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  • December 15, 2004
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

Companies Still Struggle with One of CRM's Biggest Pitfalls

When it comes to CRM, it's all about customer data. Many companies, nevertheless, don't know what to do with it. That's why earlier this year CSC, with some help from D&B and Northwestern University, crafted "Customer Intelligence Diagnostic Survey," a report that polled more than 6,000 marketing and IT executives from 58 large U.S. companies. The report reveals the state of data and intelligence at U.S. corporate enterprises, and analyzes why companies are still struggling with their CRM initiatives. The results of the study show that a significant amount of customer data is or could be collected by respondent firms. But the report states "the data is collected inconsistently and little is done with it to systematically enhance customer knowledge and impact business processes that address the customer's interests/needs." It concludes that while most firms possess analytical software/tools, the analytical activities performed are "fairly rudimentary." The least-advanced area of customer intelligence is the use of customer insights in customer-related processes to improve the overall customer experience. The study finds that this is also the most risky area due to complexity and customer sensitivity, and therefore, most respondents are still in a "test" mode. The report covers issues pertaining to customer-information integration, customer insights (analytic modeling and segmentation), and making customer insights operational. The success of these three areas should deliver a 360-view of the customer, an organization's ability to track and record a customer's interaction with a company through all customer touch points. However, 79 percent of respondents claim they do not have a 360-degree view of their customers. "For as many people that pontificate having a 360-degree view, most organizations don't have the foundation to do that. If you don't have a complete view of the customer, how are you doing CRM? Maybe that's why you're failing," says Krishna Chettayar, assistant vice president of marketing strategy at D&B. He adds that 50 percent of respondents aren't able to successfully cross-sell and upsell. "Isn't that the foundation of CRM? The goal of CRM is sales, if you can't upsell or cross-sell, why are you doing CRM in the first place?" Part of the problem, Chettayar explains, is that executives are still not familiar with what CRM technology can do for their organization, and therefore, lack the ability to set attainable goals that will positively affect customer satisfaction and revenue. For example, when asked if customer data can be easily shared across the organization, 67 percent of respondents stated "no." When asked how frequently do they believe the company misses a revenue opportunity due to poor data quality and lack of data integration, nearly 66 percent replied "sometimes." Only 57 percent of respondents can recognize their highest revenue generating customers. In fact, when asked if they can identify the most profitable or highest value customers, 17.5 percent said "not at all," 22.5 percent replied "minimally," another 22.5 percent stated "sometimes," while only 30 percent responded "almost always." When it comes to marketing effectiveness, only 42 percent responded that they are able to identify the most effective marketing campaigns, whereas more than one third (38 percent) stated they cannot, and 18 percent replied "don't know." Of course, CRM technology is not a magic bullet--to be successful, a touch of creativity helps. Marketers, for example, can do a better job of improving their marketing segmentation campaigns to target the right customers at the right time, according to Barton Goldenberg, president of ISM. "The problem is that 80 percent of marketers talk about segmentation, but less than 20 percent of all marketers truly understand the value of segmentation and do it well," Goldenberg says. "People segment too broadly. People don't take the time to challenge the segmentation and say 'Do we have the best segmentation?' Even if they have the best segmentation, they need to take the time to listen to customers. Marketing is half art and half science, and the art is not appreciated as much as it should be." In addition to improving marketing efforts, making use of good customer intelligence can be applied to other departments, such as sales and customer service. And, more companies are making a business case for CRM to help them make use of good customer intelligence. "Companies are still trying to get the operational stuff working," Chettayar says, "but getting to the business and customer intelligence is where most people see most of the value and that's where most of their investments are going." Related articles: Revitalizing a CRM Strategy
The Benefits of Predicting Customer Behavior
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