Eye on the States: Go back and do your homework--CRM marketing earns an F

Thomas Davies

Sometimes easy sales can lead to bad habits. In good times, companies
learn to take advantage of exceptionally strong momentum for a new technology or product.
They move quickly, expand their sales forces and focus on getting orders in the door.
Selling takes priority over marketing.

In the beginning, the
downside of neglecting marketing isn't apparent. Sales are coming in, and everyone --
shareholders, employees and customers -- seems happy. It's only when the market momentum
slows that companies realize their short sightedness is coming back at them.

SIZE="2">This is the situation in the government market for customer relationship
management solutions today. CRM companies spent the past few years capitalizing on some
very favorable dynamics: healthy government balance sheets, publicity (mostly favorable
until recently) of large corporations adopting CRM, a growing commitment to using
commercial products, governmentwide focus on services to citizens and high-level interest
in e-government.

But changes in these market dynamics -- in some
cases, dramatic reversals -- have exposed an Achilles heel for CRM companies. By not doing
their marketing homework, they are finding their future sales in jeopardy. And instead of
being convinced that CRM is essential to government, many officials question whether CRM
can really deliver.

One obvious sign of how fundamental marketing
has been overlooked is the widespread confusion that exists in government concerning what
CRM is. Get more than two or three people in a room, and you can spend all day debating
whether it's a technology, a product or a strategy.

The importance
of educating the government market on the ABCs of CRM, usually one of the highest
priorities of a marketing organization, seems to have been either grossly underestimated
or overlooked.

Company promotional and advertising campaigns are
invaluable for building awareness, but they are no substitute for face-to-face discussions
that educate both buyers and sellers. For example, too many potential CRM buyers in
government are perplexed about why companies are promoting their sales-force automation
products as a fix to serious problems, such as case management. While there may be a
connection between the two, the linkage is tenuous at best and all but invisible to most.

Consequently, many government officials view CRM as simply putting a pretty
government bow on what is really a commercial product. And there is growing suspicion that
commercial CRM products may not truly meet the needs of government without significant
customization and additional expense and time.

Another symptom of
the marketing failure is that many government officials place comprehensive CRM solutions
in the same category as far simpler, far cheaper software products, such as contact
managers and messaging products. This apples-to-oranges comparison occurs with surprising
frequency in the midrange market segment of government buyers.

final sign is evident in the business cases that government officials now must construct
to gain support for their budget requests. They are struggling to build a bulletproof
business case for investing in CRM solutions, because they are not confident they really
understand what CRM is and how it drives meaningful bottom-line results. They cannot be
expected to develop such business cases from promotional brochures, easily made promises
and self-serving white papers.

Most CRM companies are ill-prepared
to provide such assistance and do the required marketing. Too often, government marketing
is about promotion and not about obtaining a deep understanding of the business of
government. CRM companies risk a lot by delegating the responsibility for understanding
government to third parties, such as consultants, integrators and analyst firms. Sooner
than later, they will have to pay the piper for failing to do their marketing homework.

SIZE="2">Thomas Davies is senior vice president at Current Analysis in Sterling, Va. His
e-mail address is tdavies@currentanalysis.com.

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