Spending on CRM still a priority

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A recent study shows that 74% of businesses will spend more money this year on customer relationship management infrastructure than they did in 2000.

However, the findings of the study by Jupiter Media Metrix Inc. are tempered by the fact that the increase in spending largely targets existing customers rather than prospects. It’s a wise strategy for the current economic climate, but could prove problematic in the future as the number of people seeking online customer service jumps from 33 million this year to a projected 67 million in 2005.

Companies "need to put money in operating systems to satisfy existing customers so they, in turn, can spur additional customers by word of mouth," said Jupiter analyst David Daniels, who conducted the study. "Companies can’t just throw money at existing customers."

Some companies tend to throw bad money after good money when two different business units invest in CRM infrastructure. Between now and 2003, Fortune 500 companies are expected to spend between $3 billion and $4 billion on redundant capabilities for their existing CRM systems, according to Jupiter.

Daniels said companies could repurpose their current CRM investments to provide existing customers with such services as e-mail automation, self-directed service and "personalized experience." These elements, he said, can be harnessed easily to provide services to new customers online.

"This has to be the year when businesses get smarter about their existing Web customers," Daniels said. "Businesses have to view CRM spending as marketing and branding, because the two of them are not necessarily exclusive."

Even with existing customers, businesses must realize that building customer satisfaction is an uphill climb. According to the survey, only 41% of respondents were satisfied with the current state of online customer service. "There’s still a fairly significant gap between customers’ expectations and the online venture’s ability to meet those demands," Daniels said. "There’s got to be more involvement from the C-level."

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