Page 278 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 11: CRM Measurements

1. Company behaviour towards customers Notes
2. Customer behaviour in total (including factors outside of the company’s direct control)
3. Financial results derived from changed customer behaviour
The debate is about how to arrange the various nodes in the influence diagrams to model, more
accurately, the causal linkages. The risk in all measurement paradigms is not so much inaccurately
measuring, but in measuring irrelevant things.

Customer Behavioural Modelling: Embedded within brand-building and customer equity
measurement frameworks is some form of a customer behavioural model. These models try to
explain one or more customer behaviours by describing the antecedents on that behaviour and
the level of influence each antecedent has. The reason customer behavioural modelling is
discussed separately here is that the market research literature is rich with studies that do not
necessarily try to tie customer behaviour to financial performance or company responses. Instead,
the research simply wants to understand customer behaviour better more or less removed from
specific company goals, objectives or performance. In addition, researchers are focusing on new
concepts to link to customer behavioural loyalty.
Customer-facing Operations

Most, if not all or traditional CRM and customer transaction software, collect all kinds of basic
data regarding customer facing activities. These operational CRM systems automate customer
facing activities and in doing so, collect information on employee and customer behaviour. For
most companies deploying CRM technology, these are the only kinds of CRM measurements
they make.
Marketing Operations: Software that manages marketing operations lets companies plan,
schedule, execute and track their marketing campaigns. Several key metrics from the marketing
automation function include:

Reach How many potential customers have been reached by the campaign?
Response rates What percentage of the total campaign population responded to the campaign?
RFM Stands for recency, frequency, monetary value. This is a calculation for scoring a
customer based on past behaviour. The recency of past interactions (purchases), the
frequency of that type of interaction and the monetary value of those interactions
are added together, with specific weighting applied. This composite score is used to
predict likely involvement with a campaign.
Conversion rates What percentage of the total campaign population bought something or completed
an activity (enrolled in a sweepstake, for example) as a result of the campaign?
Customer How much did the company spend to acquire a new customer?
acquisitions costs
Average The total cost for interacting with a customer as part of a campaign divided by the
customer number of interactions. Useful for comparing costs of interacting with customers
interaction costs across multiple media.
Attrition, churn How frequently do customers terminate the relationship by opting out, stop
purchasing or choose a competitor?
Share of wallet, How much of the customer’s total budget for purchases within a product category
share of do they make with a company?
requirements
Average order The average amount spent by a customer per order. Many companies have goals of
size increasing average order size through marketing.
Category The amount of money a customer spends or interest a customer shows within a
involvement product category. Customers with high involvement in a product category
frequently buy more than those with low involvement.

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