A survey of BT Insight Interactive members' shows huge agreement that customer relationships are vital to a company's strategy. The difficulty in implementing a strategy, however, is in knowing how to measure customer value and satisfaction. Surprisingly, fewer than one in five companies have an explicit Customer Relationship Management (CRM) strategy.
The survey showed that the majority of companies focused their customer relationships on business-to-business relationships (54 per cent), although 36 per cent concentrated on business-to-consumer. The vast majority of respondents (83 per cent) agreed that CRM is "vital" or "important" to their company strategy, yet that still leaves a staggering 15 per cent still considering CRM. Two per cent of respondents said that CRM was "not on the agenda".
Almost everybody agreed that successful customer contact is a company cultural issue (97 per cent) and that customer retention dictates the integration of Sales and Delivery channels to provide a consistent customer experience (91 per cent)
The difficulty uncovered by our survey was the wide variation in the status of CRM within the companies surveyed. Only 34 per cent believed they had a defined CRM strategy or framework. A mere 19 per cent said they had an operational model. 21 per cent of respondent said they had board level sponsorship, while just over a quarter said they had resolution at departmental level.
Without a doubt, the biggest barrier to implementing a successful CRM strategy is integrating different parts of the company (26 per cent), followed by justifying budgets to the board (17 per cent). Human resources issues also affected CRM implementation, with 13 per cent saying they had problems finding and keeping the right talent.
Within a company, there are variations between the level of engagement of different departments. Not surprisingly, marketing staff are heavily engaged in CRM at functional level (48 per cent) and board level (44 per cent). Sales departments are similarly engaged (50 per cent at functional and 40 per cent at board level). Operations departments are less involved (45 per cent and 36 per cent respectively). Yet the highest level of engagement is in IT and Communications, where 56 per cent are engaged, reflecting the use of technologies to deliver channels to customers.
As many companies trying to implement a coherent CRM strategy know, the devil is in the detail. 49 per cent of those surveyed said that measuring customer value was difficult. 44 per cent reported the problems associated with measuring customer satisfaction. Internally, the major issues were identifying the correct CRM software (36 per cent) and employee know how and skills (52 per cent).
The survey reflects industry trends. The European Centre for Customer Strategies (ECCS) reported a downturn in technology investments at the start of 2001, with CRM outperforming other sectors. It believes that the fundamental reasons for pursuing CRM will once again come into focus in 2002: retaining customers, growing share of customer where share of market is not possible and sustaining relationships for longer to improve profitability. Clients clearly want CRM solutions quicker, more flexibly delivered with a more obvious return on investment.
Although only six per cent of those surveyed said the choice of consultants to work with was a big factor, it would seem that 2002 will see a rise in demand for such services. The ECCS predicts companies will need professional services to help introduce new processes.
More importantly, as companies focus more on one-to-one marketing, they need to be mindful of managing that relationship wisely and legally. At the end of 2001, a retired accountant from Pontefract won a landmark court ruling against his local authority. His counsel told the High Court in London that the supply of the register to commercial organisations was in principle an interference with the right to private life and privacy. The judge found that the government had breached the European Convention on Human Rights in that the interference to Mr Robertson's private life was disproportionate.
Professor Merlin Stone, one of the ECCS expert panellists, has warned companies that many of their databases are in breach of the Data Protection Act. Indeed, 38 per cent of those surveyed admitted that data capture and analysis were difficult to implement.
In the end, the survey shows companies see the implementation of a coherent CRM strategy as a key driving force, affecting the whole company, from boardroom to operations. The biggest issue is how to integrate different parts of the company and change the culture of an organisation. Knowing the right CRM software and harnessing the right skill mix to deliver the goods will almost certainly mean working in partnership with software and hardware manufacturers, as well as communications providers.