CRM in High St Retail: Does it Exist?

CRM in High St Retail: Does it Exist?

A rather existentialist question.  Short answer:  Not really.  Also, for the avoidance of doubt, we refer to higher value retail (and obviously women’s goods) and not supermarket or similar FMCG.

This is a bit of a Once Upon A Time story and in its epic sweep will include a brief history of CRM, of the internet, of the dot com boom and finally Social Media.  It is  a Cautionary Tale….

In the late 1980s this analyst (Nick Hewson) joined a small software house just outside London.  They were starting to develop a very early version of a relationship management application.  Indeed, a bearded Kiwi genius called Grant McAlpine was laying down many of the concepts that you see in today’s CRM software – a fact that history does not adequately record. The software worked fine but there were some snags.  There was no internet, no portable computers and no mobile phones.  There wasn’t a lot of computer networking either.   All this tended to doom to failure all attempts to use it commercially (and most software vendors!) although as learning exercise such projects were probably invaluable.

Across the Atlantic, the idiotically named Sales Force Automation (SFA) was being developed and deployed. Whatever it did, it certainly didn’t automate salesforces.  The Americans had some significant commercial issues that they wanted to address and chief amongst these (particularly amongst pharmaceuticals and financial services) were huge sales forces and huge geographies.  Most companies had no clue as to what their salespeople were doing from one week to the next although playing golf was always a good guess.  SFA was important but essentially tactical.  It had little to do with the customer (although clearly it should have done) as most companies were obsessed with internal control not external view.  SFA didn’t work for lots of reasons but the technical infrastructure was a fairly obvious failpoint – you have to imagine the pre-internet world.  Nevertheless, in the early 1990s the big management consultancies were scouting around for new ways to charge clients vast amounts (ERP had proved very nice thank you).  SFA and Customer Service stuff looked nailed on for this with fabulous amounts of expensive data structure plumbing needed to make it ‘work’.  All they needed were some Trojan Horses.  Cue the instant rise of companies like Siebel, Clarify and Vantive and the invention of an umbrella term – CRM -  for what they did.  I can’t remember where the acronym came from; it wasn’t us but it might have been Peppers and Rogers.  To put the dizzy rise that followed into perspective, it is necessary to know that Siebel were only established in 1993 and by 2000 they had a market cap of $24bn (Twenty Four Billion USD). 

Meanwhile….  In 1989 I set up Hewson Group as an analyst company. I did this with the (now ex) Mrs H who had recently left a very elevated perch at Merrill Lynch (where they had been busy inventing some complex financial instruments and we know what eventually happened there….).  We did some work on looking at the impact on SFA systems and concluded that it was marginal.  We thought that the big potential winner from increasing computerisation and (recorded) customer contact was marketing.  By 1993 we had gravitated to Cranfield School of Management and found two outstanding marketing academics (Professors Malcolm McDonald and Hugh Wilson).  With them, we published a report called ‘Emerging Information Technologies – a Marketing Opportunity’.  This was essentially a collection of edited essays from many sources – including two from the still relatively small Microsoft and a couple that foreshadowed the rise of the Internet.  It made our reputation, It bought us many clients in Financial Services, but when CRM went nuclear two years later, marketing was not to be seen as a player or a beneficiary – indeed it was many years in the future that Siebel, for example, actually had an analytics capability.  In that sense, we were wrong in assessing the prime beneficiaries.  Marketing was an observer at a party it should have been in charge of.

CRM, in the years 1995-2001 was the ultimate panacea product.  There was an inescapable thought amongst analysts that companies who had bought CRM had bought the idea itself.  That mere ownership of an application was equivalent to proper execution and that alignment with any sort of overarching business strategy was unnecessary.  The ‘C’ for Customer in CRM was usually irrelevant and nearly every project was internally focussed, few actually considered the customer experience.

And let us not forget the wilful suspension of disbelief about the Internet and online trading which informed the same timeframe.   Vast sums were invested (and spent) on specious notions that business models, business rules and consumer behaviour would all change beyond recognition overnight.  Well, as we well know, they didn’t.  When Hewson Group carried out in 2001 the (then) famous research into e-commerce called ‘Profit or Pain’ we found that the ability to execute online across all sectors and most companies across Europe was close to non-existent.  I read through some of the research the other day and it’s scary.

So, fast forward to 2011. I read today, an article by Redeye that quotes some research from Omniture to the effect that for every $100 that is spent on driving traffic to websites only $1 is spent in converting that traffic into business. C’est la meme chose.  Perhaps we should add that as a 10 years later postscript to Profit or Pain.

The retail ball, so to speak, is in the air, but eyes slide away to look at shinier baubles.  They look at Social Media because this is a lovely panacea with lots of interesting flashing lights. They look longingly at the Internet which is a bauble with real and important attractions but contains explosives called brand distance and commodisation, which will go off if not handled carefully. And the main ball - the High St store - what serious attention does that get?  Not much.  CRM in Retail?  Not much. Show us the stores that understand the customer and that can capture the customer.  Show us the ones that are immersive and exciting and different.  Show us the ones that don’t have a 1950’s mentality and technology.  Or have Apple stolen the ball and hidden it?