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Successful CRM strategies Back  
More sophisticated information tools are available to manage customer relationships profitably, but companies are only starting to use them writes Brian Moore
Marketing has moved on dramatically since the days when it was mainly product
focused, and involved mass communication techniques, to today's "focus on the
customer", involving a more targeted approach. This need has been driven by
more demanding customers who face an expanding array of branded services and
products to choose from.

Moreover, the consistent search for competitive advantage, technological
developments, and the high cost of marketing should be more than enough to
focus executives at the most senior level on what is commonly known as
Customer Relationship Management (CRM).

To some, CRM may sound like management jargon; so what does it mean? - It is
all about: Who is your profitable customer? What messages does this customer
respond to? Are you providing the required products and services? Are you
providing the highest levels of customer service? It is not about reducing
costs but increasing profits.

The main objectives for starting a CRM project make intuitive sense. The
ultimate goal is to build customer loyalty and improve customer retention with
a particular emphasis on identifying and retaining the most profitable
customers. A variety of approaches may be taken to implement a successful CRM
strategy; however, the most successful projects are always driven from the

A recent study, carried out by IDC on behalf of Cap Gemini, of over 300
European and US companies, discovered that 65 per cent of companies are aware
of CRM and its potential for strengthening customer relationships.
Unfortunately, too few companies are currently at a stage where they are
really achieving the full benefits of the technology and tools now available.

The study found that the majority of companies are focusing on smaller, ad hoc
projects which offer an immediate payback, like salesforce automation or call
centres. CRM technology leverages on new developments but the more
sophisticated tools now available, like interactive websites and
datawarehousing, are still in the planning stage at most companies surveyed.
For example, the Internet is only used for E. Commerce by 22% of European
respondents but a further 24% will be looking to integrate the internet a part
of their CRM strategy in the next 2 years. Overall, Europe and U.S. 38% of
respondents had an interactive web site (not necessarily full e. commerce)
whereas 79% are expecting to have this capability in the next 2 years.

See attached slide - integration of technologies in CRM (Fig 10)

Too many companies are failing to appreciate the high financial returns that
can result from a fully integrated approach. This involves integrating new
interactive channels with front office (e.g. sales and marketing) and back
office software (e.g. datamining). Customer information can then be finely
managed to deliver targeted marketing activity because a clear picture of each
individual customer will be available. It was once impossible for a company
to achieve this kind of marketing on a commercially viable basis.

It is necessary for every organisation to keep up with new developments in its
industry sector and in the new technology enabled market to ensure that the
customer remains king whilst creating shareholder value through increased

CRM needs to be embedded into the entire culture of the organisation and all
functions must work together for real rewards to be seen. Cultural change is
indeed one of the key inhibitors to CRM.

It is still the case that too many companies do not realise the full potential

of CRM to improve business performance. It is essential that organisations
are aware of the benefits of CRM in light of the move away from mass
production and mass marketing towards new models in which customer
relationships are the central business issue.

In summary, the key findings of the IDC survey are that over 65% of the
companies surveyed were aware of CRM technology and methods; 28% are under
study, in the implementation phase or even in the operational phase (12%). In
45% of the companies surveyed, the implementation and monitoring of the CRM
program has been initiated and controlled at the top management (CEO) level.
The average investment involved in a CRM program (hardware, software and
services), is US$ 3.1 million. The financial returns anticipated by the
companies surveyed are an immediate increase of 8% in turnover, with a
mid-term objective of 16% within two years. The average expected payback is
28 months. The implementation of a CRM project aims primarily at improving and
enhancing customer relationship with the companies' existing client base, and
to protect and retain this relationship.

The companies surveyed have a global approach to their customer channels and
plan their investments in a "phased", or "step by step" approach, by
integrating existing and readily operational applications in their
organization: call centers, Internet, front office solutions. Datawarahousing
and decision-making technology is becoming a key component of customer
relationship management: two CRM systems out of three will integrate a
datawarehouse within two years.

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