Free Encyclopedia of Ecommerce » Free Encyclopedia of Ecommerce » Customer Relationship Management (CRM) - Crm Components And Vendors, Market For Crm, Crm Costs And Deployment, Crm Must Meet Higher Consumer Expectations

Customer Relationship Management (CRM) - Evaluating Crm Performance

percent companies mid respondents

CRM is more than a matter of having the right technology. It requires the support of a well-developed business plan. Perhaps the biggest cause of CRM project failures is not the technology, but the lack of a clear-cut business plan that includes a method for measuring the success of a CRM solution. A mid-2001 study by Jupiter Media Metrix looked at how companies measure the success of their CRM programs. Jupiter found that 63 percent use customer satisfaction metrics as a measure of their return on investment (ROI), while 33 percent used cost savings as a yardstick.

Jupiter Media Metrix also noted in mid-2001 that many Global 2000 companies were guilty of redundant spending, due to conflicting corporate goals and separate business units. The research firm estimated that such redundancy would cost Global 2000 companies between $3 billion and $4 billion over the next two years. To solve this problem, Jupiter recommended that companies adopt a company-wide customer culture.

An April 2001 InfoWorld survey asked respondents to identify what they wanted from CRM. Some 80 percent said they needed CRM to keep pace with customer demands, while more than 78 percent said they wanted to provide service across all communication channels. Three-fourths said they wanted CRM to improve customer retention. Thus, customer satisfaction was the principal goal for CRM as reported by respondents, followed by handling customer interactions more effectively and integrating systems and information. Financial goals, such as increasing sales revenue, appeared to be less significant and were cited as an objective by only 53 percent of the respondents. Survey respondents also expected CRM solutions to enable them to build a customer database or data warehouse, meet growing capacity demands, integrate activities of customers across channels, link front-office and back-office systems, improve customer profiling, allow for cross-selling and up-selling of products and services, and better coordinate various marketing and sales campaigns.

With companies eager to purchase CRM solutions, more software vendors began jumping on the CRM bandwagon. The marketplace became cluttered with software vendors, including some who defined CRM in a way that suited their interests rather than those of their clients. As a result, nearly 60 percent of CRM projects were not meeting user expectations, according to a mid-2001 study by the Gartner Group. B to B magazine reported that 55 percent of CRM projects were not expected to deliver any measurable ROI. The magazine noted that a typical CRM installation for a mid-size company, including software, consulting fees, and company labor costs, would cost between $250,000 and $500,000.

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