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Oracle identifies the following components as central to any CRM initiative:

(1) Effective customer segmentation
(2) Integrated multichannel strategy
(3) Well-defined business strategy
(4) The right skill sets and mindsets
(5) The right technology

Several problems may be encountered in the process in achieving each of the above aspects individually. Now I’d like to discuss about these problems as follows:

Effective Customer Segmentation

Customer segmentation is a powerful technique which divides a group of all customers into smaller subgroups that share a number of properties in their relationship with the business. It is obvious that these subgroups should be given very different treatment. (Shailendra Kumar, 2004)

However, there are practical difficulties for analysts to implement the process of segmentation. One of the difficulties is the wrong way to segment customers.

A customer segment represents a group of customers based on their common characteristics. It may be created based on the following customer characteristics:
• Registration information
• Demographic information
• Address information
• Cultural information
• Purchase history
• Account information (for Business to Business stores only)
Many segmentation efforts today are an exercise in futility because companies are basing their segments on inappropriate criteria. As a result, organizations often wind up with segments that drain resources, instead of with segments that lead to more effective ways of running the business or meeting customers' needs. (Alice Dragoon, 2006)

For example, companies that are organized along product lines often segment customers by the products they buy. This approach, however, risks alienating customers in two ways: Customers who happen to be in more than one segment get bombarded with multiple uncoordinated offers. And big spenders in one product category who start buying in a second category are justifiably miffed when they're treated as strangers.
Therefore, before embarking into Marketing campaigns, the Marketing Manager should create a plan which specifies customer segment criteria most suitable for targeting the campaign activities. This can be done via past experiences or by analyzing the operational reports.

Integrated multichannel strategy
For a CRM strategy to be successful, a company must offer its customers multiple ways of interacting with the organizations. A single channel simply can not serve customers effectively. However, the increase in communication channels has given rise to some problems.

1. All channels have associated costs. Maybe the cost for a company to set up a new channel is much higher than profits earned from this new channel. Thus, a lot of research must be done before making the decision of setting up a new channel. Channels must be evaluated in terms of their value proposition to customers and their costs to the company.
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