When we discuss Customer Relationship Management (CRM) it's often in the context of technology. But technology is only one element, and not the hardest one to grasp.

CRM is about people, processes and technology, and in that order.It’s a discipline that’s practiced even without technology. Ever had aclerk or a waiter remember your name? That’s CRM. Gotten a break on aprice from someone you do regular business with? That’s CRM. Received anote or an email letting you know that something you asked about is nowin stock? That’s CRM, too.

But scaling those relationship momentsrequires technology -- and that’s where CRM often runs into problems. Adisturbing percentage of CRM implementations -- between 40 and 80percent, if you believe the industry researchers -- ends in “failure.”

CRM Failure is not About Technology

Failure is in quotation marks because every organization has different criteria for its CRM system, meaning that failure is usually not based on technology -- it’s based on the expectations of the organization. Those expectations can change, and the CRM application selected six months ago may not be the right choice now, especially if it’s not flexible enough to cope with the silly humans using it.

Yes, I said “silly.” We do many silly things to wreck the effectiveness of CRM: We scrimp on training, we use it as a way to find fault with sales people, we make the sheer amount of data that needs to be input daunting. As a result, users often rebel against using CRM.

But one of the most crippling things we inflict upon CRM is to see it simply as a technology. If CRM is purely an IT buy, it’s going to fail. And it’s not the IT department’s fault.

Technology Collects Data, You Handle the Relationship

Remember the concept of scaling those relationship moments? That can’t be done purely by CRM technology (or by the IT guys). It has to be done by the people using the technology to manage data about customers. The data by itself is useless unless someone takes action on it.

Think of it this way: CRM is like your local mom-and-pop store owner’s brain. With his relatively small customer base, he can keep track of his customers and know a reasonable amount about them. But does that knowledge ever help him if he doesn’t then use it later -- in a conversation, in determining what merchandise he carries, in planning a sale, in giving a regular a deal? No.

Learning Opportunities

Same with CRM. The technology can collect a mountain of data -- especially today with Social CRM coming to the fore. But if you don’t do anything with that, it’s a wasted effort. And I’m not talking about high-altitude trend analysis -- which is nice to have -- but in taking that data collected on an industrial scale and then using it to improve relationships at the one-to-one level.

This is the “people” and “process” part of CRM -- and it’s the hardest part to negotiate because the productivity revolution of the last 30 years has driven a lot of the human aspects out of our thinking. That ends with the customer; however, you can’t turn your relationship with the customer into an automated process. You can automate part of it, but you can’t automate the last step between you and the customer.

Focus on Building Relationships First

The joke around CRM is that it’s focused too much on the “M” and not enough on the “R”; customers want relationships, but they don’t want to feel managed. So the challenge is this: How do you scale up your data customer collection process, and then take that data and scale it back down into actions that will build relationships?

Smart companies handle this in the “people” stage -- they hire sales, marketing and service people who realize that the most important relationship is with the customer, not with the CRM data. The question is not how do you scale up your CRM efforts -- technology makes that easy. The question is how well do you use the information about customers to scale back down to the relationship level, where CRM’s success or failure is really determined?

Additional articles on social CRM include: