Andy Wood, MD, GI Insight You Asked Customer Relationship Management (CRM) is now a universally accepted concept amongst marketers. The impression that one gets from reporting on the subject is that hardly any companies have failed to implement CRM initiatives. But is this in fact the case? And how seriously is the subject taken by corporations?

One-off CRM technology costs can be written off; ongoing senior people costs cannot. So a company that puts CRM into the title of one of its senior managers is making a real statement of commitment to CRM. GI Insight therefore decided to commission research amongst the UK’s top 500 companies to find out how many of them had that most expensive of people, a Head of CRM. The statistics were compared with those resulting from the same exercise two years ago in 2005. The study also investigated whether that CRM Head was a dedicated senior director, or whether they also had another main job, such as Marketing Director or Customer Services Director. This was felt to add colour to whether the role was being treated as a wholly absorbing directorial function, or whether it was diluted by combination with another discipline. And thirdly, the research also broke the findings down to compare different industry sectors.

The penetration of Heads of CRM was felt to be a good proxy for the commitment that these large industry sectors were showing, not only to the notion of CRM, but to its successful practice, and its permanence within the organisation. Convincing metrics demonstrating return on investment from CRM strategies and systems are now demanded by colleagues, analysts, markets and shareholders. So if an official and directorial role had been created form CRM, this was felt to be compelling evidence to an organisation’s seriousness about methodical customer management and development.

Our barometer of ‘CRM Commitment’, in the form of the proportion of the UK’s top 500companies with a Head of CRM, comes in at approaching half (48%) up four percentage points since this survey was last conducted in 2005 (44%). This lags the statistics quoted in our introduction concerning “return on customer investment” or “customer development spend versus prospecting spend”, both of which have achieved an overall majority score in top companies. We may conclude, therefore, that in many cases, measurable return on CRM investment has to be proved before a company will appoint a Head of CRM into a senior directorial role (regardless of whether this is an internal promotion or an external hire). In this sense, our Heads of CRM penetration is acting as a real indicator of commitment. CRM initiatives have been taken, hard bottom-line results measured, and ongoing metrics put in place, before CRM management is afforded senior status.

Further insight is available by drilling into this overall 48% commitment to understand whether Heads of CRM had been appointed in a dedicated role, or whether this was seen as inextricably conjoined to another function. The resulting breakdown showed that almost one fifth (19%) of top UK corporations now have a dedicated Head of CRM, a substantial increase on the proportion (14.5%) two years ago. This represents a growth rate in dedicated CRM Directors of almost one third in the last two years.

In 29% of top companies, the role of Head of CRM was combined with another senior function - most frequently either the Marketing or Customer Service directorship. These combinations make sense, in that Marketing and Customer Service are the areas of responsibility in which customer management and development strategies have mainly been implemented. It also provides corroboration that many organisations see the functions inextricably linked — a holistic view that shows real progress in the maturity of thinking about CRM in the country’s top commercial organisations.

More detailed analysis of the results of this study revealed a number of sectors that score particularly highly for appointing Heads of CRM. Three industries really stand out from the crowd — Retail, Media & Entertainment and Travel/Leisure/Hotels.

Retail

Because transactional data is so fundamental to customer relationship management in retail, the sector’s leading position for appointing dedicated Heads of CRM may well also reflect some of the ways in which retailers can use the data and analysis outputs that come out of their CRM programmes.

Entertainment

This was entirely unexpected. Music labels, publishers, broadcasters, cinemas, and so on are, after all, mainstays of the above-the-line advertising industry. However, customer value is often much higher now than in the past. Newspapers are engaging their readers with a wide range of online and offline services, music publishers are also issuing games, technology, infotainment products and much more. And the culture of home entertainment has been vastly boosted by increasing levels of DVD viewing and television usage.

Travel/Leisure/Hotels

Businesses in this sector seem to be coming back into play as effective CRM players. This is a crucial return to form for the sector, seen in the 1980s as pioneers of loyalty and database marketing initiatives, but who slipped to the back of the pack in the 1990s and the early years of the new millennium.

GI Insight