While a chief goal of senior executives is to maximise shareholder value, pressure from shareholders for short-term results often takes precedence over developing the required long-term customer management capabilities that form the basis of lasting and fruitful customer relationships.
The value and potential of a company`s customer base is often unknown, or not even actively managed. This is because companies seldom spend time gearing themselves up for the implementation of an integrated customer management programme.
CRM project success is poor because people do not understand their companies` attitudes to customers.
Doug Leather, CEO, Knowledge Factory
It is common cause that customer management programmes are more likely to fail than to succeed. This is because the first step in implementing any type of CRM initiative is to assess organisational readiness in terms of systems, processes, people, culture, leadership and information. Only once this has been accomplished, can you think about implementing a specific programme to develop the organisational maturity in terms of customer management. And that`s when you can begin to realise the full potential of your customer database.
At present, estimates are that around 60% of all CRM projects fail to deliver real business value. Despite this, research by UK-based consultancy QCI reveals that 69% of senior manager responsible for CRM believe that their companies manage customers well and know where they need to make improvements.
In addition, a recent Gartner study has shown that 42% of the CRM software licences purchased in 2002 remain unused, the estimated wastage being in the region of $1 billion to $1.27 billion.
What is happening is that companies are being coerced into buying CRM software by bulk. Vendors are claiming that it`s cheaper to buy the functionality you don`t yet need than to add it on at a later stage. The point, though, is that you get caught by having to pay the licence fees for software you are not even using and, in some cases, you don`t even understand.
In these cash-strapped times, it is essential to begin with an analysis of your company`s readiness for customer management before embarking on any costly, technology-led initiatives.
Customer management scorecarding provides a clear picture of areas of weakness and of how to address those challenges. It yields information that can be acted on, and leads to strategic planning that can result in direct bottom line benefit through improved customer management.
Organisational assessment yields several benefits by:
* Providing an objective and quantitative measurement of how well your organisation manages its customers with a score that correlates to business performance.
* Benchmarking your organisation against a relevant set of other organisations.
* Aligning the senior management team behind a common understanding of what is really happening in CRM in their organisation. Senior executives are made aware of their organisation`s strengths and weaknesses with regard to the customer management process. This means they can make informed decisions about improving CRM throughout the organisation.
* Identifying both quick-win and deeper, strategic actions that can and should be carried out.
* Forming a clear baseline against which improvements delivered by a CRM programme can be measured.
* Providing a broad-based check that all the necessary CRM foundations are in place before investing in specific programmes or technology; and providing high-value input to business cases for CRM investment.
The customer management scorecard also identifies and analyses the key trends and developments shaping CRM, enabling you to take these into consideration when developing future customer management strategy. By revealing where your company is doing well, and where it is performing badly, where existing customer management strategies are adding or eroding value, customer management scorecarding enables you to focus your efforts more clearly and to make informed decisions about where to make your investments in people, processes and technology.
CRM project success is poor because people do not understand their companies` attitudes to customers. There is no one-size-fits-all approach to customer management, so you have to develop a plan that is relevant to your market and your company. To do this you have to be able to define which marketing and customer retention approaches best suit your requirements as an organisation.
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