A Failing Grade
(Note: These figures assume CRM is increasing sales by 10 percent. But, in many cases, for reasons shown earlier, CRM has no valuable benefit. In the majority of companies, it does not affect the sales rate at all! Much of the money spent on CRM is wasted.)
Many companies believe a data warehouse and CRM software will achieve profitability. This is a mistake. What makes for profits is communicating with customers in ways that change their behavior for the better. You don't need a giant warehouse to do this. You don't need million-dollar software. Spend as little as possible on the database and the software. Spend most of your time studying your customers and their behavior. Dream up strategies to improve their loyalty, retention and increased sales. We need imagination and advanced strategic thinking—not expensive, massive projects.
Arthur MIDDLETON Hughes is director of database marketing strategy at DoubleClick Data Management Solutions. He is the author of "The Customer Loyalty Solution" (McGraw Hill 2003). Hughes can be reached at firstname.lastname@example.org or at (954) 767-4558.