InformationWeek

September 18, 2000

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CRM Under Scrutiny

Lots of companies are thinking about customer-relationship management, but progress can be very slow

By Jeff Sweat

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ike most businesses, Kansas Farm Bureau Insurance Inc. knows enough about the importance of its customers to start thinking about customer-relationship management technology. But also like most businesses, the insurance company hasn't implemented a CRM application--yet.

Interested in creating closer ties with its fixed customer base, Kansas Farm Bureau Insurance has evaluated software from several CRM vendors, including Onyx Software Corp. and Siebel Systems Inc.--but hasn't bought anything. "The kicker for us is the price. That's what's delaying things," says David Young, Kansas Farm Bureau's E-business manager. "It's tough to put out that big an investment on something that some executives within the corporation don't think we need."

That's just one of the reasons businesses give for not moving faster on CRM. In fact, simply by evaluating CRM platform providers, Kansas Farm Bureau is ahead of many others. In a recent survey conducted by InformationWeek Research, half of almost 500 companies contacted haven't even begun CRM planning.

Why not? Cost is certainly an issue for some companies. Other factors may include the difficulty of data integration, concerns over the quality of customer data, and internal resistance to new applications.

There's also confusion in some quarters about just what "customer-relationship management" actually means. "CRM is so misleading. It's not a well-defined entity," says Alan Greenstein, CIO at Hoss Equipment Corp. in Irving, Texas. "You talk to three people in a room and you get three different definitions." For Greenstein, whose company rents and sells large machinery to construction companies, it means being able to track customers, make sales, and send out personalized direct mail.

Allan Greenstein Photograph of Greenstein by Steve McAlister For others, CRM has broader meaning. It's an umbrella term for all kinds of software that manages customer contacts, including sales, customer service, and marketing. Sounds simple--but that means all sales, service, and marketing interactions, regardless of channel, as well as all the business processes and data that support those interactions. Subsets of CRM include sales-force automation, marketing automation, E-mail management, data analysis, and legacy data stores. And all those elements must work as one.

Businesses that have begun to act on CRM strategies may have some of those pieces in place, such as basic customer support, but few have the whole package. The missing parts include tools to deal with such complex customer-management issues as personalization and cross-department data sharing.

Among 175 companies surveyed by InformationWeek Research that have deployed CRM or will do so within 12 months, 81% are doing client support and services, and 59% sales and fulfillment. The areas that lag behind the most are related to marketing--43% say they're doing promotion and ad-campaign monitoring, and 41% customized messaging.

But those figures represent businesses that have active or planned CRM initiatives. Among all companies contacted, just 28% are tackling online sales and fulfillment, and only 20% are creating customized messaging for their customers.

There's a reason that marketing automation lags: It's not easy. Eddie Bauer Inc. has been using a data warehouse and data-mining tools from SAS Institute Inc. to segment its customers into more-profitable groups, but the retailer has no intention of attempting the one-to-one approach espoused by some marketing consultants and vendors.

"One-to-one marketing is a beautiful vision. But it's a vision," says Michael Boyd, Eddie Bauer's director of customer-relationship management. "The complexity it brings to your business is overwhelming." If 1 million customers receive unique marketing messages, that's 1 million different pieces of direct mail, 1 million different Web pages. Each message would have its own content--maybe even different images--and the business would have to be constantly updating and generating new customer profiles.