September 6, 2001

CRM advances strongly in Europe; but companies still don't measure the returns from their CRM investments

The development of a customer relationship management (CRM) strategy is now a key boardroom issue for the majority of European companies, according to a major new survey released today by Cap Gemini Ernst & Young. The research found that 79% of European companies now regard CRM as a business strategy that requires changes to traditional business models, processes and culture. 

The changing perception towards CRM among European management may explain why they are not far behind their US counterparts in implementing CRM solutions. 67% of European companies compared to 74% in the USA have undertaken a CRM initiative in the last two years, and over a third now believe that it is a top priority in their corporate strategy and operations. 

The European survey was commissioned by Cap Gemini Ernst & Young with Gartner Consulting and covered 242 senior marketing, sales and customer service executives from 145 companies in 14 countries.  The survey was an extension of similar research commissioned by the company in the US, completed in January 2001.  

"This research demonstrates that European-based companies are taking CRM seriously, and we have found that most expect considerable growth in their CRM budgets over the coming year or so," said Paul Nannetti, CRM Leader for Europe at Cap Gemini Ernst & Young. "There are also clear signs European companies are becoming more sophisticated with their CRM programmes, and starting to take a holistic view of their investments.  It's interesting that respondents rated customer-centric visioning, in which executives develop an enterprise view of their strategy from the customer perspective, as the most valuable CRM initiative undertaken." 

However, the research also raised some concerns about the way European companies undertake and implement CRM initiatives.  Only one third of companies could provide any estimate on the expected return on their CRM investments. 

"The extent to which CRM investments are made on the basis of an intuitive assessment of their merits, instead of a clear financial business case, is surprising," said Nannetti.  "It is also very revealing to find that most  companies are still organised around product sets or regions rather than customers, and do not ensure individual CRM initiatives are aligned with other functions. However, there is evidence this is starting to change". 

The research also found that only 40% of European companies have an executive with specific responsibility for CRM within their organisation. Most companies remain centred around either product groups or geographic markets (41% and 20% respectively) rather than around customer segments. 41% of European companies are still undertaking initiatives separately at a departmental level, instead of taking a cross functional or enterprise approach. 

"With the completion of the European phase of this study, we now have a very clear insight into how some of the world's largest companies view their investments in their customers," said Nannetti.  "It points to some hard lessons that need to be learned by management on both sides of the Atlantic".

Cap Gemini Ernst & Young developed the CRM Index, an on-going barometer of CRM capabilities in the marketplace, to help companies define strategies and accelerate their CRM transformation.  The CRM Index was originally based on research conducted in the US at the end of 2000, and is continuously updated. It now includes data for over 400 large US companies and is now being extended to incorporate the results of the European survey. 

The Index provides industry-specific and best-in-class comparisons for CRM strategy and implementation and provides a benchmark to help formulate strategies for building customer-focused infrastructure and processes. By looking at a company's Mindset (whether its strategies and behaviours lean towards broad market focus or a one-to-one relationship focus) and Connectivity (whether its processes and technology are fragmented or highly-integrated), the CRM Index places an organisation within one of nine models. 

"The CRM Index provides a framework to help a company set its CRM strategy, and allows management to place that strategy in the context of the approach being taken by competitors," said Nannetti.  "Furthermore, it allows management to take a balanced view of its CRM initiatives by weighing the consequences of strategic and organisational decisions with the corresponding process and technology requirements. This is an essential first step before embarking on a major investment in CRM and, combined with the proper technology-enabled solutions, provides clients with both the strategic and technical underpinnings necessary to yield maximum return from their CRM programmes."

Notes to Editors

• The CRM Index survey is based on Cap Gemini Ernst & Young's proprietary view of CRM best practice. Cap Gemini Ernst & Young commissioned Gartner Consulting Europe to perform the European CRM Index research, entailing interviews in 14 European countries. 
• The research examined companies in six key industry sectors: energy and utilities; financial services and insurance; manufacturing, automotive and high-tech; life sciences; telecommunications and media; and consumer products, retail and distribution.  The financial sector was the most advanced in its CRM efforts, with 79% having completed a CRM initiative in the last two years. 

Cap Gemini Ernst & Young is one of the largest management and IT consulting firms in the world. The company offers management and IT consulting services, systems integration, and technology development, design and outsourcing capabilities on a global scale to help businesses continue to implement growth strategies and leverage technology in the new economy. The organization employs about 60,000 people worldwide and reports global revenues of about 8.5 billion euros (2000 pro forma).

More information about individual service lines, offices and research is available at www.cgey.com. 

For more information, please contact:

Philippe Guichardaz
Cap Gemini Ernst & Young
Tel: +33 (1) 47 54 50 00
philippe.guichardaz@cgey.com