CRM—Technology Taking Care of Customers?
Can Your Company Make it Work?

The last few years have seen a boom in CRM systems, but there is confusion in our industry as to what exactly CRM means, how it should be applied, and how big an investment to make into it.

Online marketing magazine Reveries, in conjunction with database marketing firm Insight Out of Chaos, surveyed 197 advertising and marketing professionals for a definition of CRM. Some respondents said it stood for either customer relationship management, customer relationship marketing or continuous retention marketing.

Some defined CRM as tracking customer behavior in order to develop marketing and relationship-building programs that bond consumers to the brand, while others said CRM is the development of software systems to provide one-to-one contact between the marketer and the customer.

Yet, even amid this confusion, a recent Jupiter report found that 26% of U.S. businesses will spend $500,000 or more on CRM tools in the next 24 months, and goes on to predict that CRM spending will increase to $16.5 billion in 2006, up from $9.7 billion in 2001, as corporations strive to improve customer satisfaction. Financial services companies will be the biggest CRM spenders.

The Rush for Accountability
It is obvious that the embracing of CRM is a result of business management’s search for more accountability in marketing budgets. But a large percentage of those on the bleeding edge of this technology are coming to the conclusion that CRM is just as unaccountable as traditional advertising is perceived to be. Marketers, who can drop millions simply for basic database consolidation, are starting to complain they're not seeing a return. If John Wanamaker were alive today, he'd probably say, "I know I waste half the money I spend on CRM systems. And I still don't know which half."

The Jupiter report states that 58% of executives polled said they have difficulty justifying the return on investment of CRM systems to the rest of their organizations. I, for one, have scoped out many of these systems and recognize one major truth: while effective when implemented to their fullest extent, none but the largest organizations have the resources, in either money or manpower, to achieve even a meager return on the investment.

Strive for the Goals

It is not uncommon for a manufacturing company to see 60% or more of its annual sales coming from new customers. So don't lose sight of the value of advertising to generate new customers while you strive to improve customer relations and retention.

CRM lives on the premise that the cost of sales from an existing customer is a fraction of the cost to generate a sale from a new customer. We also know that prospects need regular tending to assure that sales goes your way when a purchase is finally made—and this can take many months or even years. So, the goal of taking good care of existing customers and prospects should form a strong pillar in your marketing and sales endeavors.

Jupiter analysts -- like most relationship-marketing experts – caution, however, that technology alone is not the cure-all. It requires that organizations restructure themselves with senior-level CRM leaders to ensure that companies leverage their technology investments successfully.

Bottom line is that unless your company is prepared for high costs and the major, top-to-bottom changes required for successful implementation, high-end CRM packages might not be right for you.

CRM on a budget?
You can start some low-tech CRM simply but increasing awareness of customers’ interaction with your company through the sales and ownership cycle. Follow up on sales for satisfaction results, track returns to discover patterns of dissatisfaction, start your relationship before the first sale through “prospect relationship” and communications. By practicing the mechanics of company wide customer satisfaction before investing in CRM technology you will be prepared to implement the tools with under better results through more clear understanding of their purpose.

For small to medium size companies, Creative Partners Group can help implement affordable and practical programs that achieve many of the goals of CRM through regular communications and customer feedback. These programs dovetail nicely with all marketing strategies.