CRM Strategy Versus CRM Software

Mostly Ineffectual Apart, Highly Synergistic Together


  • CRM is a business strategy to grow mutually beneficial and profitable customer relationships at scale. That's essential because achieving customer affinity is one of only four sustainable competitive advantages.
  • CRM software is the enabling technology. It provides data management, process automation and information reporting. It delivers the tactical execution to achieve the user, customer and business outcomes designed in the strategy.
  • CRM strategy and CRM software are the yin and yang of improved customer relationships and company financial outcomes. They are extremally synergistic together but mostly ineffectual apart.
Johnny Grow Revenue Growth Consulting

A Symbiotic Relationship

First, let me explain why the heading of this blog post is misleading. I titled it "CRM strategy versus CRM software" because that's the phrase commonly used by my clients. This post will share why strategy and software are synergistic, not opposing, and how the two can be aligned to achieve improved customer relationships and significant revenue growth.

But first I'll start with some definitions to set clear context.

Customer Relationship Management is a business growth strategy aimed at growing mutually rewarding and profitable customer relationships at scale.

CRM software is the technology that when combined with business processes achieves the outcomes slated by the strategy. The three primary tenants of a CRM application are marketing automation, sales force automation and customer service. However, broad platforms include other applications such as ecommerce, field service management and partner relationship management.

The strategy is different than the software. The former targets the most important business outcomes while the latter is the enabling technology to achieve the former.

CRM Strategy and Technology

Success Remains Elusive

Any newcomer to the industry quickly learns of the uninspiring past. Analysts have long delivered research showing CRM systems frequently fail to achieve their intended results, and sometimes fail outright.

That begs the question of why CRM fails, and the analysts have similarly chimed in.

"Disappointment with CRM is usually the result of poorly conceived strategies that don't increase revenues or reduce costs."
— Forrester, Assess CRM Capabilities to Pinpoint Opportunities Report

"CRM is not part of a business strategy; CRM is the business strategy."
— Claudio Marcus, Director of Research at Gartner

"If you don't know where you are going, you'll end up someplace else."
— Yogi Berra

Actually, I don't think Yogi Berra was an analyst, but his quote is both wise and directly relevant to those planning a CRM implementation. If you don’t have a strategy, the software execution become aimless.

The strategy prioritizes the business outcomes to be achieved, defines the actions to realize those outcomes, designs the software to automate those actions, assigns the actions to resources and identifies the most salient metrics to track performance. Failing to do these things, and instead just installing software with the hope it will somehow achieve the most important outcomes, is a fool's errand.

Substituting software for strategy is the single greatest contributor to failed software implementations.

A Better Way

Without strategy, the technology is designed in a vacuum, execution is aimless and achievements, if any, are insignificant and often temporary.

The strategy is your roadmap to business outcomes. It designs the methods and processes that produce the outcomes that most matter and avoids wasting time with activities that don't.

Strategy starts with vision. The vision pyramid is a tool we use to show what we want to achieve and how we will get there. The below image was created for a client project that compared two alternative approaches. One vision pyramid applies a software focus while the other applies a customer focus.

CRM Strategic Vision

The software focused pyramid on the left emphasizes technology and takes an inside-out perspective, that is how does the company use technology to benefit the company.

The customer focused pyramid on the right emphasizes business goals and takes an outside-in perspective, that is how does the company use the software to better acquire, grow and retain customers.

The left pyramid is really pursuing a software installation without a strategy. The danger with this approach is that it is short sighted and most often results in a lack of user, customer and business outcomes that matter. Just installing software by itself isn't going to improve business outcomes any more than putting a new engine in your car will make you a better driver.

Technology Implemented in a Vacuum

The vision defines the business outcomes that determine whether the software is adopted by users, achieves an ROI and becomes sustainable.

And to be clear, CRM is only sustainable if it aligns and supports the company's top priorities; which are most often articulated and repeated by the CEO or C-suite.

And in my experience, I've never heard a CEO express a company priority of getting a report or managing activities.

What I hear repeatably from CEOs are things like grow the company, grow revenues, increase customer share, expand market share, better serve customers and things like that.

If your software can drive these things, you make it essential and sustainable. You make it something the company cannot live without.

Otherwise, it's probably just another IT project, departmental program or short-term opportunity that will ultimately become marginalized and challenged.

Non-strategic thinking is also a driving factor of why some IT executives don't have a seat at the C-suite table. It's often a consequence of not delivering things the C-suite most cares about.

The Point is This

Strategy is a precursor to everything that comes after. Great execution doesn't get you very far if your strategy is wrong. That's why strategy is a precursor to software implementation. When CRM strategy directly supports the company's business priorities, it makes the software wildly successful and sustainable.

You can implement software without an accompanying strategy, but three things are likely to happen.

First, the implementation effort will incur a more random pursuit of business objectives as opposed to a prioritized pursuit based on benefit or payback.

Second, you will incur a trial and error approach that increases implementation time, decreases user confidence and postpones or forgoes the most meaningful company and customer benefits.

And third, your project results revert from strategic objectives such as increased customer acquisitions, customer share and customer retention to tactical goals such as getting data into a system, measuring a salesperson's activities or producing a sales pipeline report – possibly valid goals – but goals that do little to nothing to improve customer relationships or the company's top priorities. And if your CRM software doesn’t improve your customer relationships, well then, you miss the point of Customer Relationship Management.

See how CRM strategy and CRM software combine to improve customer relationships and financial outcomes. And how they are synergistic together but ineffectual apart.

Click to Tweet