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What are good metrics for in a CRM

  RO Traducere in romana
02 Decembrie 2009

How can you avoid the traps of a CRM implementation is a question to which many people tried to give an answer over the years. Obviously, no answer proved to be universally valid, no one identical replicable. A recipe for success doesn’t exist, but there are some "ingredients" that can ensure an efficient use and these ones can be quickly identified and implemented.

There is a vast literature, supplied by the analysis offices and experts in the field, about the failure of CRM implementations. It is true, the most studies and critical analysis refer to the beginnings of CRM, when such solutions were presented and sold as an omnipotent application, a panacea for all problems facing a company, no matter what field of business and the area of activity.

An approach which soon proved to be detrimental even for those who had promoted it, which means the vendors of such solutions. So, the period of excessive optimism was followed by a much longer phase of pessimism, powered by the studies mentioned above. And, although all these can be considered already history, because now the CRM market is, for several good years, on an upward trend, critics have not ceased to be heard.

But this time, responsibility for failure - partially or totally - of a CRM implementation can’t be attributed entirely to the vendor. Customer relationship management solutions got "mature" by adjusting themselves constantly to the market requirements and the promotional message is clearly focused on the real possibilities of such applications. In other words, the principle of "Caveat Emptor" is perfectly applicable to this type of solutions today. If in the "childhood" of CRM, the fault could be passed to the vendor, implementer or consultant – so to anyone else than the recipient – now, in 2009, a customer determined that it is time to implement a customer relationship management solutions cannot be relieved of responsibilities. The argument is mentioned already in the beginning of this article - there is enough documentation on this subject: analysis, statistics, research, case studies etc..

If There is no Rol...
So, there are enough resources for a customer who try a CRM implementation to no longer do it "blindly". But, it is also true that a customer who choose a documented prepairing for this process will need some time before moving from theoretical approaches (such as "Customer Relationship Management is a business philosophy") to practical aspects. Equally, obvious is that "nobody has time”, therefore the top-level management can quickly pass the responsibility to the department that generated / flagged the need for such solutions (or the IT department, unfortunately).

What cannot be passed is to answer some basic questions, such as like: "Why we need a CRM? What is it good in our company for? What concrete benefits does it bring? ". Naturally, the promoter of the project has prepared a series of responses (due to his previously documentation ...), but it is unlikely his answers to be totally satisfactory. Statements such as „increased customer loyalty, their level of satisfaction, decreased rate of loss of customers” or "mantras" like " a 5% raising customers retention can generate an increase of profits between 25 and 100%" can be eloquent, but it is difficult to quantify and demonstrate pragmatically the companies revenue growth. The promoters will have difficulties to make such assessments at least for companies that have achieved already CRM implementation, much less for a firm that only analyzes the feasibility of the project ...

And, to prevent unnecessary burdens, here's a tip recommended by many experts in the field of CRM that deserve to give credit to: Do no hazard in the achievement of a preliminary calculation of Return on Investment! In most cases, the calculation of such Return on Investment (ROI) for implementing a CRM is the sales argument of the producers of such solutions, but the post-implementation attempts to achieve such a calculation often fail. Experts argue that the failure is normal due to the inadequate methodology for CRM ROI (primarily, the arguments are based on the impossibility of the quantification of "soft" benefits like "Customer Satisfaction" or " loyalty degree"). They recommend to be used more plausible metrics like the TCO (Total Cost of Ownership) and Payback (recovery time of the investment). But not only!

Metrics for all
The optimal response to the above questions is the spot addressing of the issues that are intended to be resolved. Which means the identification and the nomination of the punctual problems and the analysis of the practical way the CRM may (or not!) solve them. But do not accept general indicators, like "5% loyalty rate increase ", but practically, by the definition of clear metrics to enable monitoring how the objectives are achieved.

Such a punctual approach, as the experts contend, is the optimal solution in the analysis of the success or failure rate of CRM implementations. It is a right point of view if we consider that in many cases, such a solution is not implemented across all the company. It is started in a first phase by an insular approach, in several departments where work is to be effective. Obviously, insular approach is not a strategy "by the book”, but as long as it covers the objectives, it is perfectly just..

In terms of CRM metrics, there is an abundant documentation. For example, a Forrester Research study recommends as the "starting point" (!), a list of 38 indicators covering three main modules of a CRM solution: Sales, Support and Marketing. Metrics which can be assigned qualifiers, according to some predefined values in relation to the main indicators of performance.
Let us take a concrete example from a Marketing Department - a new promotional campaign. Metrics related to this department should allow monitoring the number of the leads generated within the champaign, regarding each type of product and the types of distribution channels, resulting the average costs to obtain a qualified lead. If they are following further the evolution of the lead quqlified as sales opportunity in the sales department, the scheme may be complicated progressivelly by the needs.

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