Customer relationship management is about gaining competitive advantage by using technology to optimize sales and marketing resources and maximize customer relationships, according to Meta Group and IMT strategies. For their December 1999 Customer Relationship Management study, the two firms polled sales, marketing and IT decision-makers involved in selecting and implementing CRM.
The study points to rapidly maturing CRM applications, significant investment in data warehouse integration and e-commerce infrastructure and the increased adoption of one-to-one marketing strategies as signs of growth. It predicts that the next leap forward will come from extending CRM across channels, segments, lines of business and product classes.
However, the report warns that progress is hampered by confusion over both strategic and tactical issues. Many large companies are purchasing disparate products and services that don't play well together, IMT finds. In addition to determining market segmentation, decision-making patterns, feature differentiators and ROI metrics, the study attempted to identify best practices in CRM implementation. The resulting report highlights critical success factors, "proof point" measurements and effective models moving from tactical to strategic implementations.
The following conclusions are among the key findings of the study:
As deployed in large organizations, CRM currently is fragmented into multiple separate segments that touch an enterprise's customers. Among best-in-class respondents to this study, traditional selling channels make up over 95 percent of current revenues, while electronic sales amounted to only two percent. These selling channels will continue to be the primary focus of revenue growth plans, customer interaction and IT investment in CRM.
Managing the complexity of enterprise-wide CRM technology and process integration challenges business planning. Business risks far outweigh the technology risks associated with CRM implementations. Only 10 percent of companies were able to report actual business impact. Another 26 percent had measures in place but could not report concrete ROI. Many managers are measuring the wrong things, such as the success of the technology deployment rather than business impact. Best-in-class companies placed more importance on metrics related to revenue growth than cost and quality-related measures.
The service function was the starting point for most operational CRM initiatives, followed by sales. Marketing and back-office functions are lower investment priorities. Technologies that support electronic commerce, customer interaction and customer collaboration will converge. Investment in marketing analytics will increase as operational CRM deployment reaches critical mass. Investments will increase for customer profiling, customer-behavior modeling, sales reporting, campaign planning and measurement.
Among respondents, the greatest percentage said that having a 360-degree view of the customer would enable a better understanding of customer life cycles and profitability. Others value interaction as a way to provide seamless service to customers; see CRM as a tool for operational improvements; expect to shift from being product-centric to customer-centric organizations; and want to push customer data to customer-facing employees.