CRM comes under scrutiny

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When Jeff Sweat investigated CRM for InformationWeek, he was astonished at the complexity of making many elements work as one.

Like most businesses, Kansas Farm Bureau Insurance Inc. knows enough about the importance of its customers to start thinking about customer-relationship management technology.

But like most businesses, the insurance company hasn’t implemented a CRM application – yet.

Interested in creating closer ties with its fixed customer base, Kansas Farm Bureau Insurance has evaluated software from several CRM vendors, including Onyx Software, and Siebel Systems – but hasn’t bought anything.

“The kicker for us is the price,” said David Young, Kansas Farm Bureau’s e-business manager. “That’s what’s delaying things. It’s tough to put out that big an investment on something that some executives within the corporation don’t think we need.”

That’s just one of the reasons businesses give for not moving faster on CRM. In fact, simply by evaluating CRM platform providers, Kansas Farm Bureau is ahead of many others. In a recent survey conducted by Information Week Research, half of almost 500 companies contacted haven’t even begun CRM planning.

Why not? Cost is certainly an issue for some companies. Other factors may include the difficulty of data integration, concerns over the quality of customer data, and internal resistance to new applications.

There’s also confusion in some quarters about just what CRM actually means.

“CRM is so misleading,” said Alan Greenstein, chief information officer at Hoss Equipment Corporation, Irving, Texas. “It’s not a well-defined entity. You talk to three people in a room and you get three different definitions.”

For Greenstein, whose company rents and sells large machinery to construction companies, it means being able to track customers, make sales, and send out personalized direct mail.

For others, CRM has broader meaning. It’s an umbrella term for all kinds of software that manages customer contacts, including sales, customer service, and marketing. Sounds simple, but that means all sales, service, and marketing interactions, regardless of channel, as well as all the business processes and data that support those interactions. Subsets of CRM include salesforce automation, marketing automation, e-mail management, data analysis, and legacy data stores. And all those elements must work as one.

Businesses that have begun to act on CRM strategies may have some of those pieces in place, such as basic customer support, but few have the whole package. The missing parts include tools to deal with such complex customer-management issues as personalization and cross-department data sharing.

Among 175 companies surveyed by Information Week Research that have deployed CRM or will do so within 12 months, 81% are doing client support and services, and 59% sales and fulfilment. The areas that lag behind the most are related to marketing – 43% say they’re doing promotion and ad-campaign monitoring, and 41% customized messaging.

But those figures represent businesses that have active or planned CRM initiatives. Among all companies contacted, just 28% are tackling online sales and fulfilment, and only 20% are creating customized messaging for their customers.

There’s a reason that marketing automation lags: it’s not easy. Eddie Bauer Inc. has been using a data warehouse and data-mining tools from SAS Institute to segment its customers into more-profitable groups, but the retailer has no intention of attempting the one-to-one approach espoused by some marketing consultants

“One-to-one marketing is a beautiful vision – but it’s a vision,” said Michael Boyd, Eddie Bauer’s director of CRM. “The complexity it brings to your business is overwhelming.”

If one million customers receive unique marketing messages, that’s one million different pieces of direct mail, one million different Web pages. Each message would have its own content – maybe even different images – and the business would have to be constantly updating and generating new customer profiles.

InformationWeek

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By admin
30th Sep 2000 06:30

My feeling is that 1to1 is being taken too literally. The story has a scenario of 'If one million customers receive unique marketing messages, that’s one million different pieces of direct mail, one million different Web pages'. Indeed, that would be a handful to create and administer. However, customers are not entirely different from one another. A campaign with three or four variables like pricing, color, size, etc. populated by the customer's known preferences and delivered through the customer's preferred channel does not necessarily make for one million different pieces of mail, and corresponding web pages.

Thanks (0)
avatar
By admin
30th Sep 2000 06:30

My feeling is that 1to1 is being taken too literally. The story has a scenario of 'If one million customers receive unique marketing messages, that’s one million different pieces of direct mail, one million different Web pages'. Indeed, that would be a handful to create and administer. However, customers are not entirely different from one another. A campaign with three or four variables like pricing, color, size, etc. populated by the customer's known preferences and delivered through the customer's preferred channel does not necessarily make for one million different pieces of mail, and corresponding web pages.

Thanks (0)