for CRM tools never pays off. Why do so many CRM deployments end up dead, never used correctly and abandoned by the company that had such high hopes when they initially deployed the technology?

Case in point--Albertsons Grocery stores. They just announced that they're abandoning their loyalty program. Apparently, grocery managers weren't taking advantage of the rich data collected every time shoppers swiped their card to get grocery discounts. Wow, think of the money wasted by this significant investment in building and deploying such a large loyalty program.

It's stories like Albertsons that give CRM a bad name--horror stories about firms that spent a bundle on CRM systems that users never use. I think it comes down to a simple fear of commitment. Firms need to embrace, shall I say, COMMIT to an environment that is focussed on the customer well before they even think about spending money on any technology. They need to understand that buying technology for the sake of technology or because they believe that they need to keep up with their competitors (which may be the case with Albertsons) is just dumb.

Prior to any CRM investment, at the very minimum, these three simple questions should be answered thoughtfully and completely:

1. How will our customers benefit from this new program? In the case of grocery loyalty programs, in my opinion, the benefit was never clear. As a shopper, I know that I need to participate in order to get the discounts, but I'm never happy about having my buying habits open to scrutiny. Why can't I just get the discounts? Now, if they would take the program to another level (and some chains may, just not the ones I shop in), that would be different. If they sent me a coupon for a free box of laundry detergent just when they knew that I'd be needing it, that would be great. If they celebrated my birthday by giving me a nice bottle of wine that they knew I enjoyed, that would be super. As a consumer, I never see these types of personalized benefits, although the stores have all the data they need to extend them, if they choose to.

2. What will be our return on this signficant technology investment? CRM was such the buzzword several years ago that many firms simply just jumped on the bandwagon without the due diligence that they would have given any other similar-sized investment. Any CRM investment needs to ultimately pay for itself. Whether it's increased lifetime value, new customers acquired, more customers retained, cross-sell, up-sell, whatever, goals need to be articulated up-front and tracked over-time.

3. Do I have commitment from all levels of the company? There's that pesky word again, commitment... But this is so true. Not only does the CEO need to be a customer advocate, but any users of the system need to understand the customer-focussed vision. If ultimate users of a CRM tool understand the vision behind it (and not just see it as another new technology step that they need to deal with to finish their job for the day), they may surprise you by devising new ways to use the tool to create customer satisfaction. At the minimum, they'll use the tool in the way it was designed.

If you have any other core questions that should be explored before investing in technology, please share.

TGIF. Enjoy your weekend!

1 comment:

Suzanne Obermire said...

Please see the following correction from Albertson's Director of Communication and Public Affairs:

"Hi Suzanne

I just wanted to send a correction for your blog posting. Albertsons, a SUPERVALU company, does have its Preferred Card program in place. Albertson LLC, which is a separate company, dismantled their program. People confuse us a lot as we just split last year, so wanted to let you know that in California, the Preferred Card program is still live and kicking, and we have no plans to take it away.