Five Must-have Capabilities for Customer Relationship Management

Accenture study pinpoints marketing and customer management capabilities deemed critical to enhancing performance and customer loyalty

New York — March 8, 2005 — Mastery of five marketing and customer management capabilities accounts for more than half of the difference in customer loyalty between high- and low-performing companies, according to a new study released today by Accenture.

The study, based on responses from marketing decision-makers at more than 700 companies globally, was designed to examine the impact of customer loyalty and how marketing and customer management can help companies increase margins and build shareholder value to become high performers.

Accenture found that 50 percent of the difference in customer loyalty between high- and low-performing business-to-consumer companies is linked to mastery of five marketing and customer management capabilities. At business-to-business companies, the capabilities account for nearly 60 percent of the difference in customer loyalty behavior between high and low performers.

The research also provides revealing information about the role that marketing and customer management mastery plays in helping businesses achieve objectives. The study found that 38 percent of the difference in profit margin, 40 percent of the difference in revenue growth and 38 percent of the difference in shareholder value between high- and low-performing companies is directly linked to the ability of companies to enhance customer loyalty.

"Traditional marketing approaches simply aren't working. Consumers have many options, and industries have so much excess capacity, that broad-based propositions that try to appeal to all customer segments fall short," said John Freeland, global managing partner for Accenture's Customer Relationship Management service line. "This study reveals the capabilities that do work, based on the experience of those who have been successful in creating organic growth and high loyalty."

The five prerequisites for marketing and customer management excellence, as detailed in the study, include the ability to:

* Develop and deliver a "branded" experience. The essence of the brand should be apparent in every interaction a customer has with a company, enabling customers to form an emotional attachment with the brand. It includes: training and enabling front-line employees who interact with customers; developing high-impact marketing campaigns; defining the brand's "promise"; and segmenting customers on the basis of value.

* Create and shape demand. This capability requires constant innovation, such as being first to market, developing value propositions that address latent demand and implementing leading marketing and customer management techniques. High-performing companies make offerings attractive to more customers and experiment with new channels as they expand into new markets. They also apply new research techniques and study future needs while strategically using channels to present a consistent face to customers.

* Harness talent and technology. This includes hiring, managing, training and retraining the most talented people and giving them the technology and processes to work efficiently, share best practices and apply technology to routine processes.

* Translate foresight and insight into marketing productivity. Leaders use advanced analytics that transform data into useful information, which provides the basis for sound marketing and customer management decisions.

* Drive marketing to meet performance objectives. High-performance marketers have an organizational structure that enables work across functional areas, incorporates clear job descriptions and aligns with business goals. In this organizational structure, marketers and customer managers track performance against goals that are tied to business objectives and enable timely measurement of brand impact on business performance.

Of these key capabilities, the Accenture research revealed that developing and delivering a branded experience and creating and shaping demand tend to have the most direct influence on customer loyalty. However, mastery of all five areas is needed to achieve high performance.

Accenture identified a distinct difference between higher- and lower-performing companies as the leaders place more importance, and spend more of their budgets, on building competency in all five key marketing and customer management areas. As the masters strive for excellence in these key capability areas, they also monitor practices across industries and continually seek new and better ways to improve their performance.

The Accenture study, based on qualitative and quantitative research, was designed to identify how companies approach marketing and the essential capabilities for marketing and customer management. The research also correlated marketing capabilities with financial performance while pinpointing how the capabilities create and enhance customer loyalty to contribute to margin, growth and shareholder value.

Marketing decision-makers at 716 business-to-business and business-to-consumer companies across industries in North America, Asia and Europe were asked to rate their companies' mastery of 120 marketing skills and performance against four measures: customer satisfaction, retention and loyalty; profitability, margins or returns; revenue growth; and shareholder return.

The data were used to correlate marketing skills with the ability to build customer loyalty and achieve superior business performance, using factor regression, segmentation and decision-tree analysis.

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