Association Insight International & European | Page 19

Expert Briefing | Association Insights

THE LAW OF 80-20:

GETTING YOUR CRM DATA RIGHT
BY NIGEL TURNER

EXPERT BRIEFING

In 1906 the Italian economist Vilfredo Pareto, who was also an avid
amateur gardener, observed that 20% of his pea pods were responsible
for 80% of the peas produced every year. This made him consider
whether this rule could also apply to economics. Through research he
then went on to show that 20% of the Italian population owned 80% of
the land. Pareto’s principle, also known as the rule of 80-20, was born.

Since then the 80-20 rule has been applied to all sorts
of situations. For instance in business that 20% of a
company’s customers account for 80% of sales, or that
80% of customer complaints come from 20% of customers,
and so on. Often the numbers are no more than a broad
approximation, but that is not the point. It’s all about
focusing your efforts on the things that really matter.
And Customer Relationship Management (CRM) is no
exception to this rule. Associations know that their current
and future success depends on developing & maintaining
excellent relationships with their members and prospective
members. Strong relationships help to attract new
members, enhance existing member loyalty and thereby
generate additional revenues. So many have already
invested, or are considering investment in, specialised CRM
platforms and software systems that support these vital
CRM activities.

the 80-20 rule. According to Gartner, IBM and others
who have researched the CRM space, only 20% of CRM
implementations succeed in meeting their original
objectives of improving marketing, sales, revenues,
customer service and so on. Surprisingly 80% do not. Not
an impressive track record.
There are many reasons why a CRM initiative can fail, but
in at least 80% of the cases there is always one critical
factor that is always cited. It’s not to do with requirements
capture, creep or management, hardware or software
problems, networking or the other common issues that
can derail any IT project. It’s all about the one thing all
CRM activities and all CRM systems ultimately depend
on. It’s the fuel that drives any CRM engine. It’s the data
the systems and processes need to work with. If this
data fuel is contaminated, the outcome is inevitable –
underperformance and, all too often, often failure.

So far, so good. But there’s often a hitch when you invest
in CRM. And it’s another (albeit modified) example of

www.associationsnetwork.org

© Associations Network 2015 | 19