CRM: The Myth And The Reality

Customer relationship management (CRM), makes sense, and most companies are now implementing it. Everyone in the company who faces outwards, from the CEO to the sales force, must be glad of that because it works, doesn't it?. But we've just discovered that most companies just don't know.

Some seven in ten businesses in key sectors of the British economy told a recent survey that they are investing in CRM initiatives to achieve their business goals, but only about one in 25, six per cent, tell us that they are measuring its effectiveness for them. The MORI survey for Atos KPMG Consulting also found that, despite this lack of measurement, over 80% declare their CRM initiatives a success. But then they would, wouldn't they?

The survey found:

• 83% told us that their CRM initiatives had been successful
• 86% believed the need for CRM has increased over the last three years; and 57% supported this by increasing CRM investment
• But over two thirds admitted failing to provide different services or service levels to customer groups with different needs or to customer groups of different value to the business, which makes you wonder what they are doing with the data they collect from their customers.
• Customer satisfaction is the primary or secondary goal for 75% of CRM programmes, but only four in ten businesses say they measure their customers' satisfaction
• Profitability is the primary or secondary goal for 71% of businesses
• The single most important goal of CRM initiatives is culture change, identified by 29%
• The use of new media channels (such as web, email and SMS) as CRM vehicles is developing more slowly than expected, so they say.

The study, entitled Is CRM Delivering Value to Shareholders? highlights this paradox and reveals the significant gap between what UK businesses think and what they actually do in managing their customer relationships.

Celia Gaffney, managing director at Atos KPMG Consulting who commissioned the study said: "Many companies appear to be paying little more than lip service to the objective of becoming customer-focused. CRM is being used as a short-term tactical response to issues such as customer churn and retention, rather than as a strategic approach to delivering shareholder value. Applied properly, CRM is a way of delivering mutual value - to customers and the business simultaneously - by balancing customer needs with service costs."

This is a public relations ticking time bomb. The smart guys in business know that exceeding customer expectations is guaranteed to enhance business performance, and the quickest way to lose customers and hack off people is to over promise and under deliver. If you want to see proof of that, just cast an eye over recent bank advertising. And the banks don't seem to understand why their image with their customers has declined so steadily over the 30 years that I've been measuring it. When did your local bank, or their national office, exceed the expectation that would have resulted from believing their advertising? And over 80% of those businesses in the survey who had call centres said they were very or fairly satisfied with them. Do you know of any, save First Direct, that satisfies you when you ring them or when you are telephoned?

We asked these guys what the top three problems were that are facing their companies. One in five said 'competition', and one in six each said 'increasing and retaining their customer base or increasing profitability. CRM would/could help them the deal with each of these problems, but only if well managed, and part of good management must be measuring the effectiveness of what you spend.

* Is CRM delivering value to shareholders? The findings are based on telephone research conducted by MORI between 6-28 March 2002 with 163 directors with customer management and/or marketing responsibilities across the following sectors: retail/wholesale/distribution (37%), financial services (37%) and telecommunications/ high-tech/IT/communications and content/media (26%). The annual turnover of the companies' UK operations is from 16350 million to over 1635 billion. Only two per cent had a turnover of 16350 million - 163100 million per annum. For more information, visit www.atoskpmgconsulting.co.uk