Walking the Customer Centric Walk
A new study conducted by Market Intellect surveyed 1,200 chief marketing officers (CMOs) at businesses of all sizes to assess the state of their CRM efforts and the approach they take with their customers. The sampling was random, and only about half of the respondents identified themselves as having a formal CRM strategy, while half said they were customer-centric organizations.
"Fifty percent or so say they're customer-centric, but that same 50 percent aren't doing all of the things in the success factor [category,]" says Gene Brown, CEO of Market Intellect and Valentine Radford Professor of Marketing at the University of Missouri--Kansas City. Brown identifies eight key characteristics of successful customer-centric firms, such as building CRM around customer needs, instead of technology, and practicing effective customer segmentation. In the survey few companies claimed to be successful in those key areas.
For example, just 35 percent said they understand customer lifetime value, and only 20 percent measure it on a regular basis. Only 30 percent measure campaign ROI or customer satisfaction regularly, and just 10 percent use a customer research panel. "Almost all of those folks using a customer research panel or customer advisory council make money with CRM," Brown says. "It's an attribute of those companies that are really
Particularly troubling were the ROI results. Although at least half credited CRM with an increase in customer satisfaction, retention, or acquisition, one in three firms did not even attempt to measure ROI, and the same number said they had difficulty with ROI measurement. Only 35 percent concluded that they achieved a net positive ROI for CRM and fewer than half that number said they were pleased with the ROI results. Brown attributes the low numbers and gaps to low adoption of written CRM action plans (just one in five companies use them) and a misunderstanding of the amount of effort it takes to reorient a company around the customer.
"There's a lot of lip service being given to being customer-centric, but if you're not really managing campaign ROI, and don't have a written strategy, then you don't know why we're doing this."
CRM in Action: Armed and Ready for ROI
How to...choose the right metrics for determining ROI
Hot Seat: CRM Success Means More Than Avoiding Failure