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DSC Tech Library
Customer Relationship Management
This section of our technical library presents information and documentation relating to CRM Vendors and Customer relationship management software and products. Providing customer service is vital to maintaining successful business relationships. Accurate and timely information provided in a professional manner is the key to any business and service operation.
Telemation, our CRM software application, was built on this foundation. But the flexibility to change is just as important in this dynamic business environment.
Telemation call center software was designed with this concept from the very beginning.
That is why so many call center managers, with unique and changing requirements, have chosen and continue to use Telemation CRM software as their solution.
Our Telemation CRM solution is ideally suited for call center service bureaus.
The following is an article relating to the CRM industry.
ROI and Customer Performance Metrics
By: Glen S. Petersen, GSP & Associates, Inc.
Return on investment (ROI) is a financial metric that indicates the worthiness of an investment
from a return standpoint. It is a measure that is used to determine that viability of investing the
capital resources of an organization. For many years the manufacturing, warehousing, and
facilities functions have utilized capital budgeting and ROI analysis to justify capital
expenditures. In this context cost reduction/avoidance is a common theme for the business
rationale. Historical accounting and transaction records are typically available to collaborate the
business need.
In today’s systems driven world, IT can represent 30 percent of the capital budget and this
number is expected to increase to 50 percent over the next 5+ years. In the IT area some costs
are easy to capture but often productivity of users is diffuse and hard to measure. Moreover,
with technologies like sales force automation (SFA) and customer relationship management
(CRM), there is more than costs involved; CRM and SFA typically claim to impact revenues and
margins. These arguments may have intuitive appeal but in the final analysis, the marketplace is
not a laboratory and many factors influence the results. The closest one can get to laboratory
conditions is by establishing control groups interacting with web sites; for the rest of the
universe, cause and effect are more illusive.
Most organizations approach ROI in the same manner that they do planning (you can add the
word strategic if it fits). Financial drivers such as revenue growth, margins, profitability, and
return on assets are directly linked to functional level programs that are supposed to result in the
achievement of organizational goals. So where is the customer in all of this activity and
planning? The customer perspective is built into the plan and initiatives, right? If so, then how
does the organization know it is winning and why? So when confronted with a major
expenditure for CRM, is the only course of action a total leap of faith without the ability to
comprehend what is working and what is not? The answer to the question is that it can be a pure
leap of faith but it does not have to be without a mechanism for accountability.
ROI is always based on a set of assumptions that are hopefully built on a set of cause/effect
relationships. The challenge is that testing these assumptions is not always feasible. The
situation is further exacerbated by the lack of customer performance metrics. Customer
performance metrics include such measures as:
- New customer acquisition cost
- Customer profitability
- Share of customer
- Customer retention
The performance of these measures drive the ultimate financial metrics particularly top-line
results. Organizations pursue CRM applications without knowing customer profitability or the
value of retention. Without such insight, how does one know which customers to retain and how
much to spend to keep them?
The key to an effective ROI analysis is to link the cause and effect relationships to the
appropriate customer performance metrics and then to the financial objectives. This approach
introduces accountability and insight relative to the process and is central to creating a closed
loop system, which is what CRM is supposed to be all about. Without this perspective, the
organization is basically making the leap without knowing the size of the chasm. Ultimately the
choice is yours, there is plenty of company at the bottom of the chasm but is this the company
you want to relate with?
About GSP & Associates
GSP & Associates, Inc. is a consultancy that is dedicated to helping user organizations to
leverage their investment in CRM related tools. The company provides expertise in the strategic
and operational application of CRM tools, sales tools, sales process modeling, and business case
development and ROI analysis.
About The Author
Glen S. Petersen is an internationally recognized speaker, writer,
practitioner, and thought leader in the Customer Relationship
Management (CRM) and e-Business industries. Mr. Petersen has
held senior level management positions with systems integration and
end user organizations. As a visionary and early adopter of Sales
Force Automation (SFA), in 1986 Mr. Petersen led one of the first
successful national implementations of SFA in the United States.
Realizing the tremendous future of this new technology,
Mr. Petersen joined a SFA software start-up company in 1988 and had the pleasure of working
with many of the pioneering organizations that deployed sales force automation at a time when
most organizations were unaware of its existence. In 1991, Mr. Petersen left the vendor
community to do consulting. This experience combined with his background in operational and
strategic planning places Mr. Petersen in a unique position to advise and assist clients in this
challenging area of change management and technology integration. During this period, Mr.
Petersen has developed a number of proprietary facilitation techniques, which help organizations
to better understand the potential of these technologies, and how to rally the organization around
a single threaded, phased implementation approach. Prior to founding GSP & Associates, Mr.
Petersen was Senior Vice President at ONE, Inc. and Ameridata, a $1.3B provider of hardware,
software, and services. In these positions, Mr. Petersen sold and directed operational strategy
engagements and helped major corporations articulate and justify their CRM and e-Business
initiatives.
Mr. Petersen is the author of six books:
- High-Impact Sales Force Automation: A Strategic Perspective
- CRMS: ROI & Results Measurement
- CRM Leadership and Alignment in a Customer Centric World
- ROI: Building the CRM Business Case
- CRM Best Practices: Self Assessment
- Making CRM An Operational Reality
Mr. Petersen can be reached at 505-771-1956 or gpetersen@competitiveperformance.com
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