For all the hype we’ve been force-fed about CRM (customer relationship management), it’s a wonder it hasn’t actually delivered as it was supposed to. But several years into the technology’s growth, customers and vendors are taking stock of their experiences so far and trying to determine why—despite continual improvements in CRM technology—the majority of CRM projects continue to fail.
According to analyst firm META Group, the proportion of CRM systems missing the mark ranges from 55 percent to 75 percent. Another survey, by UK market watcher PMP Research, was even more scathing: 92 percent of the 50 companies surveyed said their CRM systems had not been very successful; many of those also said it was too early to accurately measure the projects’ success, even though the systems had been in place for over a year.
That the PMP respondents reported such widespread disappointment with CRM confirms that there is still a widespread lack of understanding about the technology’s benefits. Worse still, the fact that most companies couldn’t assess benefits after a year using the system confirms that CRM is failing to deliver the kind of rapid return on investment (ROI) cost-conscious executives are now demanding.
Early over-investment is common in business technology, so it’s no surprise that CRM projects have fallen short of expectations. Slowdown in buying is the expected result, marking the point when customers reach the bottom of the trough of disillusionment—the point where early hype gives way to the realisation that there are no easy wins in enterprise IT.
Resumption of spending may be correlated with the time that company executives take stock of their early mistakes and give the technology another try, typically with a much smaller scope.
A comparison of spending patterns around the world shows that different economies have reached the trough at different points. For example, IDC recently reported that growth in Europe’s CRM market had slowed from 22 percent in 2001 to just 8 percent in 2002, with a rebound projected this year and next.
IDC also found Singapore’s CRM market had plummeted by 44 percent from the first half of 2001 to the second half before bouncing back by late 2002, while Australia’s CRM market grew 46 percent from 2000 to 2001 and another 30 percent in 2002. In the US, IDC has forecast CRM services will enjoy cumulative annual growth of 18.6 percent through 2006.
Judging from IDC’s market assessments, Australian companies—usually well-advanced in technology take-up—are leaders in the second wave of CRM adoption. There’s now a focus on smaller, integrated projects with short-term deliverables. This shift is only just hitting other regions, where it appears to have taken longer for the CRM bubble to burst.
When companies dive back into CRM, many are finding that marketing is a better area to focus on than call centres and sales force automation—the two areas where many companies initially focused their CRM efforts. Pouring that effort into marketing, however, promises additional revenues—and that’s something any company can use.
“Companies are looking for quick wins that have less risk in a risk-averse time,” says Chris Ciauri, Asia-Pacific vice president and general manager with CRM vendor E.piphany. “They’re thinking about customer churn, segmenting customers, understanding who their low and high-value customers are, and personalising their interactions with those segments. Marketing is an area that’s a little more contained.”
Once businesses look past the trough of disillusionment, they realise the truth about CRM: when implemented properly, it can be an extremely effective marketing tool that focuses customer interaction and trims marketing overheads. But successfully using the tools to revamp marketing efforts requires companies to look past the technology and provide a flexible business infrastructure supporting their ever-changing marketing needs.
Get your data marketer-ready
Like most major projects, CRM starts with good data. That’s been a key principle underscoring efforts by CCH, a publisher of specialised materials for tax, legal, and business clients, to build out its arsenal of tools in an ongoing CRM project that started 18 months ago with the migration of data into an Oracle data warehouse.
Implemented in three months, the warehouse has successfully provided a central repository for storing customer and business information. This has certainly improved reporting and analysis of the data through prefabricated reports; CCH uses Impromptu and PowerPlay from Cognos, and other standalone tools, to provide a better view of specific activities.
With more than 1000 tables in the order management database, CCH business intelligence manager Craig Scowen says there is still a lot of room for improving the company’s data analysis. To this end, the company is currently implementing an Onyx CRM system to provide an integrated suite of customer-related tools. This integration will improve marketers’ access to historical customer data, enabling the company to more proactively spot underlying sales trends and identify potential new business areas.
“As the company is evolving, we’re trying to run on information management rather than gut feeling,” Scowen says. “When we had isolated systems, we didn’t necessarily understand which people were subscribing to what products. We’ve given them the ability to look at the predictive elements of what’s going on, building our marketing and sales in such a way that we can learn from that.”
The ability to extrapolate comprehensive views of customer behaviour is critical to ensuring effective marketing. For this reason, a consistent data warehouse—backed by ongoing data integrity policies—is a major helper for any company that’s trying to do effective customer-based marketing. Even the simple process of deduping (removing duplicates) can go a long way to improving customer satisfaction and brand perception, since it eliminates the faux pas of sending duplicate copies of marketing materials to customers who have been assigned multiple identities within the system.
Data consistency across business units becomes even more important in supporting cross-selling and up-selling, two of the most important new business builders for any company. If a customer’s entire interaction history can be encapsulated within a single record, marketers can better model customer behaviour and reduce dependence on blanket marketing.
Although it seems logically intuitive, the ability to maintain a single customer record has been one of the biggest stumbling blocks for companies emerging from decades of product-focused functioning. More often than not, individual business units have maintained standalone customer databases over which they have been highly protective.
In such companies, political undercurrents, power struggles, and data incompatibilities can make data consolidation a difficult exercise. That’s been a persistent thorn in the side of companies trying to build CRM systems that offer the technology’s real benefits for marketers, says Joe Najen, CRM Practice senior manager with Accenture Australia.
“Most organisations in Australia are still very product-centric and will continue to be,” Najen explains. “Underpinning [CRM] is the focus on customer insight, and the constant challenge of trying to get a consistent customer experience across all touch points. This requires a fundamental realignment around the way that you sell to the customer, and at the heart of all that is getting a better view of the customer.”
That view can be expensive and incredibly difficult to achieve, since it requires bridges to be built between often highly polarised business divisions. Companies then need to combine creative, operational and analytical marketing disciplines to support a fundamental change in marketing philosophy.
Despite the complexity of making this happen, the importance of that approach became clear when none other than the Commonwealth Bank of Australia—with millions of customers spread over multiple divisions—recently announced it will make customer consolidation the centrepiece of the largest single systems re-engineering project in its history. Its goal? Better customer management, ultimately leading to better and more efficient marketing.
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