Why Is Customer Service Still Failing To Benefit From CRM Investment?


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While companies continue to invest in CRM enhancements, the technology is still under-delivering in the call center. Customer service staffers are still grappling with disparate systems that are often not underpinned by a clear customer centric strategy.

Industry analysts agree that CRM investment will grow in 2005. A significant proportion (74 percent) of multinationals Segmetrics has surveyed have either a CRM system in place or are in the process of implementing one. Half of the companies that don’t have a CRM system are evaluating their CRM needs. Two-thirds of the companies in our study with no formal CRM systems are running SAP elsewhere in their business but have not implemented the CRM modules. Looking more closely at what companies have in place, we found that sales force automation remains the dominant CRM application, with less than half of customer service teams having CRM functionality. Not only is there still a lack of CRM within the customer service center, but also the existing systems are not performing adequately.

When we asked customer service managers to name the most important thing that would enable their company to manage its customers better, the overwhelming majority (73 percent) said improvements to the CRM system.

Some of the key issues that they raised included:

  • An end-to-end CRM system that properly links the front and back office functions

  • Better sharing of customer information across the organization

  • Better information about where the customer is in the life cycle to enhance product targeting and service

  • The ability to view each customer at a glance to see status and the activities he or she is engaged in

  • Visibility of the customer touch-points and frequency of contact across the organization


The lack of integration across business processes and information systems across the organisation is resulting in costly inefficiencies. The key to serving customers is having current, relevant information at hand. What employees need is a system that gives them access to integrated customer information so that they are able to deliver the level of service expected by the customer and respond to the needs and expectations of other functions within the business.

We asked customer service managers what they see as the main barriers to improving customer management and CRM in their organization. While they raised a wide range of issues, the main obstacle they cited was a lack of investment. Some of the other key issues were a lack of resources, the need for better IT systems and system integration capability, time pressure and the need for culture change and senior management support.

What is the result of the current levels of underinvestment? Only a fifth of people interviewed believe that they are able to anticipate future demand for services and respond rapidly to these changes. Apart from the lack of responsiveness, less than a third of respondents (31 percent) perceived their customer service capability to be a source of competitive advantage.

Why is finance not being made available to support customer service? Customer service is still largely perceived as a cost center and a necessary evil—not a priority for business investment. Companies continue to take a tactical approach, focusing on areas such as sales, where the return is easier to see and more immediate. Customer service is more complex and requires both a long term commitment and a more strategic approach. Management remains reluctant to spend money in an area of the business that will drive overall costs up.

Tools to close the loop

Service and support interfaces are often the only human contact the company has with its customers. The quality of these experiences has a significant impact on long-term business success. Dialogue between the company and the customer, over an extended period and across multiple channels, relies heavily on technology, particularly closely integrated CRM systems. Customer service needs to be given a higher profile and the tools to close the communication loop among marketing, sales and service.

While technology has the capability to enable better customer focus, it isn’t being applied in a way that delivers meaningful customer experience. Systems remain disparate and are often not underpinned by a clear customer centric strategy. Companies need to foster a culture that recognizes the strategic importance of the contact center if they are to make a closed-loop dialogue possible.

So what is being done about the current state of play? The majority of respondents reported that they are re-evaluating their CRM needs, and the expectations of what the next generation of CRM systems will bring to the service environment are high. Integration must form a fundamental part of the vendors’ approach to addressing the needs of medium size multinationals.

Both companies and vendors need to ensure that the next generation of investment starts with the customer firmly in mind—and that CRM and customer strategy are designed from the outset to support the contact center and service environment. Business leaders need to acknowledge that customer retention and loyalty are driven by customer experience. The key to moving from CRM to CEM is whether your company can give front-line staff the tools to make effective decisions based on a real understanding of customers’ needs.

Note: Our survey was conducted in January and February 2005 and included more than 40 multinationals across Europe and the United States, in industries that ranged from food and beverage, manufacturing and chemicals to telecoms, about the current state of CRM in their companies.

Marina Hop
Marina Hop and Jacqui Bullock are the founders of Segmetrics Consulting. Hop has wide-ranging experience in business and ICT. Bullock has extensive experience in marketing, service delivery and market research. Segmetrics offers a wide range of market research, design, implementation and validation of customer segmentations, as well as customer service benchmarking.


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