Julia Vowler discovers that customer relationship management is a
favourite of the financial services sector, but although they see
the business potential, reliability and integration continue to
cause concern
With customer relationship management (CRM) being the next big
spend in IT, what's the view like from those who will actually be
using and, hopefully, benefiting from the technology?
A newly-published survey on CRM, carried out by Metrica on
behalf of Recognition Systems, interviewed 100 sales and marketing
managers from top UK companies and found that it is the financial
services sector that is making the most use of CRM so far.
This sector shows the highest level of familiarity, but "even
here only 30% felt really comfortable with the application of CRM
in the business", says the report.
However, compared with only 9% of companies in the financial
sector saying they were "not at all familiar" with CRM, that figure
rose to 24% for companies in the media and publishing sector, and a
hefty 40% for those in retail, wholesale and distribution.
But what is it that companies actually think CRM will do for
them?
CRM's "essential focus", the report reveals, is on "maintaining
and developing business profitably against fierce competition".
This will be achieved by increasing customer retention, loyalty and
profitability, and hence sales.
Along the way, it is hoped CRM will also improve marketing
effectiveness, boost cross-selling of services and products,
identify new opportunities, increase operational efficiency and cut
sales and marketing costs.
Quite a tall order, and presumably the justification for the
massive amounts of money that full-spectrum investment in CRM will
cost.
So are companies seeing any of these benefits yet?
"CRM has a 'warm' image, but respondents were not extremely
enthusiastic," says the report. None claimed that CRM applications
were "extremely good" in "actually delivering benefits", although
14% of companies surveyed said they were "very good", 19% "good"
and a more generous 42% said they were "fairly good". A
disenchanted 4% said they were "not at all good" and just over a
fifth, 21%, said they "didn't know".
The finance sector was happiest - perhaps because they are
furthest down the CRM path - with 38% saying they were "good" or
"very good".
"The survey provided firm evidence that those using,
implementing and planning to install CRM applications do not
generally perceive that real, positive benefits are actually
delivered to a sufficient degree," says the report. Why?
Changing their minds from their low ranking of the criticality
of integration with back-office systems, respondents cited the
problem of integration with other business applications as the main
barrier against the use of CRM applications. They also cited the
complaint - common to all IT-heavy projects - about the length of
time taken to install the system and get useful information out of
it. The next most common complaint was the cost.
Revealingly, the fourth barrier was cited as reliability - the
fear that "if the system goes down, so does sales and marketing".
For all these worries, companies are pretty bullish about whether
they are getting return on investment (ROI) from CRM, even though
it's early days for most implementations.
"Overall, 50% thought it was either 'good' or 'very good', with
3% saying it was 'not at all good'," finds the report. Meanwhile,
19% said it was "fairly good". But a significant 24% said they
didn't know whether they were getting a good ROI.
The message for IT departments, therefore, seems to be that
business users are still enthusiastic about CRM and expect a lot
from it. But one thing is certain - CRM is going to keep a lot of
people busy for quite some time.
Does CRM suit you?
The greatest value that will be wrung out of CRM, Bryan Black,
chief executive of Recognition Systems, firmly believes, is that it
will both enable and encourage companies to focus on their real
source of value - existing customers.
At the moment, he warns, companies spend far more on acquiring
new customers, than on retaining existing ones.
Because CRM enables companies to investigate the individual
profitability of their customers, it will expose this truth and
help to stop them wasting money on expensively acquiring new
customers who may contribute little profit to the bottom line at
the end of the day.
"Companies shy away from doing customer profitability analysis
because they are told it's very complicated," says Black. "But it
doesn't have to be that accurate - just consistent. You can make it
easy or you can make it complex."
Black's six pieces of advice to users are:
- Get chief executive buy-in and support for the long-term all
the way through, because CRM will change the way you do business.
There will be political fighting and he will have to knock heads
together
- Use outside expertise from organisations like Peppers and
Rogers to gain vision on what is possible and what is being done
elsewhere, so you can see outside your own familiar business
environment
- Go for properly funded and managed projects and break them into
manageable chunks that deliver quick wins and show fast payback.
Start simple and you can get complicated later. Go live within
three to six months
- Don't let the physical - and mental - infrastructure of the IT
department prevent you adopting the "best-of-breed" CRM products.
IT department cultures can blinker best choice
- Some companies may need a CRM director who can cut across
departments and consolidate customer strategy
- Redirect the priority many companies have for customer
acquisition to customer retention.