CRM: A Mixed Bag

The future of a CRM investment rests on the company's ability to document and measure returns, according to a study by Harte-Hanks, a CRM vendor. Harte-Hanks surveyed nearly 500 North American companies spanning manufacturing, finance, retail and transportation. The key finding is in the areas companies are realizing CRM returns. Improved customer service ratings top the list. Better client retention, more accurate profitability tracking by customer, revenue growth, faster sales cycles and improved marketing response rates were also cited. Between 37 percent and 52 percent of respondents employ at least one customer-based ROI metric. "To justify the expense of CRM projects, even in phases, a variety of metrics will be important to ensure continuation of CRM programs, engage users and determine overall success," said Gary Skidmore, president of CRM at Harte-Hanks. Surprisingly, 44 percent of respondents reportedly do not track CRM ROI -- an increase from last year. Why a sudden waning in ROI hype? Perhaps Albert Stroucken, chairman, president and CEO of H.B. Fuller Company, a 115-year-old global manufacturer of specialty chemical products, posting $1.27 billion in annual revenues, has the answer. Speaking at a conference last month, Stroucken said tracking ROI on an enterprise-wide initiative is "practically impossible and a waste of time." Simply put, CRM isn't software but a strategic decision to transform your company. It's the kind of ground-breaking project whose rollout shouldn't hang on quarterly returns. "If you're going to do it, then you better be willing to commit huge resources and see it through to the end," says Stroucken. Another interesting finding from the Harte-Hanks survey is that 20 percent of CRM programs are in-house developed solutions -- that is, no commercial CRM software packages and very limited, if any, outsourced programming. To be fair, 76 percent of respondents are relying on a commercial CRM package. Even Stroucken, whose firm is currently evaluating CRM offerings, isn't impressed with packages on the market. "Based on what I've heard so far, I don't think we would make an investment in CRM and buy a CRM package and try to implement it," he says. "We much probably would have to put something together that fits us initially." Aside from H.B. Fuller Company, the study shows that the CRM market has matured, possibly to the point of saturation. Eighty-nine percent reported a CRM solution in place; 5 percent are currently building a CRM solution; and only 6 percent said they're planning a CRM solution within the next six months. Joanie Rufo, analyst at AMR Research, counters that the CRM market still has a lot of growth left. AMR predicts a paltry 10 percent growth in the market this year but a 19 percent compound annual growth through 2006. "What we're seeing is that the hype around CRM has died down, thankfully," Rufo says. Harte-Hanks points to PRM, Web and, to a lesser degree, wireless access as growth drivers. Channel partners have access to customer data in just 16 percent of CRM solutions, Harte-Hanks reports, but this figure jumps to one in five solutions among respondents planning to implement a CRM solution within the next 12 months. And 44 percent of these respondents plan to provide 50 percent or more of their corporate users with Web access to customer data. Wireless is further down the road, with just five percent of these respondents giving 50 percent or more of their corporate users wireless access to CRM information. As CRM projects expand throughout the enterprise, so do challenges. The biggest, of course, is tying together data silos so that a CRM system can do its job. Forty-two percent of respondents cited integration of data sources as the most difficult task, followed by change management. The latter includes training people to use the solution effectively and gaining participation from various departments within a company. Tom Kaneshige also writes for Line56.com