New Accenture Research Identifies Where High Tech Companies Can Invest to Increase Profitability
Palo Alto, CA March 21, 2000 - In the first study of its kind to demonstrate the financial impact of effective customer relationship management on high tech companies, Accenture found that organizations can potentially generate tens of millions of dollars in additional profits by investing in a few high-impact marketing, sales and customer service capabilities. The study released today, "How Much Are Customer Relationship Management Capabilities Worth? What Every High Tech CEO Should Know," reveals that a typical $1 billion high tech company can gain as much as $130 million in profits by improving its ability to manage customer relationships.
"Rising customer expectations are forcing high tech executives to invest in building Customer Relationship Management (CRM) capabilities, but they may not know how to get the highest return or how to justify these investments financially," said Tom Bell, lead CRM partner for the Accenture Electronics & High Tech practice. "With this research, we have developed a practical tool to help high tech industry executives to effectively prioritize these investments."
Accenture researchers, who surveyed executives at 70 of the leading North American high tech companies, evaluated more than 50 CRM capabilities in marketing, sales and customer service, and identified 10 specific areas which have the greatest impact on a company’s financial performance. Each of these capabilities can potentially add up to $10 million to a typical $1 billion high tech company’s return on sales. In addition, the research indicates that as much as 64 percent of the difference in return on sales between average- and high-performing companies is attributable to CRM performance.
"Bringing better products to market at speed has always been a principal focus for high tech companies, rather than customer relationships. Yet, the expectations and demands of customers have increased dramatically," said Dale Renner, global managing partner of the Accenture Customer Relationship Management practice. "Companies who figure out how to exceed their customers’ expectations, and do it profitably, will be the most successful."
The study shows that ten capabilities in marketing, sales and customer service account for 50 percent of the return of sales (ROS) impact. For a typical $1 billion company, this translates up to $65 million in ROS. These areas are:
* Understand customer profitability and cost to serve
* Articulate the "value proposition" to customers
* Effectively manage product mix and bundling
* Strategically manage large account customers
* Implement effective branding, advertising and promotion strategies
* Develop effective customer service systems
* Proactively identify customer problems and communicate resolution options
* Leverage customer information from the service process
* Prevent customer problems via customer education
* Attract, develop and retain the best sales talent
A NOTE TO EDITORS:
For this study, "How Much Are Customer Relationship Management Capabilities Worth? What Every High Tech CEO Should Know," Accenture surveyed 123 executives at 70 North American high tech companies, including computer/hardware, semiconductor, software, and telecommunications manufacturers. The survey consisted of 400 questions on marketing, sales, and service, covering the strategy, process, technology and human performance components of CRM. As follow-up to the survey and to test the survey’s conclusions, Accenture conducted interviews with a dozen senior high-tech executives to validate the survey data and gather additional insight into how CRM capabilities are developed and used in the industry. Accenture has conducted extensive research on CRM in a wide range of industries, including chemicals, communications, forest products, pharmaceuticals, and retail. Copies of the Executive Report are available by calling 312-737-7777.