Cost of Generating customers

The following list represents a set of legitimate CRM business objectives from several clients currently in the throes of their CRM programs:

* “We want to thoroughly understand our customers’ needs even before they know them themselves.” – A mid-market financial institution.
* Decreasing customers churn by increasing customer satisfaction – A competitive local exchange carrier.
* Motivating customers to initiate revenue generating contacts with us – An online insurance company.
* “Increasing the likelihood of the ‘right response’ by a given customer or customer segment”. – A catalog retailer.
* To use technology to improve customer service and enable a greater degree of customer differentiation in order to deliver unique customer interactions—A data services firm.
* We want to attract customers both old and new through more personalized communication—An online retailer.

The point here is that there is not one but many visions for CRM success. CRM promises to help companies get to know their customers well enough to understand which ones to keep and which ones they should be willing to lose and why and how not to overspend in the meantime. CRM also means automating many of the business processes and accompanying analysis and saving precious time in the bargain.

And saving money: Charles Schwab’s multimillion-dollar investment in Siebel’s CRM product, which the brokerage firm uses to track each interaction with a customer or prospect, was recouped in less than two years. Stories of wildly successful CRM programs have invaded both print and cyberspace spurring otherwise cynical executives to turn their heads in the CRM direction.

The estimated 70 percent of companies who have tried implementing standalone CRM systems and failed, as well as the legions of other companies who have taken missteps on their e-business journeys might have a few comments. As with enterprise resource planning (ERP), supply chain management (SCM), and other wide-reaching corporate programs that mandate a combination of innovation technologies, new business processes, and organizational buy-in, CRM’s failures are vast and visible.

From Customer Acquisition to Customer Loyalty:

If consumers purchased only what they really needed, the economy would collapse. Indeed, one could argue that the heady mixture of good times and popular fads from protein bars to same sex fragrances to sport utility vehicles has created a veritable buying frenzy.

But consumers are fickle, and more cynical than ever before. They say “We no longer believe what we read and see, and for large purchases we’re more inclined to do our own research”. Your company has just announced another strategic alliance? You’ve got a cool new animated logo? You’re on your fourth round of venture funding?

Consumers are also busier than ever and have consequently placed a premium on their leisure time. After all, why tramp through aisle upon aisle of merchandise when a customer can order groceries off the Web and spend more time with the kids? And pizza, dog food and even that sport utility vehicle all can be ordered online through web.

In a recent information week survey, of the companies actively implementing CRM, 93 percent claimed increased loyalty and customer satisfaction would justify their CRM investment. The second-highest percentage, 83 percent, stated the need to demonstrate increased revenue. The implied mandate for most of these early adopters seems to be “customer loyalty at any cost – even if we don’t see a return on investment”.

It certainly doesn’t take much for a consumer to turn her head to a competing product or vendor. A Jazz buff has a mental list of the CDs she wants to buy. When CD now e-mails her a discount code for the new Dave Brubek recording, she goes to the site and buys it despite her hefty “wish list” on