Secondly, segmentation remains a huge problem.  All CRM systems depend on companies coming up with proven, effective segmentation strategies.  Without segmentation, companies cannot expect to derive any customer insight, no matter how much they spend. 

Yet segmentation is still a dark art that few practise successfully.  All too often, it is along the lines of little, middle and large.  A small minority of companies come up with segments that go further.  Still fewer go on to successfully deploy campaigns around such segmentation exercises.

Catastrophically, large CRM systems encourage over-segmentation.  This is an easy trap to fall into.  The truth is that coming up with a coherent and successful direct-marketing campaign is pretty difficult in the first place.  Coming up with twenty such campaigns, each of which supposedly addresses a different segment, is overwhelming. 

The test of good segmentation is that each segment should be Identifiable – can you put names to customers? Reachable – can you access the segment through channels? Relevant – what are you going to communicate and offer that is unique to this segment? And Cost-effective – Can you generate returns that justify the costs of addressing this segment?

Instead of investing tens of millions in CRM systems, companies should be spending more time on getting the basics of segmentation right.  And, if you sell through intermediaries, it is vital that you consult them early on in this process.  Your channels are not just about communicating, but also about selling, delivering and supporting (post-sale) offers.  The priority is to develop segmentation that drives the entire process.