Good CRM Must Have Objectives and Measurements


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This article was originally published by GreaterChinaCRM


It is common to hear the phrase, “You get what you measure,” and where CRM is concerned, measuring the right things is very important to track progress and as a feedback mechanism to sense changes in customer needs and to adapt your offerings or service based on the information provided. Firms that have this feedback loop in their customer base and markets are able to survive, while those that do not, over time, risk becoming irrelevant to their customers. Approaches to CRM that avoid thinking about these aspects miss the big opportunity that a strategic CRM approach can provide.

First things first

In the course of research for a book with Francis Buttle, author of Mid Market CRM Customer Relationship Excellence in Mid sized Companies, I came across some 50 to 60 different measurements portrayed in the chart on the last page. These measurements can be considered a menu, rather than a necessity for each firm. What you need to measure will be driven by your own ambitions with CRM. This brings us to the first decision: How far should we go with CRM?”

Clearly what you will want to measure will depend on the scope of your
CRM project. Is it limited to one department or will it impact the whole business? In short, is it a tactical or more strategic requirement? Many businesses tend to approach one problem or challenge at a time. However, this tactical, or ad hoc, approach has a poor track record of delivering competitive advantage, although it may improve the efficiency of a department.

To work out where you stand on this question of how far to go with CRM, take a look at Figure 1.

Starting from the top, ask yourself this question: Is it a departmental requirement with a clearly defined and limited scope? If so, budgets are likely to be fairly limited, as well, because other parts of the business won’t want to subsidize your department. However, you may find that your departmental problem is really a symptom of a business that is out of sync with its customers and markets. If that is the real situation, then you would do well to explore CRM in more depth and get board-level sponsorship—preferably from the CEO, as you will have some tough questions to ask about customer selection.

If you still decide to focus on a single departmental problem, such as sales process consistency and sales forecasting, then your measurements of success should reflect your departmental ambitions. In this example, it could be quantity of opportunities at each stage of the sales process multiplied by the potential deal size. This would give you a forecast. You might also want to measure the variance between the forecast and what actually happens so that over time you could improve you ability to forecast sales or identify those overly optimistic salesmen and those that always give a very pessimistic forecast. Somewhere between the two will be the reality.

Strategic CRM

On the other hand, the main board and CEO may be worried about customer churn as well as competitive activity and may have come to the realization that the whole business must step up a gear if it is to survive and flourish. Ambitions around customers may include a desire to systematically develop a far more customer-centric, as opposed to a product-focused, business. This usually requires tremendous change within the organization and what is expected of people.

You may have to release control from the top and give responsibility to your employees within certain guidelines, to take decisions at the point of customer contact. For “command and control” businesses, this is often tough to do. However, by setting appropriate guidelines and training people properly, as well as involving them in the quest for customer centricity, all barriers can be overcome. It is a matter of management will and determination.

If this is the scenario that you are trying to foster, then your business goals are likely to reflect a high degree of ambition that will either be about growth—revenue and profits—or improvements in customer opinions about your firm that should also be reflected in reduced churn rates and greater share of customer spend. But don’t forget your people.

As you can see in Figure 3, essentially CRM boils down to two key impacts: creating and delivering superior customer value and, in return, generating profitable growth from selected customers, with high potential lifetime value. The reality is, however, more complex than that, as you are reliant on the abilities of your people to deliver. Morale, as well as skills, is vital. So is organization. Your measures should reflect this. It may seem obvious, but happy employees make better ambassadors for a business than miserable ones. Take the trouble to listen to the concerns and fears of your staff and help them make the transition.

Summary of what to measure:

You can take measurements to extremes. In my experience, a few well-chosen measurements can make a big impact and help you track those aspects that are truly important to your business, your customers and, of course, your employees—and, if you have partners, them, as well. Below are many of the key performance indicators I found as I worked with Buttle. They have been arranged in a hierarchical manner, starting at the top with customer profitability and development goals.

The measures are supportive and provide strong indicators that the strategy is either working or in need of adjustment. I’m sure you can invent many more, but my advice would be to stick to those measures that will have a direct impact on your CRM vision and strategies. If you find historic measures are creating barriers, don’t let them stand in the way; change them.

© 2004 The Wisdom Network Ltd

Jeremy Cox
Jeremy Cox leads the European sales effort for CustomerSat. He gained insights into the challenges of evolving from a product-centric to customer-focused business as a change leader in IBM during the mid- to late 199s. He lives in Yorkshire with his wife and two teenage children.


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