Testing the Waters
Despite their interest, companies keep CRM at arm's length.
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A new survey finds that although spending on CRM solutions is at an all-time high, companies are still apprehensive about fully embracing CRM. "There's hesitancy on the part of companies to implement a whole CRM solution because it requires an evolution from a `make the sale' mentality to a `managing the life cycle of the customer' mentality," says Andrew Wilson, director of CRM at Cap Gemini America. "Right now, CRM is primarily fixing things that have been implemented over the last 10 years. But this process will gradually evolve into a more holistic approach."

Cap Gemini commissioned the International Data Corp. to survey 300 U.S. and European companies "to find out where the industry was going." According to Wilson, the findings provided a wealth of information on CRM and how companies are using it. Interesting survey facts include the following:

  • Companies spend an average of $3.1 million on CRM projects and expect revenues to grow by 8 percent within one year of implementation.
  • Of the U.S. companies surveyed, 77 percent utilize corporate Web sites primarily as a communication vehicle with customers. However, over the next two years, a majority of firms will expand the functionality of these Web sites to offer direct marketing and electronic commerce opportunities.
  • Only 7 percent of those surveyed are equipped to process electronic payment transactions. Within two years, though, 28 percent plan to transact payments electronically. This mixed bag of statistics further evidences the "go slow" approach to which Wilson refers. "What we are seeing out there is that everybody has spoken about CRM being the `next big thing,'" says Wilson, "but companies are not exactly diving in to implement." The problem, he says, is getting past the old tried and true ways of doing things, especially in sales and marketing. These departments have traditionally focused on immediate results like quick sales, rather than repeat sales and customer life cycles. Consequently, even though they acknowledge the potential value of CRM solutions, they do so with an eye toward solving individual problems, rather than completely overhauling the system through technology.

The Cap Gemini survey also suggests that while this phenomenon is common throughout all industries, some are worse than others. "The banking industry, which is very customer-focused, is still unable to provide a central view of the customer," says Wilson. "If banks are not there yet, imagine how difficult it is for a chemical company."

Wilson also suggests that even if a holistic approach to managing the customer life cycle through technology were to take hold immediately, the technology itself is, at this stage, lacking. "We still don't have single-vendor solutions that capture end-to-end CRM." But, he adds, "The tools become less important relative to the companies shifting their paradigms and managing themselves in terms of managing their customers. Until you have that, you cannot fully practice CRM."

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