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Emerald Group Publishing Limited
Copyright © 2001, MCB UP Limited
Customers who needs them?
Customers – who needs them?
A survey of over 100 FTSE 500 and Global 500 companies reveals that most are failing to take an integrated, company-wide approach to customer relationship management (CRM) or to recognise its potential to build revenues and improve company profitability.
The main findings of the survey are:
Of the companies surveyed 82 per cent do not have a company-wide CRM solution in place. Of these only 24 per cent plan to implement one in the future.
Lack of agreement and co-operation between business departments is named by 63 per cent as main inhibitors to company-wide CRM.
Sales and marketing drive CRM strategy in 31 per cent of companies but hold budgets in only 8 per cent.
Only 15 per cent of respondents believe CRM is primarily concerned with increasing profitability or revenue generation.
In almost three-quarters (74 per cent) of companies CRM is not viewed as a strategic board issue.
According to the survey "CRM UK" commissioned by outsourced customer contact management company, 7C, only 18 per cent of companies have implemented a company-wide CRM solution and, of the 82 per cent who have not, less than a quarter (24 per cent) intend to do so in future. Of these, 39 per cent say a company-wide solution would be impossible, while 33 per cent say it could only be achieved with extreme difficulty.
Company politics, rather than technology or financial issues, are seen to be the main barriers to a company-wide view of CRM. Separate and competing business units that cannot achieve agreement, have different cultures and are focused on different aims and goals are seen as the biggest inhibitors by 90 per cent of respondents.
This is further reinforced by a lack of board level impetus. Only 26 per cent of boards view CRM as a strategic issue, with 52 per cent seeing it simply as a business process issue and 22 per cent not viewing it as a board room issue at all. In 63 per cent of companies CRM is discussed during board meetings only occasionally, rarely or not at all.
Lack of a consistent approach to CRM is also reflected in the allocation of budgets. Though sales and marketing are seen to be the primary drivers of CRM strategy in 31 per cent of the companies, they only hold the budget in 8 per cent of cases. In 27 per cent of companies the budget for CRM is held by the IT department but they only drive strategy in 5 per cent of cases. In almost half (49 per cent) of companies, the chief technology officer will become involved in CRM programmes only at the implementation stage and will not be involved in programme development.
It also appears that CRM is under-funded. In only 12 per cent of cases is the annual budget for CRM known to exceed £1 million and 33 per cent of respondents do not know what their company's CRM budget is.
Only 15 per cent of survey respondents recognise that a primary role of CRM is to support revenue generation or increase company profitability. Only 13 per cent believe that it is mainly about winning new business. When asked which benefits CRM programmes most often fail to deliver, 31 per cent of respondents said they failed to deliver increased sales or to shorten the sales cycle, while 25 per cent stated a reduction in the cost of sale.
"CRM is not simply about providing customer service at the lowest possible cost", says Duncan Wilkes, 7C's UK managing director. "First it is about managing customer relationships in a way that will reduce customer attrition and provide new sales opportunities based on a thorough and well developed understanding of each customers' personal circumstances, needs and desires".
"Second, it is about developing a clear understanding of the most profitable way to transact business with each customer. The 18 percent of our survey respondents who have integrated CRM across their organisation have achieved a clear competitive advantage. Companies must integrate their management of customers and customer information across their organisations and their claims to be customer centric will be ill-founded until they do so".
Wilkes recognises that the responsibility for businesses' failure to adopt integrated CRM must, at least in part, lie with the CRM industry's failure to deliver a compelling message. "The responsibility lies with us to present companies with a more comprehensive, unified and better-explained CRM package; one which can provide strategic benefits to the whole organisation, gain the endorsement of the board, transcend internal company politics and win a clear and substantial budget. Many of the companies who have succeeded in establishing a company-wide approach to CRM have done so by perfecting best practice in one business unit or division, proving its merits and then rolling it out to the whole organisation", he said.