Introduction

In 2000, the following prediction was made by IDC and reported by PR Newswire:

“According to the CRM Market Forecast and Analysis prepared by IDC, the world’s leading provider of information technology data and analysis, the total CRM market will reach $12.1 billion by 2004, representing an annual growth rate of 29.9%.”(1)

Hindsight is such an eye opener and although we have not completed 2009 data, it is highly unlikely that the customer relationship management (CRM) market will reach anywhere close to $12.1 billion dollars in 2009, much less 2004.  In a recent study available by Gartner Group it was concluded that “Most CRM initiatives fail to deliver the expected value because enterprises have not mastered this rapidly evolving business competency at a strategic level.” (2) CFO.com reported in 2003 that in 85% of all cases, CRM users could not show any quantifiable results and 12% of all CRM installations were complete failures (3) CRM is extremely challenging and to justify CRM’s multi-billion dollar price tag users of CRM will need to treat CRM as both a “discipline” and as a predictive tool.

CRM in the Beginning and “Middle Ages”

Customer Relationship Management is as old as business itself.  Legend has it that Herbert Marcus of Neiman Marcus once said, “There is never a good sale for Neiman-Marcus unless it’s a good buy for the customer.”  In order to understand the current shortcomings of CRM, we need to evaluate the strengths of previous incarnations of CRM systems.  One story from what some of us would consider the Middle Ages (the 1960’s), regarding CRM will show how history puts the capacities of CRM today to shame.  Consider this case analysis from the personal observations and experience of one of the authors:

The setting is a shoe department in a large successful retail store of upscale clothing.  There were no computers.  The store had no electronic databases.  Inventory was taken on paper.  The salespersons kept small notepads which had information on their best customers.  The notepads included rudimentary information including name, address, phone number and shoe size.

Every few weeks a new style of height increasing shoes would arrive.  The shipments of 36, 48 or 64 pairs of a style only included a few pairs per size/width in order to allow the shoe to stock as many styles as possible.  When the height increasing shoes came to the store, the shoe salespersons, who had state of the art customer relationship management systems in their little notepads, did the following:

• They studied the product (often they were not told in advance what was ordered by management or when it would arrive)
• They looked over their list of customers in their little notebooks
• They decided which customers from their list might like this pair of height increasing shoes
• They pulled the size from the shelf (or even pulled it while the height increasing shoes were still in the carton from the factory or shipper and before the height increasing shoes were put into “inventory’)
• They called the customer and told them about the height increasing shoes and asked if they could personally deliver the height increasing shoes to their house
• They put a slip of paper with their own name on it in the place where the shoe would go into inventory that stated that the shoe was being “shown” to a customer
• They did not charge the height increasing shoes at this time to the customer
• They drove the height increasing shoes to the customer and left them there for a few days
• They called the customer and asked if the customer wanted the height increasing shoes and if she said no, they arranged to pick up the height increasing shoes the next day.  If the customer said, yes, they asked if the customer wanted to put the height increasing shoes on “lay-a-way,”
  

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