CRM: Do you really know what it is?

There are those who would have us believe that buying software can make a company communicate more effectively with its customers - and there are those who point out that all the technology in the world won't make an ineffective company any better. Luke Mellors, IT director at hotel booking hub Expotel, sheds some light on the issue.

I come from the services industry where knowing your customers, their habits and what they want is king. In the hospitality sector you don't provide a product to everyone you provide a unique experience to someone.

And it is inevitable that in the process of making that happen decision makers will have become very familiar with CRM and the claims of CRM vendors.

If businesses are trying to utilise the value of IT to increase their customer intimacy and serve their customers in an unforgettable and positive way then CRM... must be more than a marketing system.

But CRM is one of those overused and often misunderstood terms within our sector.

Firstly, it is born out of the same DNA as business intelligence and data warehousing in that it exists simply because core business systems are ineffective at storing, delivering and utilising information. It delivers on a need but a need that is driven out of necessity and failure as opposed to innovation.

Secondly, it is deemed a sales and marketing tool yet contains vital operational, historical and preference information on customers. That begs the question why a function of the business that should be looking at new markets holds the key to how to service existing ones where the rest of the business doesn't.

But instead of berating too many people let's hope that we can generally define CRM as the storage and delivery of information that allows a business to understand, action and know its customers better.

Certainly, many businesses have now identified the need for IT to deliver increased customer intimacy.

The back story to what represents something of a rethink across many businesses takes us back to the 1990s. You see, 1990s system development was in my view a transactional-based economy that was simply about processing sales, goods and numbers to meet the needs of the business. This need was viewed as the transaction between two individuals that resulted in a financial or otherwise rewarding gain. Most businesses that exist today have evolved since that time.

The problem occurs though in that the main function of the business is still considered the transaction and not the customer.

This is a concept I find increasingly difficult to come to terms with as in my experience it is next to impossible to separate the two. A transaction-based economy is one that has no past and no future - it is an action that happens.

If businesses are trying to utilise the value of IT to increase their customer intimacy and serve their customers in an unforgettable and positive way then CRM (however much I dislike the term) must be more than a marketing system. Transactions happen because of a relationship that is developed over time and for the future, and so managing customer relationships must be important to any business.

My view is not that companies should go out and buy the very first CRM system they see but rather that - with respect to CRM which is as much a mindset as a technology - companies must review how they look at their business and customers. Where appropriate they should review the effectiveness of existing systems in delivering this singular customer view and certainly investigate if CRM in its current form, or other core business systems, can deliver across their business and not just to the sales and marketing function.

However, whatever the relevance of CRM - as a phrase, as a technology and as a concept - I certainly do not underestimate the value of investing in systems that understand your customer better and allow you to manage this understanding in an effective way that will make your customer feel special. And that is all that counts.