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To CRM or Not CRM?

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Posted June 6, 2002 By Robyn Greenspan     Feedback

By definition, CRM is open to interpretation but professionals will agree that satisfying customers is paramount.

How enamored companies are with CRM apparently lies within the definition. Customer relationship management is a broad term, encompassing everything from call center routers to complex analytics, and budget allocations and deployments could very well depend on individual interpretation.

In fact, quite a few of the respondents to a recent survey by Reveries.com defined CRM as "customer relationship marketing," which could explain why 32 percent of the 191 who responded indicated that marketing strategy was the single biggest reason for CRM success. More than a quarter (26 percent) chose executive commitment as the number one factor. Realistic expectations — not looking to CRM as a "magic cure" — accounted for 12 percent of the responses.

Interestingly, the surveyed marketers didn't give technology too much credit for a successful CRM strategy. Only 4 percent chose technology excellence as their response to the query. Proper metrics weighed in with 8 percent, and organizational design was chosen by 7 percent.

More than half (51 percent) of the 197 individuals that responded claimed that the marketing department typically leads CRM at their company (or client companies). Senior management was a distant second with 19 percent, followed by IT (12 percent), sales (9 percent).

If budget were not an issue, where would you invest
the majority of your marketing dollars?
Responses Number of
Responses
Percentage
CRM 54 28%
Internet/Media Promotion 4 2%
Mass Media Advertising 42 22%
Public Relations 21 12%
Retail Trade Activities 10 6%
Sales Promotion 24 12%
Traditional Direct Marketing
(non-CRM)
14 7%
Other 26 13%
Total 195  
Source: Reveries.com


Meanwhile, customer relationship management ranked fourth from the bottom on the list of 25 Management Tools for 2001, as compiled by
Bain & Company.

The survey, which examined the usage, satisfaction and effectiveness of the 25 most commonly used management tools among 451 senior executives across more than 30 industries in 22 countries, found that a fifth (19 percent) of CRM users had abandoned the tool altogether.

Considered a "new economy tool," customer relationship management posted the lowest satisfaction ratings and is among the highest in defections. However, one of the top five tools used by 60 percent or more of the companies is customer satisfaction measurement. Despite implementation by the majority of respondents, this figure represents a lowered usage rate for the tool, which was ranked at a high of 86 percent when first evaluated in 1993. It descended in rank from 4th to 5th.

The disparity in the ratings between customer relationship management and customer satisfaction measurement could have something to do with how Bain defines the terms.

Bain identifies customer relationship management as a tool that collects data about customers to optimize marketing, sales, and service processes to increase customer value.

The research company defined customer satisfaction measurement as a tool that collects input from customers to measure satisfaction, prioritize needs, and determine key customer requirements.

While customer relationship management by Bain's definition falls short, the tools that improve customer equity (increasing market share, customer loyalty, and customer value), rate significantly above average: one-to-one marketing, customer satisfaction measurement, customer retention, and customer segmentation.

Reprinted from CyberAtlas.

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