If Warren Buffett ran a CRM company…

If you ever want an object lesson in candour and taking an objective long term view then look no further than Warren Buffett’s annual shareholders letter. Observing on the mayhem in the financial markets in his 2007 letter he notes ‘You only learn who has been swimming naked when the tide goes – and what we are witnessing at some of our largest institutions is an ugly sight’.

Whether or not it involves lending money to people who can’t pay it back, short-termism is a hazardous practice, and one that’s rife in the CRM market. There are two key manifestations of this in my view. Firstly there’s an undue focus on initial project profitability at the expense of customer satisfaction. While I have no issue with vendors looking to make money on the work they do, I think there’s a tendency to obsess on protecting margin, generally through the heavy handed use of change requests, rather than concern as to whether they will have a customer who wants to retain their services at the end of the implementation process.

Secondly the emphasis tends to be on getting the project ‘done’ and moving on to the next one regardless of whether the system is generating any genuine business value for the customer. Partly this is a question of capability – CRM vendors ‘know’ the technology, but few have an understanding of how to apply it, and partly because it’s easier not to: injecting the inconvenient reality that there’s more to achieving CRM success than buying technology and plugging it in, introduces the sort of uncertainty that can distract from the fundamental objective of selling software.

If Warren Buffett were to suddenly find himself running a CRM company, I’d imagine it would become a rather profitable one, because Mr Buffett, unencumbered with a background in the IT industry, would quickly deduce two things 1) unhappy customers are unlikely to make you very rich, and 2) the greater value you can generate for your customers the more they are likely to invest in your products and services. Sadly there aren’t many Warren Buffetts out there, rather fortunately for the CRM industry I suspect.

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