Customers find CRM suits them

Julia Vowler discovers that customer relationship management is a favourite of the financial services sector, but although they...

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.

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