Why CRM Fails Many Companies (and Can We Fix It?)

A study just released by the Chief Marketing Officer Council showed that a large percentage of marketers are unhappy with their CRM systems. Specifically:

• 45% believe CRM systems are not effective enough
• 85% do not think they can integrate disparate customer data sources well
• 94% do not believe they have an excellent knowledge of customer demographics or transaction histories

As a result, even though nearly a third of the companies surveyed have customer churn rates of over 10%, two thirds have no system in place to go after these lost customers. In effect, most companies' marketing efforts resemble a "leaking bucket" -- a lot of effort is spent getting customers in, but not much is done to keep them.

Part of the problem may be cultural. Perhaps we think of "growth" as adding new customers rather than serving existing ones better. A big part of the problem, though, is surely technological. It is harder to figure out how to generate additional revenues from our existing customers than to go after new ones. For example, there's not much involved in renting mailing lists, putting out more advertisements, or paying more for online clicks. But how many companies could really pull together all their transactional data from their retail stores, online stores, and other sales channels, and use that data to figure out what they should be doing?

This is exactly the problem we will try to solve with opentaps analytics, where we're building a set of standard tools to help you better understand your customers. We have just gotten started with this effort and made some good progress, and I will make more posts as we go along.