Marketers' CRM struggles persist

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The results of a study published last month by database marketing company Harte-Hanks Inc. reinforce what a number of similar studies have determined: Due largely to strategic and technological complexities, customer relationship management remains a concept or a work-in-progress rather than a reality for many marketers.

At least one thing has become clear, according to "The CRM Status Report 2002," Harte-Hanks’ second-annual CRM survey. Given the level of investment needed to get a CRM project off the ground—typically more than a million dollars—marketers and software providers agree that CRM needs companywide endorsement in order to have a fighting chance. A majority of companies (79%) indicated that CRM must be mandated on the corporate level in order to "achieve the most value."

As a result, the role of top management is evolving rapidly. Senior management drove 28% of CRM implementations so far this year, compared with 5% in 2001. The recent economic downturn, which required top-level corporate decision-makers to pay close attention to significant corporate investments, was clearly a factor, Harte-Hanks said.

While CRM implementation needs support from the top down, almost a third (30%) of respondents claimed the participation of departments across the company was the biggest challenge. Among those constituents, product marketing and marketing communications departments increased their usage the most in 2002 vs. the prior year—and had to justify CRM in the economic downturn [see chart].

"They [marketing departments] had to fight for their budgets," said Randy Wussler, VP-product management at Harte-Hanks.

The study found 55% of respondents relied on developing commercial CRM packages (such as Siebel and Vantive) in-house; only 29% outsourced the programming or development work to commercial providers, down from 48% in 2001. Meanwhile, 16% favored a homegrown solution with no outsourced programming or commercial CRM software.

This year, according to Harte-Hanks, companies are using simpler applications that require less programming and development expertise. "A lot of this work is being brought in-house," Wussler said.

David Bonthrone, VP-global marketing at Dendrite International Inc., Morristown, N.J., a marketer of software and support services to pharmaceutical companies, favors outsourcing—but not necessarily limited to one provider.

"The best way to implement a CRM solution is to take a modular, best-of-breed approach," he said.

Where it begins

More than half (52%) of all CRM development starts with information technologists, even though sales and marketing departments are the primary users of the CRM database.

Alan Walters, director of information services at Camarillo, Calif.-based Royce Medical Products, said his company’s sales and marketing departments "are waiting for IT to define the problem, figure out how to solve it, and give it to them."

That approach is backwards, he said. The marketing and sales staffs need to determine their specific needs and relay that information to the IT department, he said.

If the marketing department is not tapped into the CRM solution, Wussler said, it’s impossible to determine which campaign caused the phone to ring and led to a sale.

That, Wussler said, leads to the study’s most troubling finding: Return-on-investment measurement actually decreased from 2001 to 2002. Forty-four percent of respondents this year said they had no ROI measure in place, up from 32% in 2001. Having the ability to measure is crucial, Wussler said, since tracking the success of a particular campaign or sales program is the tangible way to prove CRM is actually working.

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