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By The Drum | Administrator

May 28, 2004 | 7 min read

Customer Relationship Management is vital. Whatever line of business you’re in, your customers are your lifeblood and as such require the kind of TLC only someone who needs them to make money can offer.

Unfortunately, while all this is very straightforward, there’s more clarity in Corrie’s Todd Grimshaw’s sexual preferences than in the CRM industry. It’s a term that has long been associated with IT, yet practitioners are keen to assert that CRM is a marketing tool and one that all businesses need to be better educated about. Therefore, Adline has gathered practitioners together to establish what CRM really is, preach to the unconverted and enlighten the misinformed.

First up is Jane Evans, a senior director with Cheltenham-based direct marketing agency Target Direct. She explains where she believes the confusion has arisen: “If you asked ten practioners of CRM to define it, you’d get ten different answers. So it’s hardly surprising that many companies have struggled to use it correctly and effectively.

“It also depends on who you ask,” Evans adds. “If you speak to the IT department, CRM will be seen as a system, whereas if you speak to a marketing department it is more likely to be seen as a way of thinking.”

And how does Evans define CRM? “It’s a way of thinking. It’s about embracing your customers at the heart of your business and, in doing this, providing the best service.”

Attempting to clarify the confusion over the technology/marketing debate is Pamela Bath, director of Blueberry Wave – the Oxfordshire-based market planning and CRM consultancy. She suggests: “CRM is developing or defining a communication programme based on the customer’s requirements. CRM is only about marketing and communicating relevantly with customers and prospects. It is not about technology.”

Bath goes as far as to suggest that IT companies have jumped on the bandwagon of CRM. She explains: “They’ve tried to justify basic software functionality as something special. Technology is merely the operational infrastructure required to capture, store and access data – it is technology, not customer management.”

While the corner shop analogy is apt, there’s no question that, these days, CRM stretches onto a bigger scale – smaller companies, with just a few clients or customers, may be able to get to know each of them personally, but bigger firms, particularly in sectors like retail, would need specially designed technology to play its part.

It’s important to understand what it takes to make CRM a success. Ronel Schoeman, business and analytical consultant at the Database Group, argues that success comes out of “thinking from your customer’s perspective, rather than being product-led.”

He explains: “It’s all about gaining relevant insight into customer behaviour and acting according to their wants and needs – a very intuitive process, and many large technology companies have invested massively in creating and perpetuating the myth that customer value and satisfaction come packaged in a box.”

Fiona Hought, associate partner of Direct Marketing at Poulter Partners in Leeds, comments: “Customers know what they want – the challenge is to deliver that profitably through the organisation. A 100 per cent focus on the consumer, ensuring every touch point has been both considered and managed effectively, is the key to successful CRM. It’s not about battering customers with sales messages day after day or trying to make customers act in a way that you feel most comfortable with.”

James Goddard, chairman of JJ in Oxford, believes that for CRM to be successfully executed it should be given the dedication it deserves. He says: “CRM has to involve a change in culture – it’s not simply about implementation of a new system or process. Commitment is key to effective CRM – not complexity.”

Like any expense to a company, being able to justify the spending with a potential return on investment makes it that little bit easier to do. However, one of the reservations that companies have about CRM is that identifying ROI is believed to be difficult. David Beardmore, director at thinkdata – a specialist multi-channel data management company – believes there’s a reason for the lack of confidence. “The business and marketing press have carried many stories of failed CRM programmes, where little or no return has been seen from an investment of millions of pounds. Therefore, many people are sceptical both about the costs of an effective CRM programme and the return which can be achieved.

It is thinkdata’s opinion, borne out of experience and real life situations, that, where a modest investment is made into consolidating customer data, significant returns can be made and sustained.”

Providing companies with some advice on how to ascertain a potential ROI is Pamela Bath. She says: “To asses CRM, get yourself a decent data planner, who will work out how to establish worth, and will produce ROI forecasts for all planned activities, which actual events can be measured against.”

Hought believes understanding what you expect to achieve is key before you commit. “If a business doesn’t understand what can be achieved by CRM, then that would suggest that there is no way of appraising the ultimate value of any future expenditure, hence they are effectively signing a blank cheque. It also suggests there is very little control over the customer relationship”.

So, bearing this in mind, just how CRM-savvy are businesses these days? Reports in the States have already alluded to big spends on CRM but it would, arguably, bode far better for the process if we were talking numbers of companies active with CRM rather than money being spent. “CRM is thriving,” claims the Database Group’s non-executive director, Professor Merlin Stone. “IBM’s CRM study 2004 shows that, on average, approximately one-third of European companies are gaining benefits from CRM, particularly in areas of customer service, brand management and loyalty. Forward-thinking companies understand that CRM is a core discipline requiring process, organisational and technology transformation across multiple dimensions,” he claims.

Hought adds: “If you were to look at how many businesses have truly adopted CRM as a principle, the answer would be disappointing. If you were to look at the number of businesses that are investing and talking about CRM, then that figure is much more robust. What remains to be seen is how many companies go on to truly try, to give the customer what they want, and how many use it simply to push more sales, at the expense of satisfaction.”

Once you’ve decided to invest in CRM, the next decision must be who to contact. While specialist CRM consultancies, marketing and direct marketing agencies and software providers are all on hand to help implement the CRM process, Evans warns that it’s important to fully understand what qualifies as CRM. She states: “The advent of new media has helped fuel the belief that firms are practising CRM when in reality they probably aren’t getting to know their customers any better than before. CRM and marketing are closely linked and, as such, CRM requires a marketing approach.”

Supporting Evans’ view is Lee Thawley, account director at The Ladders Agency. Thawley also has a word of caution for firm’s preparing to launch a CRM programme. “It’s all to easy to be bamboozled by fancy jargon and impressed by big claims from the new breed of specialist agencies, touting sophisticated data analysis programmes that promise to create long lasting and profitable relationships with customers. Despite being expensive, these CRM programmes can, and ofetn have failed to meet core business objectives.”

She adds: “The real key to success is actionable systems in partnership with communications that present the brand in the most effective and appropriate way to customers.”

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