For many companies, CRM seems like an expensive mistake -- it's a good theory but in practice how do you actually make a multimillion-pound investment in software and database systems pay its way? More businesses are getting desperate to see a return on investment from CRM, and many have just budgeted this into their 2003 sales figures.
The good news is that every CRM system can be made to deliver a return on investment and in specific time periods. Although not all CRM/database packages are the same or equal, the differences in application and performance in modern systems are far less than the salesman would have you believe.
All the major players in the marketplace today have mature products with modules to cover the majority of the key marketing requirements. Where a product does not have a key feature, such as campaign automation, this can always be purchased as add-on from one of the specialist marketing software vendors. The interconnectivity of these packages makes this a quicker and cheaper solution than replacing the whole software system.
There are always opportunities to gain return on investment from an implemented CRM system and these fall into three main categories: the system itself, the processes it delivers and the data it holds. The system can deliver automation of marketing campaigns and the customer journey, resulting in increased sales through improved speed and reduced manpower. However, companies often fail to use the automation capability of their CRM system at all and continue to market in the old way on the new system.
Process gains can be derived from implementing business rules-based marketing programmes such as a properly designed customer activation programme. Rather than assuming a customer trying a product is automatically a loyal customer, the CRM system can build in a set of customer communications and responses, which will take them through the initial critical period and ensure they become regular, active customers rather than simply dormant ones. For example, reward cards have distributed huge volumes of free cards, many of which have never been used or have been used only once.
Research has shown that these need to be activated within a short period of take up by the consumers or they become dormant. Alternatively, processes can be put in place to swiftly manage out non-profitable customers -- in some cases these people actually lose companies money and yet still receive the same level of offers as more active ones. By introducing rules to prevent this, instant gains can be made on the bottom line.
Data is the third opportunity. There are enormous quantities of under-utilised data in any CRM system and straightforward analysis can yield dramatic changes in efficiency. Reduced mailing volumes, better media targeting, enhanced acquisition targeting and determining 'next best purchase' can all be achieved through linking up information between the CRM system and other parts of an organisation and departmental strategies. For instance, relating the addresses of customers to advertising campaigns can flag up ways to restrict media spend to those areas where it will be seen. One company recently spent its TV budget in areas that only reached 9% of its customer base until analysis of the customer base redirected their spend.
Writing off CRM will never be an option in a world where consumers have been trained to expect it. Experience has shown that those who are tempted to throw everything away and start again from scratch will inevitably find the same problems will come back to haunt them. During the next few years, successful businesses will deliver CRM as a series of small profitable steps rather than completely rethinking the entire strategy as a whole.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .