Q: You seem to believe there's a fundamental error in the underlying concept of CRM—namely, the idea that customers are there to be manipulated.

A: Absolutely. This started way back with database marketing. Companies were using their customer information to target people for special offers. But the customer doesn't want to be targeted like a hunted animal. The corollary of that, of course, is that customers now have more power than ever before. When an auto customer goes into the showroom after two hours on the Web, he or she knows more about the car and the pricing than the [sales] guy on the floor. So, as the power has transferred to the customer, we're no longer in charge; the customer's in charge. That means we have to find ways to let the customer develop and manage this relationship. And we need to stop thinking that we can manage the relationship with people.

Software is vital; you can't have [CRM] without the software. But software comes last. It comes after you decide what you want to accomplish for you and what you want to accomplish for the customer. The problem with most CRM solutions today is that they've been designed to save the business time or money, or to make things more efficient for the business. They haven't been designed well enough to make things more efficient, friendly, and helpful to the customer.

Q: You propose an alternative that you call CMR—customer management of relationships. How does it differ from CRM?

A: Instead of us deciding when, where, and how to talk to the customer, we're beginning to let customers tell us how they want to be communicated with and when they want to hear from us. For example, one of my bank clients in Argentina asks people, "Do you want to hear from us by E-mail, by telephone, by mobile, by direct mail?" Its customers actually say, "For this kind of information, I want to receive it this way; for this other information, I want to receive it this way." Suddenly we're beginning to make customers' lives easier, which is, I think, the whole goal of CMR.

First, it's a way of changing your business philosophy. You really are going to look at things from a customer standpoint instead of your business standpoint. Then when you pass that, you ask, what is it we have to know about our customers, and how will we use that data when we gather it? At that point, you're ready to begin to talk to a software vendor. And you say, "Don't just show me your pretty GUI. Here's what I need to accomplish with this; here's the data I need to capture; here's how I need to query that data—now, what can your software do for me?"

The whole software question has gotten more complicated. At the beginning, all we did was track transactions in a store or a bank or B2B. Now, we have to first capture transactions from multiple channels, whether the Web or the store or the sales force. But we also have to capture all the information we gained from them in the call center or, in a B2B situation, in sales calls. Everybody talks about the 360-degree view of the customer. That's what they really mean: We have to know what the customer is saying to us at every interaction, and then we have to find ways to learn from that to make it easier for the customer to do business with us.

Q: In your book, you state there's no common definition of CRM. How did that come about?

A: It's true even within one company. The vendors are part of the problem. They keep going to shows and expos, saying, "Here's one quick solution." They've convinced half the world that CRM is software. But it doesn't start with software; it starts with knowing your objectives and what you want to accomplish with CRM. Users all say they can't get any ROI from it, and part of the reason is they don't know why they went into it in the first place—except that the CEO said, "Everyone else is doing it; we've got to do it, too."

Q: What role have CIOs played in the CRM problem? How much of the blame should they be willing to accept?

A: I'm not sure I want to place blame on anyone. The real blame goes to the vendors, which tell the world that you buy this, plug it in, and you've got CRM. But that won't happen, and a lot of CIOs are smart enough to know that. The biggest problem has been that companies—not just the CIOs, but entire companies—have focused on technology first instead of on the business problem. The big opportunity for the CIO is to move to action and agility. Many times, it takes too long to get things done because of the disconnect from the business problem. So we start with the business problem first and ask, "How can I, as a technology guy, help these folks to solve it?"

Q: What's the role of corporate executives in all this?

A: Traditionally, IT departments have reported to the CFO, so certainly the financial executives have a role in the IT part of it. But more than that, I'd like to see the CFO be the person who blows the whistle and says, "Time out! Let's start at the beginning, and you tell me how I'm going to get an ROI out of this." Agree at the beginning what will constitute success. The CFO is still our prime numbers guy in the company. He should hold their feet to the fire and say, "Yes, I want to invest in this. I want to be nice to the customers, but please help me figure out how you're going to come back to me in six months and tell me what I got for my money."

Q: What about companies that say the ROI of CRM is difficult to calculate?

A: They haven't done what I'm suggesting at the beginning, to say, "What measure are we looking for that will tell us we have a success? Do we want to increase sales, not just generally, but to which customers and which segments? Do we want to increase cross-sell? Do we want to increase lifetime value?" They've got to sit down and say, "Why are we buying this stuff? What are we going to do with it?"

Corporate executives can be an enormous influence in helping [to make this happen]. Marketing guys aren't that good at this. I believe a lot of this should stem from marketing, but it's not a marketing function. It's not a CFO function nor an IT function—it's got to be cross-disciplinary. You need everybody in the company singing off the same page in the hymn book.

