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