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.
This was first published in December 2002