While there are some commonalties in what is actually measured for ROI, there is no hard and fast rule as to what, exactly, the actual ROI number should be -- it varies by company based on their financial situation and philosophy.
That said, there are common metrics that companies tie into ROI calculations when making a decision to purchase analytical CRM technology. The metrics fall into two categories: one, greater efficiencies that lead to expense savings or two, increased revenue.
If we use a definition of analytical CRM technology to include warehousing, analytical and campaign management functionality, common metrics supporting greater efficiency include:
- Decrease in campaign cost due to contacting smaller, yet better targeted, numbers of prospects
- Produce more campaigns per staff member
- Reduce time (or staff) needed to maintain/update customer database
- Increase speed in executing existing campaigns or in delivery of customer intelligence to key stakeholders
Common metrics supporting increased revenue measure:
- Increase in campaign or marketing response rates
- Increase in customer profitability
- Improve retention of valuable customers
- Increase products sold per customer (cross-sell ratio)
A word of caution in setting up key metrics to determine ROI for an analytical CRM technology purchase: successful ROI is achieved when the purchase of technology is aligned with your company's overarching CRM strategy. Technology is only one piece of the puzzle. Internal processes, training of employees, and organizational needs must also be aligned in support of customer-centered strategies to maximize the ROI of your CRM technology purchases.
For more information, check out searchCRM's Best Web Links on CRM Analytics.
This was first published in November 2001