CRM returns an unknown value

Executives in multinational companies are struggling to measure the return on investment of their customer relationship management (CRM) system due to poor information systems and a lack of project ownership, a recent report says.

According to a Cap Gemini Ernst & Young global survey of CRM practices, 42 per cent of managers did not know what the ROI on their CRM efforts was because they did not measure the returns.

The survey covered 250 senior marketing and customer service executives at multinationals with $US1 billion-plus revenues, researching the high-tech, financial services, telecommunications, utilities, retail and hospitality industries.

Moreover, the survey showed, managers could not measure ROI because their information systems did not offer a complete view of customer history or activity.

Cap Gemini Ernst & Young global director of CRM, Paul Cole, said businesses are struggling to measure the benefits of CRM because they lack the technical aptitude.

"Sometimes their accounting systems do not delineate ROI on an individual customer, only on a product," he said.

"For example, on the revenue side with product campaign management, the executive may only look at money put into product marketing, which can then cloud your ability to measure the overall return.

"Also, some financial systems are not geared around assessing ROI in a timely manner."

Cole said customer management was seen as the "crown jewel" within the enterprise, causing a business to put in 3000 seats for CRM and take a wait and see approach.

"Companies should be utilising CRM to find customers more efficiently, reduce the churn, and to make them more profitable," Cole said.

"There's really not enough focus in the business strategy on why a company is engaging in CRM, and how it's going to impact its people and change processes."

The survey also found that more than half (54 per cent) of executives said there was a lack of CRM ownership in their company, saying this responsibility was split across many executives.

CRM strategy did not have sole ownership due to companies' organisational structure, with 41 per cent organised around product groups, geography (29 per cent) or customer segments.

Commenting on the lack of project ownership, Raj Mendes, Cap Gemini Ernst & Young Asia Pacific vice president of CRM, said: "A lot of companies don't treat the customer like a real asset, but more like their hard capital.

"Globally, what we have is a situation where only data silos for sales, marketing or services exist, with no ownership of the customer relationship. We need to look outside of the product alone and into the pure customer experience.

"As customer service has evolved in the past decade, we see the CIO, logistics manager and the service manager all saying that they own the customer but aren't talking to each other about how to work cohesively."

In Mendes' view, the more mature multinationals will begin to hire chief customer officers (CCOs) as a CRM project steward. "The CCO will be an overlay of the marketing services areas - it's a breaking of the traditional management model, and will develop customer relationships across channels and processes."

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