How important is CRM in European markets?

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By: Wise Marketer Staff |

Posted on March 16, 2004

There is a worrying gap between how companies rate their actual performance in a set of key customer relationship management (CRM) activities and the activities' perceived importance, according to a survey conducted by Professor Werner Reinartz, associate professor of marketing at INSEAD, and CRM provider PeopleSoft.

The pan-European survey of 246 companies centred on the theme of 'How CRM can make your business successful'. On average, respondents rated their companies' CRM capability and performance at 2.98 out of 5. The fact that the perceived importance of the same CRM activities was, on average, 3.8 out of 5 shows the gap between what companies feel they ought to focus on and what they actually achieve.

Strategic importance
The survey also revealed that the link between strategic CRM activities and overall economic performance is greater than in any other functional area, and draws the conclusion that it is critical to take a strategic approach to CRM.

The survey was structured around four independent questionnaires that were customised to assess the CRM capabilities of four different corporate functions: strategy, marketing, sales and services. Respondents answered one of the four questionnaires depending on their job role.

Key findings
The results highlighted three key findings:

  1. Firms are still having difficulty in creating a single view of the customer.
  2. Data about customers needs to be transformed into information that can be used to provide a useful analysis.
  3. Companies are increasingly understanding that CRM should be integrated into the structure of the whole organisation, not just at the customer facing front-end.

Worst functions
The most prominent gap between actual performance and perceived importance was in the strategy and services functions and, of these, strategic CRM was seen as needing the most improvement.

The strategy survey results rated CRM performance as 2.87 out of 5, while the average importance was rated as 3.7 out of 5. Of the four functions, the performance rating here was the lowest, indicating some scope for improvement. The activities that had the biggest gap between actual performance and perceived importance were:

  1. Real-time integration: Firms often fall short of the optimum 360-degree view of a customer, the ability to integrate CRM systems with other back-office applications, and to link real-time analytics with operational systems in order to make rapid pro-active recommendations. The key to carrying out CRM to its full potential lies in creating a good data infrastructure.
  2. Customer Metrics and Analytics: Firms must improve customer scoring and profiling, and assessment and forecasting, in order to better allocate their resources.
  3. Company organisation: The survey highlighted a need to better integrate with back-office and partner processes. This would lead to more efficient processes, and would allow customers faster access to the information they need.

Service conclusions
The services survey rated CRM performance as an overall 2.99 out of 5, while the importance of these activities was rated as 3.9 out of 5. This rating was the highest across all the four functions, which indicates the perceived significance of getting service-related CRM right.

The areas with the biggest gap - and therefore in need of most improvement - were:

  1. Service efficiency and effectiveness: Firms need to allocate more resources to improve processes.
  2. Organisational issues: An improvement in this area can have a positive impact on mobile employee management, can improve call centre efficiency, and improve effectiveness and skills planning. But to achieve this companies would need considerable top- and middle-level leadership, as well as bottom-level buy-in.
  3. Database management and usage: This is a recurring theme in the survey as it is seen as the basic building block of successful CRM.

For additional information:
·  Visit INSEAD at
·  Visit PeopleSoft at