Room for Improvement
A survey of European CRM decision-makers shows opinions about--and progress on--CRM varies across national boundaries.
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Recently Chordiant, a Cupertino, Calif.-based software vendor, surveyed 171 European CRM decision-makers on issues ranging from their perceptions of customer satisfaction levels, to their intentions of adopting new e-commerce channels.

The results show that deep distinctions remain between countries about when and how CRM should be deployed. But there was also agreement, mainly on the importance of CRM. An overwhelming majority of survey respondents agreed they believed it would have a high impact on the future success of their own companies. British consultant Tony Craddock says, "It's clear CRM is important to European executives."

CRM has developed rapidly in Europe over the past two years. It is no longer just another term for sales force automation or contact management. It's not just a marketing buzzword. CRM is becoming a cornerstone of corporate strategy. And this survey had a lofty goal. Ultimately, the aim is to provide a catalyst for the generation of a set of guiding principles on the technologies, methodologies and standards that will lead the market away from the fragmented approach that prevails, the survey reveals.

The survey's authors do think CRM efforts have been fragmented. To be successful, however, they believe CRM must be implemented as an enterprise-wide strategy defined at the highest level and rolled out to every department and employee. The authors claim there is a growing awareness for the need of this holistic strategy, and they're guardedly optimistic. "This year may be the first year of significant investment in tightly integrated multichannel delivery," the authors write. "But there's still much work to be done."

High-level Concern

Titled "eCRM in Europe: Hype or Reality?," the survey canvassed senior representatives of organizations in Germany, the Netherlands and the United Kingdom. One-to-one marketer Don Peppers, of Peppers and Rogers in stamford, Conn., led a series of briefings, after which delegates completed a questionnaire. Survey respondents represented five vertical industries: financial services, insurance, telecommunications, transport/logistics and retail. They came from marketing, customer service, sales, e-commerce, IT and senior management roles.

Chordiant notes that a small but significant number of attendees were senior, board-level executives, indicating that CRM is recognized as an important issue at the very highest levels within organizations. The UK, which represents the largest market for eCRM services, had three times the number of senior executives as Germany, reflecting the maturity of eCRM initiatives in the UK. The British also get credit for spending more time building customer relationships. More than 60 percent of British respondents spend two-thirds or more of their time in this activity, with 42 percent of Germany and 40 percent of the Netherlands also engaging in relationship building.

"Higher costs, tighter legislation and more demanding security requirements have slowed down the development of eCRM in Germany," says Juergen Neubauer, country manager, Chordiant Central Europe. But he expects CRM to achieve the same market penetration in Germany, Switzerland and Austria as achieved in other European countries in the near future.

What is CRM, Anyway?

While most major European companies agree that CRM is vital, no two responses to the question "What is your definition of Customer Relationship Management?" were the same. British respondents emphasized personalized service. For German respondents, the most common definition was understanding customers and satisfying their needs. Dutch respondents were the only ones to mention the centralized aggregation of data to build customer profiles. UK respondents were alone in saying that a choice of delivery channels was a requirement of eCRM. German respondents did not mention once the importance of developing a long-term relationship with customers, a key concept for Dutch and British participants.

When asked to identify the company with the best eCRM image, respondents from all three countries put an American company, Amazon.com, at the top of their lists. Chordiant found it interesting that no Dutch or German companies were identified by their own countrymen as having good CRM records. British respondents gave the nod to two UK companies: First Direct, a Web-based bank, and Virgin, the diversified consumer company.

When queried on the techniques they were using to build relationships with customers, participants in the UK and the Netherlands indicated that direct mail was the most popular. In Germany, with its strict restrictions on privacy and the use of personal data for commercial purposes, call center use was lower than in the two other countries, and the Internet appears to be eclipsing direct mail. The Internet's focus on unsolicited customer communication may present the greatest opportunity to address the customer management challenge in Germany.

According to Chordiant, UK companies are by far the most enthusiastic about moving into new channels, with respondents citing e-commerce, interactive digital television and mobile commerce among the new channels. In the Netherlands, by contrast, almost two-thirds of respondents reported no plans to move into other channels. Chordiant thought this might be due to the strong tradition of call centers and direct mail as means of contact in the Netherlands. Chordiant also found it significant that almost a third of German participants did not know whether their company planned to expand channels. This reflected badly on German companies' ability to establish and communicate their delivery channel strategies.

Channel integration turned out to be a stumbling block. Despite its enthusiasm for new channels, the UK has a dismal record of integrating existing channels. In 84 percent of UK companies surveyed, existing channels to market were not integrated, compared to 64 percent for the Netherlands and 34 percent for Germany. These results imply that new channels have thus far been implemented piecemeal, with no integration strategy.

Are Customers Satisfied?

An overwhelming 64 percent of German respondents perceived their customers' satisfaction to be low. "German corporations assess their customer service levels very carefully and self-critically," says Neubauer. The Dutch respondents were more optimistic, with 45 percent rating their customers' satisfaction levels as high. British respondents were mainly cautious; 46 percent of respondents rated customer satisfaction "fair," while only 31 percent opted for "high." "Satisfaction is not being perceived to be high," says Craddock. "There is considerable room for improvement."

Call centers continue to be used mostly for customer service and support. Only a few companies are using them to conduct a significant portion of their businesses. In the Netherlands and Germany, the majority of call centers handle less than 20 percent of a company's business.

"The UK is exceptional in having a significant number of companies [38 percent] conducting the majority of their business through call centers," says Neil Morgan, Chordiant marketing director for Europe, the Middle East and Africa. He feels this is a refelction of the advanced deregulation in the financial services and telecommunications markets in the UK that has led to increased competition and has forced suppliers to move early to the lowest cost channel.

The Role of Technology

Finally, survey respondents weighed in about technology. "Technology is important, but only as an enabler; the human interaction is the most vital," said one UK respondent. A Dutch respondent said, "Technology is not the issue--mentality/business process is the issue." And a German respondent added, "It's necessary, but not the driving force."

But as with customer satisfaction, respondents were not confident about their use of technology, with the majority of respondents believing their companies used technology to moderate or fairly poor effect.

"It becomes clear that technology solutions can only be effective where an organization has already defined a holistic eCRM strategy," the survey's authors write. "Implementing eCRM technology in absence of a clear strategy risks doing more harm than good."

Excerpts from the study, "eCRM in Europe: Hype or Reality?" by Chordiant Software International used with permission. www.chordiant.com

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