Marketers Score Less Than Two Out of Ten for CRM

16 April 2008

NEW YORK: Despite spending millions of dollars in gathering data about their customers, only sixteen in every hundred marketers worldwide rate themselves 'effective' or 'extremely good' in regard to their management of customer relationships.

Worse yet, forty-five percent rated themselves as 'deficient' or 'need more work' at integrating and leveraging customer data.

A mere 6% claimed to have 'excellent knowledge' of their customers when it comes to demographic, behavioral, psychographic and transactional data.

These eyebrow-arching revelations come from a new study conducted among 450 senior marketers across the globe.

Snappily titled Business Gain From How You Retain: Addressing the Challenge of Customer Churn and Marketing Burn, the investigation was conducted by New York-based The CMO Council with Computer Sciences, IBM Software and Dun & Bradstreet

Notes CMOC executive director Donovan Neale-May with masterly understatement: "There is a lack of focus as to how to optimize revenue from existing customers. In a year of economic restraints, marketers should be more concerned with cross-selling and upselling."

Only half of the survey's respondents said they have a strategy in place for further penetrating and monetizing key relationships. Not surprisingly, nearly a third of respondents (31%) reported customer churn rates of more than 10%. 

Another third (32%) reported customer turnover of 5%-10%. Two-thirds admitted they have no system in place for reactivating lost or dormant customers.

Observes Loreen Babcock, ceo of direct and relationship marketing agency Unit 7: "Let's be honest. It's sexier to bring new customers in, but that whole marketing model is broken because there is no accountability."

And, to exacerbate the problem, "the landscape is a mess in terms of how data sources are linked," Babcock says. As a result, almost one-third of respondents (31%) said that data mining played no part in their marketing activities.

However, Alexander Black, senior partner at IT services company CSC, was understanding and absolution personified, stressing that there's an awful lot of customer information out there. "There can be as many as 20 to 25 different sources of data," he consoled.

The companies that most excel at CRM are wealth management firms like Charles Schwab and Fidelity, Black said, "because they have the biggest risk if they lose their wealthy customers".

Internet retailers like and eBay are equally on the ball when it comes to CRM, because "they started with a clean slate. They don't have the heritage of all those legacy systems".

The CMO Council is an invitation-only affinity group whose members are drawn from the upper echelons of corporate management.

Data sourced from AdWeek (USA); additional content by WARC staff