InformationWeek

May 1, 2000

Behind The Numbers:
Companies In The Dark About Customers

ou might try to drive cross-country without a map. You could try to follow the setting sun from New York to Los Angeles. But you might end up in British Columbia. However, that's not a likelihood for most drivers because of the number of available road signs everywhere.

But on the information superhighway (remember that quaint expression?) it's easy to lose track of where your customers are headed. That's the perspective of a new Meta Group study of 800 business and IT executives, which reveals that managers in most companies lack the data to build a comprehensive view of their customers. It's not that managers in these companies aren't interested in obtaining customer knowledge; rather, there are serious obstacles, such as building the right architecture or obtaining useful analytical tools.

A number of companies are investing their resources to implement so-called integrated customer strategies. Yet, according to the study, most sites are just starting to realize the breadth and depth of the issues they face. Meta Group predicts that businesses will need to spend as much as $250 million during the next two to three years to achieve tangible returns on customer-relationship management investments.

The study demonstrates wide discrepancies between what businesses want from their CRM projects and what they have achieved. Four out of five of the companies surveyed say they have yet to compile a complete view of their customers, even though 92% confirm that improved customer intimacy is an important priority. And about 70% of those companies collecting data don't believe they're effectively using the information that's gathered.

There's no question that customer centricity is key to business success. However, collecting data from every possible source--including phone, online, fax, E-mail, and direct mail--is a challenge. It may require not just software but a restructuring of the entire business to integrate all the parts. While many companies are taking steps toward profiling clients, 67% are still struggling with systems to integrate customer data.

Despite the struggles, the future looks bright for customer-intelligence projects, according to the survey. One in 10 participants feels very strongly about the future success of CRM endeavors. Six in 10 agree, although not so tenaciously. Only a third think their projects could face problems.

What steps is your company taking to understand its customers better? Let us know at the address below.

Own the data behind InformationWeek Research. See our available reports at informationweek.com/reports

Bethany Cooke
Associate Editor
bcooke@cmp.com

This week in Behind The Numbers:

Clients Are A Priority	Company Over Customer	Room For Improvement	Only Half The Time
Business Rules	Optimistic Results	Teamwork Troubles

Clients Are A Priority
Until recently, the focus for many businesses has been getting E-commerce systems up and running. However, companies are beginning to realize that knowing their online customers is important, too. After all, how successful is an Internet initiative without revenue? Among the 800 business and IT executives polled by Meta Group, 92% report that client intimacy is an important company priority, ranking among the businesses' top 10 business objectives.

Only 1% of respondents say customer knowledge isn't a priority. These managers are confident enough in the handling of their companies' customers that information to better serve their accounts isn't needed.

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Company Over Customer
Are companies taking the time to poll their customers when building a client-centric project? Among the companies that are integrating business intelligence with database systems, few are seeking the advice of customers during the process. Only about a third of the companies polled have turned to clients before deploying a customer-knowledge program.

Instead, most people interviewed by Meta Group say there isn't room for customer opinion when designing such a project. Three in five executives believe companies should call the shots.

Yet, considering the large gap between the need for customer information and the ability to produce such information, a more customer-focused approach might be advisable.

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Room For Improvement
Most companies have a wealth of client information. Online monitoring, sales appointments, and call-center inquiries all leave a flood of client data. One of the most-challenging issues in managing client knowledge is centralizing that information and turning it into a viable business tool.

That's a task few businesses have successfully mastered.

Only a third of those polled by Meta Group report that their companies are effectively using client data to clearly profile customers. Of those, only 4% say they're doing an excellent job. Nearly seven in 10 say their companies have yet to become proficient at the task.

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Only Half The Time
Having the right backer usually helps a project to flourish. When it comes to customer-relationship management, that key person might not be a business executive. According to the Meta Group survey, CRM projects are almost evenly split when it comes to supporters. Slightly more than half have business executives as sponsors, while the others have the support of an IT heavyweight.

Even with executive backing, there's no guarantee a project will be implemented successfully. There may not be mutual agreement over the way to go about spending, or there may be another round in the age-old conflict between engineers and MBAs over the best way to achieve the desired results.

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Business Rules
Collaboration between IT and business executives is key in the direction, leadership, and funding of any company initiative. If IT isn't brought into the management of a project, the best and most comprehensive technology decisions can be left out of the equation.

The lack of business involvement can have equally grievous administrative implications. But when it comes to making CRM management decisions, business tends to leapfrog technology.

More than two in three of those surveyed by Meta Group say their customer-knowledge projects are more business-focused than technology-driven. This lack of collaboration could explain why so many companies that want customer knowledge don't yet have it.

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Optimistic Results
Certain business practices can have a positive impact on a company project. Deploying cutting-edge technology, hiring talented staff, and clearly communicating key objectives are just a few examples. Despite the struggle that most companies are experiencing in successfully establishing in-house CRM programs, optimism runs high over the outcome.

In all, 68% of those polled by Meta Group say their company is following best business practices--and that it's just a matter of time before their customer-knowledge projects become successful. And among those optimists, 11% feel extremely confident about the future.

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Teamwork Troubles
Compiling effective customer profiles requires collaboration from multiple departments. IT must work with marketing. Sales must be in the loop. And customer service can't be excluded. Only with the cooperation of all parties can customer data be successfully integrated, supplying a company with the most comprehensive client information possible.

Yet for many companies, such initiatives need work. Nearly a third of those polled by Meta Group report that CRM collaboration efforts at their company aren't going well. Almost twice that number--57%--confirm that work is needed. Only 10% say their company is doing a fine job of collaborating, while another 4% report their efforts are top-notch.

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