It wasn't too long ago that the economic downturn had sapped much of the momentum out of the CRM space. Most experts...
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
foresaw stagnant or, according to the more rosy scenarios, scant growth for the industry. Even more damaging, the revived excitement over the 80/20 rule quickly fizzled in the face of a string of "CRM failure rates," the highest of which reached an eye-opening 80%.
Today, the economy is slowly recovering. The downturn proved to be more trial by fire for CRM than a crushing blow. CRM took its lumps, but it's emerging stronger from the experience as an impact-driven business process. Research from early 2004 illustrates this point. Boston-based AMR Research estimates that the CRM market will grow to $10.8 billion in 2004, a $1 billion jump from 2003. "The bottom line," states a recent AMR press release, is that CRM "priorities have shifted ... to applying technology to improve key business processes and using the resulting data to execute." Framingham, Mass.-based International Data Corp. research found that successful CRM technology implementations have yielded ROI anywhere from 16% to more than 1,000%. The lion's share of the returns (93%) came from "increased productivity and business process enhancements."
At the time, however, the survival of CRM was hardly a given, and the entire industry was awash in a return on investment craze. And why not? As a retrospective analysis, ROI is the most telling judge of the effectiveness of an investment, and customer initiatives should be no exception to the rule. The situation was unique, however, in that CRM had yet to demonstrate enough measurable ROI to capably combat the accusations of failure, and to support further investment. This presented CRM technology providers with a sizeable challenge: How do you use a retrospective (by definition) method of measurement to justify an initial investment?
No ROI without representation
As AMR and IDC found, ROI success revolves around process. Proper measurement planning at the outset is vital. Step one is assembling a cross-functional CRM team from across the enterprise. Along with IT players, loop in decision-makers and key players from customer-facing departments where technology must be adopted to develop new processes. Looking to maximize revenue opportunities by refocusing a sales force on growing share of wallet with key customer groups? Get the VP of sales involved. Planning to use customer analytics to eliminate unprofitable marketing campaigns? Include a marketing manager on your team.
And don't forget about the customer. Whether a B2B or B2C company, product or services focused, if your firm collects customer feedback, use it. Allowing the customer to identify the pain points in the customer experience not only helps you determine where to focus, it can tell you what to measure first. All told, these constituents will keep the customer initiative balanced from the technology, business process and customer vantage points.
Once your core team is assembled, conduct a "metrics brainstorming" exercise. To help direct the effort, use a basic 3x3 framework. Across the horizontal axis, list the high-level phases of the customer life cycle: acquire, grow and retain. Across the vertical axis, list the three primary customer touch points: marketing, sales and service. The result is a nine-zone matrix upon which you can plot each metric/benefit area according to where and how it fits your strategic CRM objectives. To use an earlier example, if the VP of sales is looking to increase share of wallet with most "growable" customers, this would appear in the sales/retain zone. If the marketing manager plans to launch more targeted campaigns to capture qualified leads, this would fall in the marketing/acquire zone.
By identifying and tracking benefit areas early, companies avoid the post-implementation trauma of sifting through disorganized data, unraveling haphazard processes, or struggling to get buy-in from annoyed data owners not included from day one. Business and IT decision-makers can flesh out pain points together, and discuss ways to connect technology to process, in order to drive ROI. With a clear understanding of measurement areas, decision-makers can pinpoint data owners across the enterprise who are critical to tracking ongoing return, but who often slip under the radar. Most importantly, it makes the retrospective analysis of ROI a more predictive and measurable experience.
Copyright © 2004 Carlson Marketing Group, Inc. All rights reserved. Peppers & Rogers Group is a Carlson Marketing Group Company.