The New Revenue Model for CRM.

• Author: Hall, Robert
• Position: Bank customer relationship management plans being reconsidered - Brief Article

For mainly the right reasons, banks have spent the last few years focused on customer relationship management (CRM). But as bankers being second-guessed about their CRM outlays are quick to acknowledge, there is a disconnect between CRM intentions and its measurable impact.

When somebody said "CRM," what the CEO heard was "revenue." The speaker--whether it was a vendor, a guru, the bank's head of IT, marketing, or retail--probably meant call-center scripts, screen prompts, tiered service levels, customer analytics, campaign management or something equally tactical.

But the CEO heard "revenue." And thought "profitable revenue." And passed it on to Wall Street that way. Now they are disappointed by uncertain ROI, unclear metrics, unending budget outlays and so on.

Somewhere between the early, heady days of CRM promises and today's disenchanted realities, the people who said "CRM" fell in love with the means, not the end. They bought all the car parts, but could not build a car. They bought all the notes, but could not play a symphony. They have the best CRM technology money can buy, but most still don't have more valuable customer income streams.

Organizations of any size are vulnerable to such disappointments. Organized along functional lines, they tend to invest in solutions that improve or automate those functions--one at a time, silo by silo. Got a sales shortfall? Buy a sales solution. Got a cost problem? Replace something with technology. Got a revenue problem? Change your pricing.

So they are having a CRM hangover. Because they couldn't tell when CRM meant revenue and when it didn't, they drank the whole thing and now they can't believe it.

But if they were to start afresh--if they were to truly design for revenue--they would take a different approach. Instead of looking for revenue opportunities in functional silos, they would design for the function of revenue creation. They would specify the definitive set of critical activities and decisions through which revenue gets generated and--equally important--where revenue gets diminished.

Organizations are thirstier than ever for CRM. But now they are more realistic about what they are seeking. They don't need everything: They just need what delivers the goods. If less than 10 percent of the data in the warehouse gets used, why pay for...