The Appliance of Clients: A Customer Relationship Management System Has the Potential to Offer Major Benefits, but FDs Often Find It Hard to Gauge the True Return on This Investment. Paul Miner Draws on Case-Study Evidence to Explain How to Implement a CRM System That Best Meets the Needs of Your Business. (How to Customer Relationship Management)

By Miner, Paul | Financial Management (UK), November 2002 | Go to article overview

The Appliance of Clients: A Customer Relationship Management System Has the Potential to Offer Major Benefits, but FDs Often Find It Hard to Gauge the True Return on This Investment. Paul Miner Draws on Case-Study Evidence to Explain How to Implement a CRM System That Best Meets the Needs of Your Business. (How to Customer Relationship Management)


Miner, Paul, Financial Management (UK)


Historically, financial directors have viewed customer relationship management (CRM) as an expensive and ineffective IT system pushed by overzealous vendors. Respondents to a survey last year by Bain & Company, for example, rated it as one of the least satisfactory management tools they had used.

But, given the current economic uncertainty, it could be worth taking another look at the emerging generation of CRM systems, because the acquisition and retention of customers has become a crucial theme. A good CRM system--if well conceived and carefully implemented--can be a valuable tool in translating these customers into shareholder value.

One problem for financial directors when assessing the business case for a CRM system is how to determine the return on the investment. According to a survey in June by Atos KPMG Consulting, although 80 per cent of respondents felt that their CRM implementation had been successful, only 6 per cent could quantify the return on their investment. But, even if the expected return is hard to estimate, by making CRM part of a performance management framework such as the balanced scorecard, its relevance to your business strategy can be explained and clear objectives can be set.

A pilot project can help to justify the investment and provide the basis for a rational calculation of the return. Learning from these first small steps, and also from the experiences of other pioneering organisations, can provide extra pointers for the successful roll-out of a full CRM system.

Two of the main factors that prevent a CRM system from performing--a failure of understanding and a failure of implementation--are common to many other projects, but they have features that make this particular management tool distinct.

People interpret CRM in many different ways, but there is a generally accepted theoretical view that it's not a mere marketing exercise; rather, it's a method of co-ordinating an organisation's culture, internal processes and IT systems to satisfy its customers' needs. But is such a view correct, and do organisations really try to achieve this in practice?

A review of 57 case studies provided by a range of different CRM system vendors gives us a valuable insight into what companies want from their CRM systems and the benefits that can accrue. In the table on the opposite page, the business needs are ranked according to the number of organisations that identified the heading as one of the objectives of their CRM initiative. They reflect similar priorities to those identified in the theoretical view above.

One point that becomes immediately clear, however, is a difference in emphasis between the theory and the practice. The main benefits for the case-study organisations seem to lie in improving internal processes and marketing data to increase revenues and reduce costs, rather than in directly meeting the immediate needs of customers.

Examining each of these needs and benefits provides a real understanding of what CRM can achieve. It can form the basis for a realistic business case with a verifiable calculation of return on investment.

* Create a single, detailed view of the customer, with improved management reporting and forecasting. This includes knowing why the customer is buying the organisation's product or service and any ongoing problems they may have with it. Anyone who contacts the customer can then contribute information about the encounter and highlight this for people elsewhere in the organisation who may need to act on it.

* Improve productivity through standardised processes, less paperwork and more integrated IT systems. One point of interest arising from the case studies is that, although many of the organisations were actively integrating their sales, marketing and service functions, they were planning to include the back office only in the later phases of the implementation.

* Increase revenues by providing a wider range of products, "up-selling" and "cross-selling". …

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The Appliance of Clients: A Customer Relationship Management System Has the Potential to Offer Major Benefits, but FDs Often Find It Hard to Gauge the True Return on This Investment. Paul Miner Draws on Case-Study Evidence to Explain How to Implement a CRM System That Best Meets the Needs of Your Business. (How to Customer Relationship Management)
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