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IBM survey shows companies gaining strategic value from CRM initiatives

30 April 2004  |  1411 views  |  0

IBM Business Consulting Services, in a global survey released today, revealed that the likelihood of Customer Relationship Management (CRM) success can be improved significantly within a company - from less than 15% to as much as 80% - by prioritizing and selecting key CRM approaches and business processes. Surprisingly, the approaches having the greatest impact are not big-ticket items such as technology implementation or data integration - but rather human-oriented steps that typically require conservative, incremental spend.

The global research survey, conducted to understand the attributes and strategies that characterize successful CRM initiatives, found the two approaches most consistently cited as requirements for success were 'change management' such as training employees to use CRM processes, tools and policies; and 'process change' such as involving employees in the process of designing and changing CRM activities. When done correctly, these steps drive commitment to CRM throughout the company, which translates into sustained value.

The survey points out key faults which can cause CRM projects to fail or prevent delivery of expected return-on-investment. In most such cases, companies rely too heavily on technology systems as a panacea or organizations down-play the importance of senior management buy-in, which leads to lukewarm adoption by employees.

For those companies struggling, study results provide clear guidelines indicating that with the correct focus and commitment companies can significantly improve CRM performance. While the requirements for success seem clear, acting on these steps is no small task, which may explain why many companies have difficulty implementing them. Today, fewer than 15% of global companies believe they are fully succeeding with their CRM initiatives, and another 20-to-30% are having only some success.

The survey reveals that a radical redeployment of CRM initiatives is underway. Many companies are looking to CRM to improve their performance and grow their business overall. Over 50% of companies believe that CRM is "relevant" or "highly relevant" to improving performance from a shareholder value perspective. Approximately 65-70% are looking to CRM to deliver revenue growth by improving the customer experience and retention, and influencing the development of new products and services.

"This report illustrates the value of CRM and the lessons learned over the past several years that have enabled companies to become much more successful," said Adam Klaber, Partner and Global CRM Leader, IBM Business Consulting Services. "Increasingly, business models need to be built upon the virtues of flexibility, real-time responsiveness, and a laser focus on the customer. A successful CRM strategy is at the heart of this business model."

"At BCAA we understood early on the importance of engaging our employees in understanding the business drivers of our CRM transformation program and the linkages to our overall organizational goals," said Bill Bullis, Chief Executive Officer British Columbia Automobile Association. "This study reveals the great promise of CRM in driving customer value and increasing organizational performance when it is done correctly. In the end making CRM effective comes down to culture and creating broad acceptance and adoption."

"Our CRM efforts have helped us to offer unique services and products to our customers based on a clearer understanding of their needs, values and expectations. This approach is the basis for all successful CRM programs," said Kelly Bost, Vice President, Business Development Group, Manulife Wood Logan. "IBM's survey findings are significant because they confirm the very critical role CRM initiatives play in transforming a company culturally, structurally and strategically."

The survey was conducted by the IBM Institute for Business Value, a part of Business Consulting Services. In late 2003 and early 2004, IBM surveyed 373 senior-level or above management decision makers or influencers at a mix of small, medium and large enterprises, to understand how companies attain CRM success and achieve significant return on investment. The findings are available in a detailed report titled The CRM Global Study - Doing CRM Right and an Executive Guide outlining the five success factors required for companies to alleviate transformation risk and optimize CRM practices.

Additional BCS Survey findings:
  • CRM should be run at the corporate level or with a cross functional perspective. Nearly 75% of companies manage it at the functional level, such as Marketing, Sales, IT or Customer Service; only 25% of companies run them from corporate, where a senior level team typically spans multiple functions and business units. When corporate units or cross functional groups run CRM, there is a 25-60% greater chance of success.
  • Senior management in over 35% of companies impede CRM success by portraying it as useful, but not critical. When senior management views CRM as critical or strategic, it is a major contributor to overall CRM success. Viewing CRM as useful, not critical actually detracts from success because it sends the message to employees and middle management that CRM is not a priority.
  • Over 75% of companies do not realize returns on CRM initiatives because they do not fully use CRM once it is implemented. Only 14% of employees fully use CRM. This is due in part to companies' underestimating the value of stakeholder alignment. Companies that are most successful are those that align CRM objectives with the priorities of employees. Surprisingly, aligning CRM objectives with the priorities of customers is a close second. Yet only 21% percent of responding companies view employee alignment as very important to CRM success.

The CRM survey findings reinforce today's CEO agenda and provide a more granular view of specific tactics organizations are taking to meet future growth initiatives. IBM's recent Global CEO Study 2004 included more than 450 in-person interviews with CEOs, revealing their renewed focus on revenue growth. Many believe this growth will come from new products and services, new markets, and greater customer intimacy - and CRM is clearly instrumental to all of this. Eighty-percent of CEOs surveyed cited the ability to respond rapidly to changing market forces as a high priority in the coming years; and the target most often cited was the customer. More than 50 percent of CEOs responding feel they need to do a better job capturing and understanding customer information rapidly in order to make swift business decisions. A successful CRM strategy is central to all these opportunities.

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