Report finds 40% of surveyed companies do not respond to simple customer requests
Despite massive investment in customer relationship management systems, many leading UK firms are losing millions of pounds by failing to respond to new business enquiries and convert leads into sales, new research has revealed.
Analysts expect businesses worldwide to invest about £35bn a year in CRM by 2005, and yet customer service is still poor among top UK companies, according to the report carried out by auditing firm RDMP and commissioned by Siebel and Microsoft.
The report surveyed 250 of the top 500 FTSE companies across the retail finance, insurance, communication, utilities and manufacturing sectors during the last quarter of 2002 and revealed that UK firms - which spend £16.5bn a year on advertising - are missing out on new customers by making elementary mistakes.
For example, 40% of companies failed to send requested information to potential new customers after an initial telephone enquiry.
In addition, 92% of respondents failed to attempt to recontact a customer to advance an initial enquiry that was made over the web, or by e-mail or telephone. The report also found that only 26% of the companies responded to an e-mail sales enquiry and only 24% responded to enquiries within 24 hours.
These figures show that getting the basics right is more important than trying to innovate with CRM-related customer service projects, business experts said.
"This study supports the proposition that most companies should take the opportunity to improve the basics, such as responding to and following up sales enquiries," said Professor Patrick Barwise at the London Business School.
"Before worrying too much about difficult and risky business plans such as brand repositioning or outside-the-box product innovation, companies should check their employees are answering e-mails and calls from customers."
There are simple steps companies can take to ensure their customer responsiveness improves, said Robin Goad, managing analyst for CRM at research firm Datamonitor.
"Organisations generally have lots of expertise in the call centre but they do not route e-mail or web enquiries through it," he said. "Companies have invested in lots of different customer systems which make full integration complex and expensive, but this is not needed to answer e-mails. All companies have to do is take responsibility for e-mails away from the webmaster and give it to the call centre."
Neil Morgan, vice president of European marketing at Siebel, agreed that the lack of system integration is a major cause of poor responsiveness to customers.
"In many cases it can be down to companies not integrating systems across different channels," he said. "For example, Direct Line has completely separate systems for e-mail and call centre management."
Integrating systems to give companies a single view of the customer has been the holy grail of CRM projects since the software first appeared in the late 1990s, but UK firms have struggled to do this.
Datamonitor estimates that only 9% of UK call centres are fully integrated, largely because most CRM systems have not been implemented properly.
"The lack of integration is often a legacy from rash investments made three to five years ago," Goad said. "Companies can no longer push money at the problem and in many cases the investment has been written off."
However, improving customer service is not necessarily about investing more in CRM systems, but about addressing change management issues and aiming for best practice, Morgan said.
To this end, Siebel has launched its own free-of-charge "best practice manual", which aims to help companies get the most out of their CRM implementations.
"We want to use our experience in the area and share it with customers to help them get to market quicker and increase profitability," Morgan said.
"We also incorporate our customers' best practice in our products. For example, BT, which has 20,000 Siebel users, had a heavy influence over our e-communications product, ensuring it was scalable enough to handle vast amounts of customer data."
The RDMP report will be published annually so the companies involved - many of which did not believe the findings until they were shown the full research - can track their progress, Morgan said.
Siebel hopes the report will act as a wake-up call for CRM users, but another negative survey could further dent IT directors' confidence in the software.
Lack of faith from users combined with smaller IT budgets has contributed to falling sales of CRM systems in the UK. Datamonitor said the market dropped by 25% last year and estimated it would not recover to 2001 levels for at least another four years.
"Suppliers are also suffering because they were happy to take those investments three years ago," said Goad. "The trend now is for small-scale investments made on a point-by-point basis."
However, all parties agreed that the question of whether CRM investments are in thousands or millions of pounds is irrelevant, what is important is that companies ensure the systems are being used properly to respond to customer enquiries.
Study shows customer service failings
The RDMP research, which used the anonymous buyer model, assessed the effectiveness of companies in the following areas:
- Ease of contact and structure management of new business enquiries
- Knowledge and responsiveness
- Individuality and quality
- Post-enquiry follow-up/converting to revenue.
The report found that:
- Of the companies, 40% failed to respond to an initial telephone enquiry from a potential new customer by sending the requested information
- Following the initial enquiry, either by web, e-mail or telephone, 92% failed to attempt to re-contact the customer to advance the enquiry further through the sales process
- Only 68% of the companies gave customers the option to contact them via the web
- Of those, 66% of the companies failed to respond to the customer's web-based questions or requests
- Only 26% responded to an e-mail sales enquiry
- Of those companies that provided information, 42% failed to send a personalised letter
- Customers had to wait an average of 4.6 days to get a response to their enquiries
- Only 24% responded to enquiries by the next day.
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