Many companies measure CRM success wrongly but still believe the
software. Daniel Thomas reports
UK firms often adopt the wrong return on investment (ROI)
measurements for their customer relationship management initiatives
and do not implement CRM for the right reasons, according to new
research from Meta Group.
The analyst firm said too many UK companies use gross measures,
such as change in turnover, as their primary success criteria.
"This type of measurement is of great concern," said Ashim Pal,
international vice-president for CRM at Meta.
"Few organisations have sufficient analytical capability to
correlate project-level CRM value to overall company performance."
According to Pal, the inability to measure ROI is a result of the
focus being placed on "just do it" projects and quests for a CRM
software products, rather than using CRM to solve problems.
"ROI is far easier to measure when CRM projects are focused around
the company strategy for customer care and management, channels and
points of interaction, engagement and delivery, and customer data
analysis," he said.
In an attempt to resolve this problem, Meta has devised an ROI
model that maps CRM investment to an overall change in business
performance via technology and process changes.
This form of ROI modelling allows the creation of portfolio
measures which, when combined into balance-scorecard like models,
permit "hard" (money earned, money saved) and "soft" (customer
satisfaction) measures to be evaluated against each other, said
Enrico Camerinelli, programme director at Meta.
"Appropriately scoped, focused and measured CRM programmes can and
do drive up customer satisfaction and provide real cost reduction
and optimisation opportunities," he said.
During 2003, Meta expects UK firms to pursue "quick win" CRM
implementations, with few companies spending more than £13m on any
one project. By 2006, CRM will become more tightly integrated with
business objectives, Meta predicted.