CRM: Profiting from understanding customer needs

he essence of customer relationship management(CRM) is understanding customer needs andleveraging that knowledge to improve a com-pany’s long-term profitability. When successfully deployed,CRM can have a dramatic effect on bottom-line perform-ance. In a span of 18 months, Lowe’s Home ImprovementWarehouse achieved a 265 percent ROI on its $11 millionCRM investment. Virgin Wines achieved a 12 percent cus-tomer conversion rate (the percentage of customer visits toits website that resulted in sales) compared to a 4 percentrate before adopting the program. These examples clearlydemonstrate CRM’s potential. Despite these impressive achievements, however, the Gart-ner Group estimates that 55 percent of CRM projects arenot expected to produce results. Some organizationalissues linked to CRM failures have been addressed, suchas a lack of company-wide commitment to the system.But failures due to a lack of customer focus are less wellunderstood. In a recent survey of 1,500 companies in