Q: Among your clients, how does this message go over?

A: Slowly and painfully. It's hard to get people to change cultures. There are some who get it. I like to say it's important to not try to eat the whole elephant in one sitting. But to start with pilot programs.

I'm working with one client now in the U.K. that has 385 retail stores. We're taking on just two. Each store has 40,000 customers, but we're taking just 200 customers at each store for a six-month pilot to learn how we can have this kind of communication with customers—and find out if it's going to pay back for us. Also, is it something we could roll out to all the other stores and make happen? Because the people on the floor [in this retail example] are the moment of truth. You can do all the things with your software and direct mail and whatever, but if the customer goes into the store and has a bad experience, it's all down the drain.

Q: With these clients, who typically takes the leadership role in fixing CRM?

A: The CEO has to be the believer, but there's no one real coach. When you're planning this, get every department represented. But also get some of the nay-sayers in on the planning. Either they're going to convince you they're right, and you're going to save yourself a ton of money, or you're going to convince them you're right, and then you've got them on your side. They become great champions for the cause.

I work with a lot of retailers, some banks, some oil companies. Most will anoint a king or queen of customer relationships. Sometimes they take the person from the technology function, sometimes from marketing, sometimes from sales. But the problem is, whoever that chief is, they always seem to stay in their own little sandbox of thinking. The big assignment, then, is to get beyond their own background and get more enmeshed in the total business and how people can use this stuff. The most pressing issue on the technology front is how to ensure that the entire workforce can use the tools. It's all about driving the vision down to the execution level. You've got a lot of companies that have superb systems, but the organization isn't ready to use them. The CIO can be involved in moving that through.

Q: Does that involve training, or is it more than that?

A: It's partly training, but it starts way back at the beginning. You need a task force of cross-functional people to get together and decide what problem you're trying to solve and how you're going to solve it. The training comes later. The strategic thinking has to include all functions of the company at the beginning: the CFO, because that person has a good view of the entire company, but also the CIO has a role in this. I saw a quote recently from a woman at Nokia, who said, "The IT department is my partner; they don't go around me and I don't go around them." That doesn't happen in too many companies. There's often a kind of Chinese wall between the IT folks and the marketing folks or the sales folks. One role I try to play is to bring these people together. It's a little like tribal chieftains--we're having that problem over in Afghanistan. But we also have tribal chieftains within every company. Somebody's got to bring them together and knock heads a little and say, "Hey, we've got to play this as a team."

Q: Sounds like that has to come from pretty high up in the organization.

A: Yes, it has to start at the top. Absolutely. If the top leader doesn't sincerely believe and isn't willing to knock some heads, then it ain't going to happen.

Q: How much hope do you have for the vendors? Do they even understand the problem?

A: I'm not sure they do. I attended a conference where Martha Rodgers (of consultants Peppers & Rogers Group) was standing on a stage talking about all this, and out on the expo floor they were still saying, "It's a point-and-click solution." That said, I think some of the vendors are starting to come around. It's beginning to happen, but it's a long, slow process. They still are selling product, and they think product's going to solve the whole thing.

Q: Some new vendors, including SalesForce.com and Salesnet, are offering application-service provider (ASP) solutions to CRM. Do you see that as a step toward a solution or simply a different cost model?

A: I see it as a different cost model. Again, technology is technology, whether it's inside or outside. The question is, what are you trying to do with it? And how are you going to use it? That takes cultural and organizational change. I don't know that the vendors can do much about that. I don't think it's their role to go in and say, "You've got to change your company to do it right." But I do wish they'd back off a little from saying it's just a matter of buying the system and plugging it in. But they're not there yet.

Q: What are the top things CIOs can do now to address the CRM issue?

A: Viewing the customer across all channels is a big challenge. We still have too many companies storing the data in separate silos. The first assignment for the CIO is to bring all that together so any operational person within the company has a single view of the customer. You've got the call center; you've got the Web; you've got the sales experience. Customer information is coming in from so many sources now, so it's pretty tough to pull it together into what we call the 360-degree view. But it's beginning to happen. That's where the vendors are beginning to help us, too. They do understand that piece of it.

The smarter companies are looking at the cost and saying, "Let's spend our money on the customers we can make money on, and save some money we've been throwing away on the rest, and in the end it won't cost us more." The CIO can have a role in that. He or she's the person who's got to have the vision [that answers the question:] "Why are we pulling all this stuff together, and what are we going to do with it after we get it?"