ANALYSIS: Marketing - Keen but uncertain about tackling CRM Uncertainty about how to harvest a customer base is evident across the region.

<p>As the internet frenzy dies down, customer relationship management </p><p>appears to have replaced e-business as this year's choice buzzword. But </p><p>is the new-found interest in CRM - in a region which until recently </p><p>counted on inflated economies to deliver new customers - genuine or </p><p>simply hype? </p><p><BR><BR> </p><p>Apparently, it's the real thing, according to a survey of 100 </p><p>marketing-driven businesses in each of the 12 markets polled. But the </p><p>snapshot is not all reassuring - the majority of respondents are </p><p>uncertain about their abilities or the road-worthiness of their CRM </p><p>programmes. Anxiety that their systems fall short of best practice </p><p>methods runs deep. </p><p><BR><BR> </p><p>"There was a greater level of consideration than we had expected - or </p><p>feared - but also a greater level of uncertainty about where to go from </p><p>here and what the rewards would be," says John Goodman, Asia-Pacific </p><p>president of OgilvyOne, which conducted the survey earlier in the </p><p>year. </p><p><BR><BR> </p><p>Businesses are unsure about what they are doing, how they should handle </p><p>CRM, how they could improve efforts and who should own the </p><p>programme. </p><p><BR><BR> </p><p>Only 11 per cent of respondents were confident enough to say that their </p><p>CRM strategy was so strong that it didn't need improvement. In Goodman's </p><p>opinion, this is still a surprisingly high number given that CRM is a </p><p>relatively new business policy across Asia. </p><p><BR><BR> </p><p>Ironically, Thailand - with the smallest percentage of companies with a </p><p>CRM strategy - is the most confident and Korea the least. Sixty per cent </p><p>of companies in Korea believe their CRM strategies desperately needs </p><p>improvement. </p><p><BR><BR> </p><p>The unease is not unexpected. The harvesting of the existing customer </p><p>base through the collection and use of customer data for marketing </p><p>communication is simply not standard business practice in Asia. Few </p><p>businesses needed to think in such terms. Until things went south in the </p><p>late 90s, strong economies delivered an endless supply of new customers. </p><p>With another slowdown imminent, markets maturing and newer suppliers </p><p>popping up, businesses have been forced to rethink the benefits of </p><p>harvesting and developing their customer base. After all, it can cost </p><p>nine times more to acquire new customers than to retain them. </p><p><BR><BR> </p><p>It's this realisation which has turned CRM into a hot business topic </p><p>although cynics argue that CRM has merely replaced e-business as the </p><p>choice buzzword. </p><p><BR><BR> </p><p>Still, the OgilvyOne poll offered plenty of reasons to believe the </p><p>message is sinking in. More than half of the business, which included an </p><p>even split of local and international companies in the region, had a CRM </p><p>strategy in place. This ranged from a high of 85 per cent in Australia </p><p>to a low of 42 per cent in Thailand. And the future looks promising for </p><p>CRM agencies. </p><p><BR><BR> </p><p>More than 52 per cent of companies indicated plans to invest in a CRM </p><p>strategy in the next six to 12 months. The sense of urgency was </p><p>strongest in Australia, close to 60 per cent are looking at doing so in </p><p>the next six months, and weakest in Hong Kong, where just a little over </p><p>10 per cent said they would do so. </p><p><BR><BR> </p><p>In dollar terms, this new-found interest could mean as much as a 37 per </p><p>cent spike in the regional CRM market this year on top of last year's </p><p>US$339 million, according to IDC, which based its projection on </p><p>CRM software sales. Based on European trends, Goodman says every dollar </p><p>spent on software should result in another two for consulting and </p><p>implementation. </p><p><BR><BR> </p><p>As for development and implementation, 42 per cent of respondents </p><p>currently use an outside partner. Advertising agencies are used by 60 </p><p>per cent of respondents, management consultancies and IT suppliers by 37 </p><p>per cent, direct by 23 per cent and interactive agencies by 15 per </p><p>cent. </p><p><BR><BR> </p><p>The Philippines