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Companies are wasting CRM investment, say academics


Writing for the MIT Sloan Management Review, Dr Stan Maklan, Professor Simon Knox and Professor Joe Peppard reveal why investing in Customer Relationship Management is not always a silver bullet for addressing marketing challenges and recommend what needs to be done to achieve the best results.
Their research reveals that, in a bid to increase revenues, there has been a trend for companies to invest in sophisticated new relationship management resources such as call centres, databases, software and websites but then to continue running their business as they always have done.
Crucially, these companies wrongly assume that their customers value the outcomes of these investments.
Companies spend almost $50 billion per annum on implementing CRM solutions. Yet despite these enormous investments, studies consistently show that 55% to 75% of companies fail to meet the expected return on their CRM investments.
The research suggests that successful CRM investment results from developing customer relationship capabilities within the organisation and backfilling with capital investment as one learns which initiatives are working.
Dr Maklan said: “Too many organisations are compromising huge investments in marketing technology because they do not manage the development of management know-how as effectively as they do IT systems development.
“I am sure that the lessons we have learnt about CRM are applicable to the new online social media; software systems alone do not improve your business."
The Cranfield academics argue that it is because leading companies are usually so well endowed with resources that they rush too quickly into large-scale, IT-based CRM investments, seduced by ‘best practice’ and management fashion that they somehow forget about the capabilities needed to support these resource investments.
Professor Knox said: “Top teams need patience and the courage to avoid global solutions, consultants’ best practice models and their own preference for immediate results by allowing marketing capabilities to develop and lead CRM investments.”
Professor Peppard added: “Customer loyalty cannot be fast tracked merely through buying companies, mailing lists or CRM technology. Where CRM is successful, organisations learn from customers and craft effective responses, renewing and enhancing the value each side derives to a point where the relationship itself is a source of sustainable advantage and profit.”