Measuring the success of your CRM initiatives does not have to be a guessing game

4 July 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}

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You may have picked up this series of articles, having heard that focusing on customer relationships is becoming increasingly critical to business success. You may have read newspaper or other accounts of how some organisations are focused on customer relationships. This series of articles also addressed the keys to implementing customer relationship management. But how do you know whether your efforts are really working? Since customer relationship management (CRM) is such a broad initiative that involves all aspects of your organisation, how can you continually measure progress and then tie it to longer-term success? The measurement challenge may be daunting, but it is essential to continued support and success.


Since implementing CRM is time-consuming and requires a significant commitment across your organisation, it is essential that you:

  • Establish the means of measuring your progress on your CRM initiatives. Establish enterprise wide measures of success and metrics that can be applied to all of your CRM efforts.
  • Apply these metrics on an ongoing basis and use them to guide significant modifications as weft as min or adjustments to your plans and to justify continued finding of your CRM initiatives.

Interrelated areas
Today, we will provide an overview of these key measurement principles.
There are five interrelated areas of’ CRM measurement. Each of these is further explained below.
1. Internal CRM capabilities. Have our business focus, organisational structure, customer interaction capabilities and technology become more supportive of a customer-centric approach?
2. Customer interactions. How are we supporting the customer experience, across all touch points?
3. Customer dynamics. Have we improved customer acquisition, growth, retention and reactivation?
4. Operational efficiencies. Have we saved time and resources through increased system and process efficiencies?
5. Business metrics. Through our efforts in the areas itemized above, have we increased revenues, decreased costs and increased competitive differentiation?
The best practices in each of the five transformation areas can provide a means of monitoring your success. Additionally, your completion of specific CRM action plan project phases and related efforts are a means of measuring progress over time.


These internal diagnostics provide an immediate and ongoing means of measuring the extent to which your organisation is changing and your internal capabilities are improving, which is requisite for achieving any external measures of success. These internal diagnostics also ensure that your CRM investments will be balanced and well-coordinated. Organisations often overinvest in some areas; under invest in others. There may be a heavy focus on technology initiatives, for example, or on e-business capabilities.


While these areas are important, a balance is required in order to optimize your total investment. Internal diagnostics therefore encourage an ongoing balance.
 

Measurement of customer interactions
The key to effective quality monitoring includes few crucial steps:
(1) Listen to your customers by monitoring all interactions. Ask questions such as: are these interactions related to the company’s goals and objectives, or are they related to specific areas of concern such as customer attrition? This is where analytics comes into play for the contact centre. Speech analytics identifies calls that are relevant for evaluation and text analytics identifies email and chat interactions that should be monitored.


(2) Capture all of your customer feedback channels. Apply the same quality standard that is used for calls to text-based interactions like email and chat.


(3) Ask your customers what they think. Instead of using your organisation’s internal metrics to measure the quality of a call, ask the customer: “What did you think of your experience and our representative you worked with?” or “Did your service experience match the promise made in our advertising?” It’s very important to map high-quality interactions with your customers’ expectations, comparing internal evaluation scores with customer scores.


(4) Evaluate interactions to identify skills gaps. Thereafter, provide individual learning opportunities where there are deficiencies.


(5) Do not view our representative development as a one-off activity. Provide continuous coaching that will help improve our representative’s performance and productivity. Coaching is key to consistent customer service.
 

Improvements in customer dynamics
The internal improvements in the areas outlined on the transformation map and the improvements in specific customer interactions should yield related improvements in customer dynamics.
These dynamics can include customer acquisition, customer growth and development, customer retention and customer reactivation. These are the measures with which we are all very familiar because they are the goals of many of our sales, service and marketing efforts.


(1)  Customer acquisition improvements may relate to increasing the targeting and related response rates or conversion rates of acquisition efforts, or acquiring more valuable or more loyal customers.
(2) Customer growth and development improvements may relate to increased cross-sell of specific products, increased profitability of sales to existing accounts, or improved up sell ratios in a selling point or online.
(3) Customer retention improvements may relate to increased customer satisfaction with your online help features or offline selling point, creation of loyalty programmes for your most valuable customers or improved response time to customer complaints.
(4) Customer reactivation improvements may relate to increased performance of any win-back marketing campaigns or direct sales efforts.
 

Improvements in operations
Many of the internal areas of transformation are going to result in improvements in core operational efficiencies. These may include cost reductions in data collection, maintenance or access or fulfilment; the identification of fraud or other problems and increased overall integration of core business processes.


These operational improvements, while often overshadowed by the curb appeal of customer dynamics, are also measurable and substantial. Many customer data warehousing initiatives are justified strictly on the basis of increased data maintenance efficiencies. New call centre technology may be similarly justified on the basis of reduced staffing expenses.
 

Bottom-line business metrics
Finally, the improvements in customer dynamics and in operations result in measurable changes in bottom line business metrics.
There are really only three bottom line measures of success for CRM or any other business initiative:
(1) Increased revenues
(2) Decreased costs
(3) Increased competitive differentiation

Your CRM livelihood as a client or vendor depends on your ability to tie all of your initiatives and resulting improvements to these measures. Everyone within your organisation may understand that improving media selection, collecting data online, or accessing customer data in a call centre can have an impact on your bottom line. Everyone within your organisation certainly would understand how improving customer acquisition, increasing customer retention, or increasing customer penetration could have an impact on your bottom line. It is important, however, to quantify the size of that impact.


Rather than beginning with the initiatives that may come to mind first, or with whatever the first vendor in the door may offer, broad-scale quantification of potential return on investment must be pursued. Take each of your potential initiatives and tie them to projected, quantified improvements in customer dynamics (e.g., acquisition, retention, penetration and reactivation). Next, determine and quantify how improvements in these dynamics impact revenue, costs and competitive differentiation. Completing this planning work prior to any investments in technology, marketing, analytics, infrastructure or organisational changes will enable you to prioritize the relative importance of each of your potential initiatives.


If your CRM efforts are not held to these bottom line standards today, it is safe to assume that they will be in the near future.
You’ll also need to effectively lead and manage these measurement activities, showing CRM support teams how to achieve their goals through new processes. Employees must be equipped with the tools necessary to succeed whether it’s stationery and pens to send thank you notes or software to create self-service options for customers. Indeed, while technology is a powerful facilitator in the process of CRM, that’s all it is—a facilitator. And the moment companies forget that, CRM will turn into a tool that, instead of building loyalty, does just the opposite.


(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at lionwije@live.com)

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