and Japan made the most noticeable use of ad </p><p>agencies. </p><p><BR><BR> </p><p>Goodman believes use of agencies in the Philippines can be traced to the </p><p>absence of other developed partners, while Japanese agencies are </p><p>expected to provide a comprehensive range of services because of their </p><p>traditional total partnership role in marketing communications. </p><p><BR><BR> </p><p>But before CRM can emerge as a buoyant revenue source for agencies, </p><p>companies will need to see the practice as a complete customer contact </p><p>strategy at all levels of direct communication. </p><p><BR><BR> </p><p>This isn't yet the case. Greg Paull, DraftWorldwide Asia-Pacific </p><p>regional director, notes: "The key barrier has been limited appreciation </p><p>of the fact that CRM is a multi-faceted effort which needs to touch and </p><p>encompass all divisions of an organisation. </p><p><BR><BR> </p><p>"Unfortunately over the past two to three years, most CRM investments in </p><p>Asia have failed to do this. The key barrier has been to think that CRM </p><p>is all about a great big data warehouse and pieces of software." </p><p><BR><BR> </p><p>Yet data warehouses and software in themselves do not build </p><p>relationships. </p><p><BR><BR> </p><p>"They are one of a number of enabling tools of CRM," says Paull. </p><p>"Similarly some traditional advertising and communications agencies have </p><p>positioned CRM as being constant and ongoing communication with </p><p>customers. Again this is an enabling activity." </p><p><BR><BR> </p><p>No amount of advertising or direct mail will form a relationship, warns </p><p>Paull, if the customer does not want to enter into one in the first </p><p>place. </p><p><BR><BR> </p><p>"To the contrary, especially in Asia, the organisation will be seen as </p><p>intrusive and too pushy." </p><p><BR><BR> </p><p>The tendency to see CRM as a tech or communication-only issue may also </p><p>explain why companies did poorly in the crucial area of collecting, </p><p>integrating and using data on their customers, as the OgilvyOne survey </p><p>discovered. </p><p><BR><BR> </p><p>Depressing was Goodman's take on companies' ability and performance on </p><p>this core CRM competency. In evaluating whether businesses were </p><p>successful in their CRM strategy, OgilvyOne considered their ability to </p><p>look at customer data, segment it by relevant criteria and then </p><p>communicate based on the customer's value and relationship. Of the major </p><p>criteria, the majority of companies only felt comfortable with their </p><p>ability to segment data by product or service purchased previously. But </p><p>on the key benchmarks for success, only 30 per cent of companies across </p><p>the region said they were able to gather the critical data for </p><p>frequency, tenure and share of wallet needed for any impact. This </p><p>compares with the 60 to 70 per cent norm achieved in Europe and the </p><p>US. </p><p><BR><BR> </p><p>Interestingly, this after half of respondents claimed their marketing </p><p>department had custody of their CRM policy. Regionally, as a measure of </p><p>support CRM programmes receive within businesses, there is a roughly </p><p>even split between director and manager level ownership of the </p><p>programme. Around 15 per cent of respondents said their CRM programmes </p><p>were owned by the CEO. Japan and India had the highest CEO-ownership </p><p>score against Hong Kong, where it was more a manager's responsibility. </p><p>Goodman said Hong Kong's score reflected the lack of urgency in CRM </p><p>issues. </p><p><BR><BR> </p><p>However, Draft's Paull believes there is a valid reason why this is the </p><p>case in Hong Kong. "Hong Kong marketing managers have greater exposure </p><p>to international media and marketing trends than their counterparts with </p><p>lesser media access or greater language barriers." </p><p><BR><BR> </p><p>He believes there are two sides to the issue. "If marketing managers can </p><p>obtain senior level support, they are more likely to succeed. On the </p><p>other hand, in markets where CRM is owned at senior/CEO levels, they </p><p>will need to be careful as to how this vision and direction is </p><p>translated to lower levels of the organisation. Otherwise a CEO's CRM </p><p>vision may be perceived as another passing fad by his team." </p><p><BR><BR> </p>