Wednesday, June 27, 2001

More Money to be Spent on Customer Service

Jupiter Media Metrix today reports that 74 percent of businesses will spend more money on customer relationship management (CRM) infrastructure in 2001 than they did in 2000—with a majority committing to increasing their spending by as much as 25 percent to 50 percent. New Jupiter CRM research reveals that businesses are wise for making these investments, despite the current economic downturn, because the number of individuals seeking online customer service will jump from 33 million in 2001 to 67 million in 2005. Jupiter analysts warn, however, that companies investing in online-only solutions will fail to advance customer satisfaction because they will not build a consistent customer experience across all channels.

"Although the current state of the economy is causing companies to cut costs in many areas of their businesses, customers still expect the same level of service," said David Daniels, analyst, Jupiter Media Metrix. "Customer satisfaction has always been a key metric for positive financial results. Businesses must not make CRM investments only to keep pace with growth—they should view their CRM spending as a strategic benefit that will bring higher levels of customer satisfaction and retention."

Key findings and forward-looking analysis from the latest Jupiter CRM research—which will be discussed in further detail August 20-21 during the "Connecting With Consumers" showcase at the four-day Jupiter CRM Forum in Las Vegas—include the following:

- According to a Jupiter Executive Survey, 63 percent of companies use customer satisfaction metrics to measure the return on investment (ROI) of their CRM investments, compared with 33 percent that view cost savings achieved by reducing service staff as the best measurement of return. Jupiter analysts say that businesses using customer-satisfaction ROI measures should not expect a quick return on their CRM investments, because the rate at which businesses can measure satisfaction will depend on how frequently and through which channels they touch their customers.

- Jupiter analysts assert that businesses should realize that advancing customer satisfaction is an uphill climb. According to a Jupiter Consumer Survey, only 41 percent of respondents were satisfied with the state of online customer service. However, Jupiter analysts have found that companies that adopt CRM systems with customer satisfaction in mind will realize revenue growth sooner than those that only strive for cost savings.

- The success of online CRM systems has been stymied by redundant spending. According to Jupiter analysts, redundant spending will cost Global 2000 companies between $3 billion and $4 billion over the next two years. Jupiter analysts say that disparate corporate goals and separate business units have led companies to invest in CRM solutions that failed to unify the customers' experience. To curb the potential for redundant spending, Jupiter analysts advise companies to budget for CRM at the enterprise level with "c-level" ownership.

"To create a consistent customer experience and reduce redundant investments, companies must adopt a company-wide customer culture," Daniels said. "This approach might require larger capital investments up-front, but the resulting business consolidation should cut managing costs by as much as 20 percent. In effect, companies have been buying separate CRM systems to service the same customer base."