Integration Woes Stymie CRM

PwC Consulting: companies have not achieved "channel mastery" in customer relationship management

New York  December 19, 2001  Many large companies are undertaking customer relationship management (CRM) efforts to drive customer loyalty, but a lack of internal CRM integration initiatives is thwarting success and preventing CRM from making good on its promise to deliver satisfaction in an age of 24/7 customer interaction, according to a new study by PwC Consulting.

Meanwhile, companies have critical misunderstandings about what factors are most important to consumers when interacting with their business, as well as confusion about customer preferences among the ever-growing selection of touchpoints from call-center to Web to in-person contact, the consultants found.

The CRM survey by PwC Consulting, a business of PricewaterhouseCoopers, depicts a global corporate community that recognizes the importance of deploying CRM programs but has fallen short of harnessing the collective channels and processes necessary to provide a better, more consistent customer experience, according to the consultants.

For its Multi-Channel Value Quantification survey, PwC interviewed corporate decision-makers at 225 Global 2000 companies with at least $100 million in annual revenue (41 percent with more than $1 billion in sales). The surveyed companies ranged from financial services to manufacturing, energy and consumer products.

PwC Consulting also surveyed 225 international consumers experienced in interacting with large companies. Surveys were conducted between the months of August and September 2001.

Notable differences between industries, as well as geographic disparities, arose when executives were asked to describe the CRM-related challenges their enterprises are facing. The variations among types of business, and from one international market to the next, reflect a worldwide effort to grasp and attain the consistently superior service customers demand, the consultants argue.

"Today's consumers are extremely savvy and are testing CRM program capabilities like never before, from simple service calls and order-tracking to seeing must-have sale items show up in their morning e-mail," said Adam Klaber, global CRM leader for PwC Consulting. "This research clearly shows many companies are struggling to make CRM optimally effective for even their best customers, especially in the area of data integration absorbed from so many communications channels."

Key survey findings:

·        Nearly 75 percent of companies polled reported that they are still trying to achieve front-to-back-office harmonization. Sixty percent said their cross-channel integration still needs improvement, while only 25 percent rated cross-channel integration as "achieved." During the early days of CRM, primary focus was placed on improving front office functions  anything that touched the customer. Back office data is critical to helping companies enhance the customer experience and build loyalty. Today, a lack of channel integration, not a shortfall of different channels per se, may be the fatal weakness for CRM efforts.

·        A third of consumers indicated a strong preference for having a variety of communications channels through which to interact with a company. However, companies underestimate the desire for channel freedom, ranking it third on a list of features they think customers prefer. Consumers report they are 60 percent less likely to do business with a company that doesn't offer their preferred channel. While establishing and maintaining customer loyalty is the first corporate CRM objective, adding channel choices does not necessarily equate to higher profits. In fact, if done ineffectively, channel overload can impose huge costs. Companies must evaluate which channels are most strategic to their business and equip them with features that appeal to customers.

·        Seventy-four percent of consumers surveyed typically use e-mail or the Internet to contact a company, but only 13 percent describe online channels as their preferred contact. Despite all the attention paid to enabling technologies, consumers overwhelmingly prefer connecting by phone or in person. Over 70 percent said that the phone was their first choice. While consumers have become accustomed to using the Internet for product and service research, they still want to speak with someone for transactions and service. Companies seem to have misjudged the importance of the telephone and are trying to reconcile this with the reality that the phone is the most expensive CRM channel to support. Enterprises may be better served by instilling some of the human touch traits into e-channels such as personalization and real-time information access to help encourage customers  especially low-value customers  to use self-serve channels rather than those that require live interactions.

·        When corporate respondents were asked why meeting CRM objectives had been so difficult in the past, the majority cited ineffective processes as the cause, followed by people and corporate priorities. Surprisingly, despite the economic slump, budget ranked the lowest barrier to CRM success.

·        While all industries tout integration as a CRM priority, they are dealing with different challenges. The manufacturing and consumer products sectors displayed the least confidence in how well they handle customer relationships. Only 42 percent of respondents in those industries felt they are currently providing the best relations. Energy and utility companies perceive themselves as much farther along, 59 percent claiming their customer relationships were working optimally. Financial services came in next at 54 percent, with 52 percent for communications, information and entertainment companies. Financial services respondents indicated the strongest need for back-to-front-office integration. This industry group may be pushing the hardest to harmonize functions in part due to the tremendous consolidation the financial sector is undergoing.

"e-Business raised the bar on CRM by introducing an abundance of technologies, which translated into increased methods of customer communications  most of which were not integrated with traditional channels," said Dan Hirschbuehler, the lead partner for CRM ACCEL, PwC Consulting's solution for CRM. "We've learned that loyalty has become a porous concept in the process. With consistent integration across channels and between the front and back office customers are less likely to slip through the cracks to the competition."

PwC found that many CRM efforts are suffering from evolving as a collection of independently developed systems, often under stand-alone business units. When consumer expectations dictated that companies add another channel, such as wireless Internet, companies often cobbled new capabilities onto existing systems without regard for integration, according to Hirschbuehler. PwC asserts that successful CRM programs require back-to-front office integration that consolidates disparate systems into a seamless whole, and information must be consistent and shared in real-time across every channel, ranging from brick-and-mortar stores to mail order, from e-mail to phone.

"Achieving cross-channel mastery is an obvious new paradigm for CRM programs  it accepts that customers want multiple communication options, but because their behavior drives them from phone to web to store and back again, integration helps assure their experience is consistently positive across all touchpoints," said Hirschbuehler. "The research was an excellent barometer, showing us the disconnect that often exists between customer expectations and corporate response."

Additional findings from the research:

·        Global Differences: Wireless channels are more important to customers outside the U.S., according to the research. Twelve percent of international respondents use mobile phones for contact, versus only 4 percent of Americans. Foreign consumers were 50 percent more likely to say that having multiple communications choices would favorably influence their decision to complete a transaction.

·        Integration Barrier: Corporate respondents rated "identifying what customers expect from their companies" as the most difficult CRM objective to achieve, followed by "integrating process and technology company-wide." But corporations differed on how tough the integration process is. Information companies called integration the hardest objective, while financial services companies appear to have the most success, only 18 percent saying this was the most difficult CRM objective. Despite a trend toward investments in analytic technology, this feedback indicates that enterprises are struggling to ascertain what customers want. Without this critical knowledge, opportunities evaporate to cross and up-sell to customers.

·        Get it Right: Consumers felt the quickest way to lose their business outright was not resolving issues effectively and quickly. Nearly half of respondents believed resolving an issue on the first call was the most important way to preserve loyalty  higher than such factors as having a smooth purchase process and receiving the order in a timely fashion. Consumers show little tolerance for anything less than total CRM responsiveness and competitors are waiting to step in when the system breaks down. Offering Web self-service channels with capabilities to do research, check order status, or dispute billing problems provides customers the opportunity to get the resolution they desire while enabling a company to reduce call center volume and costs.