"The latest buzz in the industry seems to be around CRM, or Customer Relationship Management. The premise behind this latest "savior" is simple: Get a 360-degree view of your customers and you can learn more about them and serve them better. Of course, in serving your customers better, your profits will grow. But can you see the flaw in this logic?
It's tough to spot the flaw because the promise is so exciting. The solutions being offered in the CRM space tout the ability to bring together all of the various customer interactions into one consolidated view. With this consolidated view, you can provide your customers better service. With this consolidated view, you can more easily identify your most profitable customers. With this consolidated view, you can learn more about these profitable customers and tailor your marketing efforts to acquire more like them. With this consolidated view, you can more efficiently handle your customer base with fewer resources. The list of virtues goes on and on.
Of course, the keyword in all of the above is "customer." Herein lies a flaw at the root of most of the current CRM fervor. In order to realize the fabulous benefits of customer relationship management, you must first turn a prospect into a customer. However, the majority of e-commerce sites on the Web are converting prospects to customers at the rate of 1-2%. This means that all of the effort and expenditure involved in a CRM implementation will be lost on 98-99% of visitors coming to these sites!"