The full version of this article is available on Harvard Business Online (subscription required).

The Idea in Brief

Customer-relationship management (CRM) software spending may soar from $20 billion in 2001 to $46 billion in 2003—and no wonder! With its emphasis on identifying valuable customers, securing their loyalty through tailor-made offerings, and reducing costs of serving them, CRM has seized managers' imaginations.

So why do 55% of CRM projects drive customers away and actually dilute earnings?

A single flawed assumption: that CRM is software that manages customer relationships for you. It isn't. Managing customer relationships is bundling customer-focused strategy and processes to boost customer loyalty and profitability. Technology simply supports that strategy.

To make your CRM initiative pay off, understand four common perils—then replace them with CRM smarts.

Read the full article on Harvard Business Online.