Is bribery a business model for CRM?

Successful customer relationship management is all about encouraging sales personnel to share information - and the best way to do that is to bribe them, according to a leading analyst.

Speaking on Tuesday at CRM provider RightNow Technologies' annual UK user conference, Rebecca Wettemann, founding partner of analyst Nucleus Research, said that the central tenet behind CRM is motivating personnel to share information - something that doesn't come naturally to most people.

Wettemann said the best way to get round people's natural reluctance to share was through "bribery and incentives". "People do not share unless there is something in it for them - that is why so many CRM implementations fail."

Numerous implementations of CRM technology - designed to automate much of the administrative tasks carried out by sales, marketing and customer support teams - are widely believed to have failed in the late nineties due to cultural issues, rather than technical problems.

Wettemann demonstrated her point about sharing by asking the audience, mainly comprised of RightNow customers, to swap pens with the person next to them without looking. "How many people want to keep the pen they have been given now?" she asked. "Companies implementing CRM need to overcome people's natural barriers - we all like our own pens. People with really nice pens need incentives."

Montana-based RightNow Technologies has been pushing hosted CRM services since 1997 and boasts customers including William Hill, British Airways, Roche, Easy.com, Experian and Nationwide.

The number of companies looking to invest in CRM has increased rapidly over the last two years despite the bad reputation the technology earned itself in the late nineties and early 2000s. CRM horror stories of hugely expensive but inefficient implementations were commonplace but more recently a new breed of CRM vendors offering online or hosted CRM applications have begun to dominate the market.

Wettemann added that companies shouldn't get sucked into focusing on the direct returns from hosted CRM, such as cutting the need for expensive locally installed software, but focus on the softer, harder-to-measure benefits such as making sales audits easier and cutting maintenance costs. "Not many people focus on soft benefits. Why not? Because they can't count them. But not focusing on these more intangible benefits is another reason why CRM implementations fail," she explained.

RightNow's core competency within CRM is almost an exact mirror of the other main hosted CRM player, Salesforce.com. RightNow specialises in customer service and marketing applications but only recently launched a sales support product. Salesforce.com has up till now been focused on sales-side applications but recently announced a customer-support product.

According to industry analyst DataMonitor, vendors faced with a saturated enterprise CRM market are turning their attention to smaller companies. Global CRM spend among small and medium-sized businesses will be close to $2bn by 2008 - more than double what it is today.

Andrew Donoghue writes for ZDNet UK.