Everybody knows how to get out of the recession – it’s easy. You just hang on to your customers and get them to buy more. Oh yes, and you also go out and find a lot more customers. And then you give them all terrific service so they never think of deserting you. And, of course, you do that without letting costs go through the roof.

If it really is that easy, why do so many companies fail to do it? One reason is many of them have no idea who their customers are. For instance, high street retailers have no way of identifying who walks through their doors unless they have some kind of account or loyalty scheme.

Other companies have struggled for years to gain a single view of their customers. Take a bank, for example – it may know you as a current account customer, a pension holder, an insurance policy holder, but each of those items of information will be held in different parts of the organisation. Few such companies have integrated their systems well enough to allow a senior manager to see the total value of that single customer to the business.

Such incomplete knowledge is not limited to the financial services sector and it can have huge knock-on effects in any company. Vital sales opportunities are lost through chasing the wrong prospects, poor strategic decisions are made, and customer service is disjointed and unsatisfactory. When information about customers is held in several different places, something as simple as a change of address can require several phone calls and a lot of internal resource.

The answer to the problem, certainly according to those selling the solutions, is customer relationship management, or CRM. And it is hard to argue with their logic: if you can build a single view of your customers and track your sales opportunities to focus on the best prospects and automate as many parts of the process as possible, then you are more likely to succeed.

“You can’t manage the business on spreadsheets and Outlook folders. You can’t connect it, you can’t report on it, and you need more people to do it that way,” says David Beard, a CRM specialist at Sage UK, which produces a range of CRM packages and systems.

So why isn’t everyone on the CRM bandwagon? One reason is that the concept gained a lot of attention around the turn of the millennium and many companies piled in with big, expensive end-to-end projects that were intended to entirely transform the business. As with so many over-ambitious IT projects, a lot of those projects failed: even now the CRM vendors are still struggling to overcome that bad early track record.

With the information in one place, customer service or call centre workers are better able to deal with customer enquiries on the spot, rather than passing them to another department or promising to call back with an answer.

The benefits don’t stop there. You can analyse which customers buy what and who are the most and least profitable. You can track the success of marketing campaigns, and maximise their effectiveness by targeting them at those people who are most likely to buy.

By collecting website enquiries, responses to advertisements and data from bought-in databases, you can also harness the CRM system to recruit new customers and then track the pipeline of sales opportunities from initial interest right through to sale and after-sales service. You can even send out invoices automatically if the CRM is integrated with the accounts system.

And, to cap it all, senior management no longer have to believe the optimistic forecasts of their sales force; now they can see for themselves what is happening – which sales people are performing, which customers are buying, and which marketing vehicles are proving the most effective. That kind of knowledge is a strategic goldmine when it comes to outperforming your rivals in a recovering but still sluggish market.

But hang on a minute. If it all sounds a bit too good to be true, for many companies, that’s exactly how it turns out. Realising all those theoretical benefits relies on the diligent, accurate and consistent collection of data at all stages of the process and that seems to be the part where many firms struggle.

Technology can help – for instance, many CRM systems will integrate with corporate email, so that every email exchange will be visible from the CRM system. Similarly, computer-telephone integration will help call centre workers record phone transactions and tie them to the customer record.

Sales people can often pose the biggest challenge – they may be part of a team but more often that not they are paid according to their own individual revenue targets. Where’s the incentive for them to share what they know about customers with their colleagues – indeed the whole company – via the CRM system if it means that someone else might get the credit for ‘your’ sale?

According to Mike Ramsay, head of DMC Software in Peterborough, which specialises in CRM, the trick is to persuade them of the advantages. “Sales people often fear that they are being watched, so you have to sell it to them, and persuade them they’ll make a lot more money if they use the system properly,” he says. “And you need to build it into their KPIs so part of the bonuses is based on their use of the system.”

However, Steve Gleed, a partner at PWC, warns that even such relatively sophisticated incentives may not work. “There has been