Customer Management Strategy Is Critical to Success - Or Failure - Of CRM Implementation

NEW YORK, March 19, 2002 — A new study by management consulting firm Booz Allen Hamilton examines the growing pains felt by Customer Relationship Management (CRM) programs and identifies key factors to enhance customer relationships.

Although corporate spending on CRM has risen rapidly over the last five years, with forecasts for global spending in 2002 ranging from $20 billion to $45 billion, many senior executives express frustration about the returns on CRM investments. Some industry observers compare the current dissatisfaction to the difficulties that faced Enterprise Resource Planning (ERP) programs in the 1980s and '90s.

An effective customer management strategy can provide a critical competitive advantage, the Booz Allen study noted. A 2001 survey of over 500 global CEOs by the Conference Board found customer loyalty and retention to be the top challenge facing top executives. In addition, a recently-released joint study by Booz Allen and the Kellogg School of Management at Northwestern University found that more than two-thirds of top-performing companies are squarely focused on meeting customer expectations and extending long-term customer relationships, a much higher rate than lower-performing companies.

"Our clients are telling us that the customer management challenge is the single most important CEO agenda item — acquiring them, retaining them, and capturing fair value from them," said Mitch Rosenbleeth, Vice President of Booz Allen.

Strategy plays an increasingly critical role because CRM has evolved in scope, from automating a targeted set of business processes to a broad range of enterprise-wide capabilities designed to transform a company's relationship with its customers and their role in the supply chain.

"Strategy must come before action," Rosenbleeth said. "CRM can enable a complete transformation of business, but CRM technologies produce value only when properly deployed in support of winning customer strategies."

"Many business leaders, under pressure for fast results, attempt to use technology as a shortcut to better customer management," said Chris Dallas-Feeney, Booz Allen Vice President. "We believe that is the wrong approach. The technology is more than adequate. The right question is, how does a company craft a customer strategy that is specific to their situation and one they can grow with."

With the right strategy in place and the right technology to support the strategy, CRM can be a powerful competitive differentiator. Moreover, by following a low-risk, gradual approach, companies can quickly deploy CRM for immediate gains, while laying the groundwork to capture maximum value.