A growing number of businesses in the United Kingdom are adding executive positions overseeing CRM, according to a TotalDM survey of the United Kingdom’s top 500 companies.
In keeping with recent research showing that the CRM landscape has changed significantly in the last four or five years, this finding shows a strong commitment to customer relationship management—despite the glib mantra of marketing in the past years claiming that CRM initiatives don’t produce measurable payback.
One-off technology costs can be written off; ongoing people costs cannot. Therefore, the penetration of heads of CRM shows a commitment by these large industry sectors not only to the notion of CRM but also to its successful practice and its permanence within the organization.
Consider these recent findings:
- Research from the Lloyd James Group, in an April 2005 report titled In Search of Quality, indicates a 5 percent to 10 percent drop in available data on the market.
- In the United Kingdom, opt-out rates from the Electoral Register (a major prospecting resource for marketers) now stand at 29 percent, according to Experian in a Jan. 21, 2005, article titled Electoral Register Fully Loaded
. - In the United States, the “do not mail” opt-out initiative is constantly gaining ground. This has occasioned a small but significant shift of marketing investment away from new customer acquisition and toward existing customer development.
- Research from Pitney Bowes (The Customer:Prospect Ratio, March 2004) indicates that by the end of 2005, 51 percent of marketing investment will go into customer marketing and 49 percent into prospect marketing.
-
A Group 1 Software research project from the beginning of 2005 shows that an overall majority of top U.K. companies—
53 percent—obtain a return on their investment in customer management.
With such research as a background, TotalDM found that about 44 percent of the top 500 U.K. companies have a head of CRM. Although the percentage was less than half and slightly less than the numbers above, it is significant, because in many cases, measurable return on investment has to be proved before a company will appoint a head of CRM in a senior directorial role, regardless of whether it is an internal promotion or an external hire.
In this sense, the penetration of businesses putting a head of CRM into an executive position serves as a real indicator of
commitment
, rather than simply experiment. It means that CRM initiatives have been taken, hard bottom-line results have been measured and ongoing metrics have been put in place and
then
CRM management is afforded senior status.
Heads of CRM by the numbers
In TotalDM’s survey, the banking and telecom industries stand out from the crowd. These are both industries naturally rich in customer data, particularly transactional data.
In telecoms, the real and present danger of customer mobility—especially in the mobile arena, which suffers from 30 percent to 40 percent customer defection every year—galvanizes service providers toward effective CRM. It is an absolute imperative to try and separate customers into types, ranging from serial switchers to lifetime loyalists. With average margins slim, and a 12-month period before return on cost of acquisition starts in earnest, the sector has to take CRM seriously.
Banking, on the other hand, is subject to low rates of customer churn (although these are rising slowly). Banks must undertake Intense analysis of customer types to identify which customers are likely to be interested in further products, usually introduced ones such as insurance or investment services.
Unexpectedly, our survey found that the scores for CRM commitment in the fast-moving consumer goods (FMCG) and media and entertainment industries were above the all-sector average but still below that of the retail and travel and hotel industries. FMCG brands, music labels, publishers, broadcasters, cinemas and the like are the mainstay of the above-the-line advertising industry. Yet, TotalDM has stated that the fundamental building block of CRM strategies is data-based direct strategies. FMCG is evidently doing plenty of CRM, even if only at the broad segment level: breaking down demographics on the basis of age, marital status and gender.
It seems from our research just under half of the country’s top 500 companies have become so serious about the measurable value of their CRM that they have appointed a senior executive to the role. There may be plenty more to do, but it would appear that confidence in CRM is now reaching its majority. We are at a watershed moment in which more organizations are relying on effective CRM to manage customers, revenue and profits.
