Taking Internet CRM to the Next Level

By Steve Butler, e-marketer

25 February 2002 – Multiple surveys from early 2002 confirm
that e-business managers are continuing to prioritize the deployment of customer
relationship management (CRM) solutions, as well as make enhancements to the
customer-facing features of their websites. These trends serve as confirmation that
businesses continue to see the value of building upon their earlier CRM implementations.

Until recently, many companies were uncertain of the return
on investment (ROI) that they were achieving through their early use of CRM solutions,
with few businesses having the historical data necessary for year-over-year comparisons.
However, a growing number of companies have begun to do a better job of examining their
CRM implementations’ ROI in 2001.

According to a survey conducted by AMR Research, 78% of
companies chose to gauge the success of their CRM projects by looking at customer
satisfaction and retention rates, while 71% of respondents said that they reviewed the
cost savings that they experienced. Fewer companies measured their CRM ROI by tracking
growth in sales or in the number of new customers.

The internet is of course just one channel through which
businesses may communicate with their customers, yet it is one of the most effective at
improving customer retention and reducing customer service costs. For example, companies
are able to differentiate themselves from their competitors by providing in-depth product information,
or by offering customers the convenience of self-service features, thanks to a well-developed website.

But internet-based customer service capabilities have room
to improve, according to a December 2001 study of large corporations’ websites that was
conducted by the Yankee Group. Although nearly two-thirds of surveyed websites offered
basic search capabilities and product information, just 24% had order processing
capabilities, while 55% provided some kind of customer service and support.

Surveys of internet-based purchasers — be they business or
consumer buyers — show that customers appreciate the convenience of being able to serve
themselves online. From transaction capabilities to the ability to check inventory, track
orders, or personalize certain features, customer-facing websites have plenty of room to
move into next-generation implementations. On the internal side of their operations,
website operators also have the opportunity to gain immense amounts of data about their
customers’ preferences and activities, thus permitting them to learn how to better serve their customers.

An early 2002 study by the Robert Frances Group found that
less than 10% of companies believe that they are effectively capturing the customer information
that they are obtaining, pointing to a need for further e-business investment that is still to come.

AMR Research predicts that sell-side e-commerce software
sales will increase from $5 billion in revenues during 2001, to $7 billion in 2002. Among
those sell-side solutions vendors that stand to benefit from next generation deployments
of internet-based customer service capabilities include Broadvision, BEA Systems, IBM and
Vignette. As for vendors of CRM analytics solutions, E.piphany and Kana Communications are
considered market leaders, along with key CRM players Siebel Systems and PeopleSoft.

eMarketer Senior Analyst Steve Butler wrote the IT Spending
Report, the eCommerce: B2B Report and The CRM Report. E-mail him at
sbutler@emarketer.com with comments, suggestions
and questions. More information is available at the e-Marketer Web site
www.eMarketer.com.