Why CRM fails - And how to fix it

MIT Sloan Management Review

Volumn 52, Issue 4, 2011, Pages 77-85

  Maklan, Stan ^a   Knox, Simon ^a   Peppard, Joe ^a  

^a CRANFIELD UNIVERSITY   (United Kingdom)

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[No Author keywords available]

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EID: 80052331639     PISSN: 15329194     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (32)

1. Marketing is indeed hard on itself, perhaps more so than any other function in business, and particularly on the issue of marketing accountability. See M. McDonald, "Marketing: Priority Case for a Reality Check," Marketing Review 3, no. 3 (2003): 253-271.
2. Despite such harsh self-critique, a growing body of high-quality research links marketing activities to business performance and increased market capitalization. A recent exemplar of this research is S. Srinivasan, K. Pauwels, J. Silva-Risso and D. Hanssens, "New Products, Sales Promotions, and Firm Value: The Case of the Automotive Industry," Journal of Marketing 68 (Oct. 2004): 142-156. (Pubitemid 39508317)
3. J.N. Sheth and R.S. Sisodia, "Revisiting Marketing's Lawlike Generalizations," Journal of the Academy of Marketing Science 2 7, no.1 (winter 1999): 71-87.
4. J. Hagel and M. Singer, "Net Worth: Shaping Markets When Customers Make the Rules" (Boston: Harvard Business Press, 1999).
5. See A. Payne and P. Frow, "A Strategic Framework for Customer Relationship Management," Journal of Marketing 69 (2005): 167-176. (Pubitemid 41504946)
6. The estimates of the CRM solutions market are cited from A. Payne, "Handbook of CRM: Achieving Excellence Through Customer Management" (Oxford: 1. Butterworth-Heinemann, 2006). Payne and Frow define CRM in the context of a continuum. The broad, strategic definition of CRM is a "holistic approach to managing customer relationships to create shareholder value," whereas the narrow definition is about the "implementation of a specific technology solution." In between the two extremes is the mainstream definition of CRM as "the implementation of an integrated series of customer-oriented technology solutions."
7. See A.R. Zablah, D.N. Bellenger and W.J. Johnston, "Customer Relationship Management Implementation Gaps," Journal of Personal Selling & Sales Management 24, no. 4 (fall 2004): 279-295. Zablah et al. provide a meta review of CRM's very mixed results. In their article they refer to a study by Gartner Group from which we cite our failure rate. Their study is said to be the most authoritative. (Pubitemid 40815652)
8. Information systems scholars are very clear that it is the ability to leverage technology rather than the technology per se that generates competitive advantage; the technology can be bought by anyone, but only a few companies really leverage it effectively. See A. Hughes and M.S.S. Morton, "The Transforming Power of Complementary Assets," MIT Sloan Management Review 4 7, no. 4 (summer 2006): 50-58; (Pubitemid 44147025)
9. and J. Peppard, J. Ward and E.M. Daniel, "Managing the Realization of Business Benefits from IT Investments," MIS Quarterly Executive 6, no. 1 (2007): 1-11.
10. Strategy scholars make similar claims; see M. Zollo and S.G. Winter, "Deliberate Learning and the Evolution of Dynamic Capabilities," Organization Science 13, no. 3 (June 2002): 339-351;
11. R. Sanchez and A. Heene, "Reinventing Strategic Management: New Theory and Practice for Competence-Based Competition," European Management Journal 15, no. 3 (June 1997): 303-317. (Pubitemid 127167613)
12. R. Makadok, "Toward a Synthesis of the Resource-Based and Dynamic-Capability Views of Rent Creation," Strategic Management Journal 22, no. 5 (2001): 387-402.
13. Zollo and Winter "Deliberate Learning."
