Retail CRM: Does Data Create A Duty?

Opinion: It's hard enough to successfully negotiate the bloodsport of a CRM project, says Evan Schuman, but now it just got nastier-thanks to a customer lawsuit over what responsibility CRM data carries with it.

Pity the poor retail CIO who is a CRM advocate. In acts of backstabbing betrayals worthy of the ancient Roman coliseum, our hero finds himself having to deal with a host of villains:
  • Overzealous software sales reps, who conveniently forget to mention the money and person-hours the retailer will have to spend to make the CRM deliver. Installing—and, from the reps perspective, paying for—the package is only one-fiftieth of the battle.
  • Squabbling line-of-business, financial and IT managers—the very people our hero is trying to help—who cant agree on what answers they want the system to deliver.
  • CFOs, those grumpy, eyeshade-wearing number-crunchers who question whether the CRM-generated answers thus far are really that much better than the field-force-generated answers they had before. Ahhh, yes, the ever-present weapon of a chief financial officer: Question the ROI, which is the accountants version of FUD (fear, uncertainty and doubt).

As if our CRM-Advocating Hero needed any more headaches, news came last week of a lawsuit filed against a major retailer: $54 billion retail grocery chain Kroger.

Krogers sin? A grocery store group it owns, QFC, had installed an extensive CRM system but didnt use it to alert specific customers that they had purchased contaminated and recalled beef. One of its customers—who did purchase the mad cow disease-infected product and was specifically and incorrectly told by store employees that her product had not been recalled—filed the lawsuit.

That customers QFC loyalty card did ultimately prove she had purchased the contaminated beef, but not long after, her family ate it. The argument: Had the retailer e-mailed the customer—and the other affected customers—as soon as the recall was announced, they would have been spared the often-fatal illness.

So, now the technology itself is posing the threat of legal and PR nightmares. Et tu, CRM?

"CRM has already been getting somewhat of a black eye as its not gotten the ROI expected. And now this?" lamented Marianne Gregory, vice president of CRM at ThinkFast Consulting.

The Kroger situation forces to the forefront an age-old problem with recalls. Typically, its the manufacturer—the entity that normally made the error—that has to go through the cost and hassle of a recall.

Often, though, the manufacturer doesnt have a full list of who purchased the product as it sits with a retailer or distributor, unless the consumer sends in a registration form, which is only appropriate for a small percentage of retail products. (I personally like the idea of filling out a reg form for a bag of carrots, but Im a masochist at heart.)

For items where a registration form doesnt apply, retailers have also not traditionally had that information, so the manufacturers had to rely on media coverage and advertising to publicize a recall. CRM changes that, and its that unintended result that is causing the latest flap.

Next Page: Is It Better Not to Know?