14. Tacit knowledge is a foundational concept in the resource- based view of the company. Competitive advantage is derived from the combination of company-specific assets (e.g., brands, distribution networks) developed in step with dynamic capabilities to create inimitable resources. The dynamic capa bilities result from organizational routines, how-we-do-things-around-here, that distinguish one company from its competitors and are based in employees' tacit knowl edge. Because this knowledge is tacit, competitors cannot acquire it; if they could, the resource would no longer be inimi table. This sets up one of the great challenges for management: How does one manage and leverage that which is tacit in order to develop competitive advantage? A means of addressing this challenge, the importance of which is widely discussed in the literature, is presented by the authors in this paper. See A.W. King, S.W. Fowler and C.P. Zeithaml, "Manag ing Organizational Competencies for Competitive Advantage: The Middle-Management Advantage," Academy of Manage ment Executive 15, no. 2 (May 2001): 95-106; (Pubitemid 33717030)
15. D.J. Teece, G. Pisano and A. Shuen, "Dynamic Capabilities and Strategic Management," Strategic Management Journal 18, no. 7 (Au gust 1997): 509-533; (Pubitemid 127467809)
16. N.K. Kakabadse, A. Kouzmin and A. Kakabadse, "From Tacit Knowledge to Knowledge Manage ment: Leveraging Invisible Assets," Knowledge and Process Management 8, no. 3 (July-September 2001): 137-154. (Pubitemid 33315415)
17. CSC, pioneers in re-engineering, found that overwhelmingly, IT-process-led re-engineering was led by the IT function. In none of the companies it surveyed did marketing lead a re-engineering program. See CSC Index State of Reengineering Report" (Cambridge, Massachusetts: 1994).
18. IT should not lead large change projects alone; see M. Sum-ner, "Risk Factors in Enterprise-Wide/ERP Projects," Journal of Information Technology 15, no. 4 (December 2000): 317-327;
19. T.H. Davenport, "Mission Critical: Realizing the Promise of Enterprise Systems" (Boston: Harvard Business Press, 2000).
20. The strategy literature makes a clear distinction between individuals' skills and abilities and the concept of the organization's capabilities; see the references for Teece et al., "Dynamic Capabilities" and Zollo and Winter Deliberate Learning."
21. For a knowledge-based perspective on this issue, see R.M. Grant, "Toward a Knowledge-Based Theory of the Firm," Strategic Management Journal 1 7, Special Issue (winter 1996): 109-122.
22. P. Kotler, "A Generic Concept of Marketing," Journal of Marketing 36, no. 2 (April 1972): 46-54.
23. D. Peppers and M. Rogers, "The One to One Future" (London: Piatkus, 1994).
24. C. Shapiro and H.R. Varian, "Information Rules: A Strategic Guide to the Network Economy" (Boston: Harvard Business Press, 1999).
25. R.S. Achrol and P. Kotler, "Marketing in the Network Economy," Journal of Marketing, 63 (Special Issue 1999): 146-163.
26. Further explanation of the research behind this analysis can be found in S. Maklan and S. Knox, "Dynamic Capabilities: The Missing Link in CRM Investments," European Journal of Marketing 43, no. 11/12 (2009): 1392-1410.
27. G. Wood, "Flutter's Departure Leaves Bitter Taste," Guardian, Jan. 16, 2002.
28. S. Maklan, S. Knox and L. Ryals, "Using Real Option to Help Build the Business Case for CRM Investment," Long Range Planning 38, no. 4 (August 2005): 393-410. (Pubitemid 41149471)
29. K.M. Eisenhardt, "Building Theories from Case Study Research," Academy of Management Review 14, no. 4 (October 1989): 532-550.
30. The integration of business processes around the needs of individual customers or customer segments as a means of delivering the brand is discussed by M. Christopher, A. Payne and D. Ballantyne Relationship Marketing: Strategy and Implementation" (Oxford: Butterworth-Heinemann 1999);
31. D. Peppers and M. Rogers, "Enterprise One-to-One: Tools for Competing in the Interactive Age" (New York: Currency Doubleday, 1997);
32. J.N. Sheth, R.S. Sisodia and A. Sharma, "The Antecedents and Consequences of Customer-Centric Marketing," Journal of the Academy of Marketing Science 28, no.1 (winter 2000): 55-66.