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Unit 11: CRM Measurements

Most of the measures within a web site are designed to review the health of the web site. Notes
However with the wealth of customer information embedded within the click stream data,
many CRM software products include the ability to tie these measures to other off-line customer
measures, such as loyalty measures, survey responses, etc.
Despite the highly measurable nature of web site traffic, many companies have significant
problems with this framework. Based on interviews with 51 business-to-business and business-
to-consumer web site managers at Global 3,500 firms, Forrester Research, Inc. reports three key
areas of concern. The structure of the web site reporting doesn’t lend itself well to understanding
customers. Secondly, the measurement tool providers lag behind users needs. Third, cross-
channel tracking and measurement is practically non-existent (Souza, 2001).

Leading Indicator Measurements

A leading indicating measurement is a predictor of future financial performance. Many companies
look to CRM systems to provide the right leading indicator outputs so that the business can
adapt to changing conditions sooner. While most of the measurement frameworks discussed
can be leading indicator measurement frameworks, the two main paradigms here are either
deliberately designed to be such (balanced score cards) or have no other real historical analysis
use (knowledge management).

Balanced Scorecards

A powerful tool for performing the first step in creating an enterprise CRM Scorecard is the
CRM Strategy Map. The CRM Strategy Map allows an organization to clearly and visually
communicate its CRM strategy to all stakeholders and guides a CRM strategy team in identifying
what should be measured to manage and maximize enterprise CRM performance and ROI. With
the successful completion of a CRM Strategy Map, the enterprise is ready to perform the second
step in creating a CRM Scorecard – Select Strategic CRM Measures. Selecting the metrics that will
comprise an organization’s strategic CRM Scorecard, like developing an effective CRM Strategy
Map follows a systematic approach. CRM scorecard is an integrative organisational artefact to
diagnose and assess a firm’s CRM practice.
The Balanced Scorecard (BSC) began as a concept for measuring whether the smaller-scale
operational activities of a company are aligned with its larger-scale objectives in terms of vision
and strategy. It was developed and first used at Analog Devices in 1987. By focusing not only on
financial outcomes but also on the operational, marketing and developmental inputs to these,
the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn
helps organizations act in their best long-term interests. The balanced scorecard is a strategic
planning and management system that is used extensively in business and industry, government,
and non-profit organizations worldwide to align business activities to the vision and strategy of
the organization, improve internal and external communications, and monitor organization
performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business
School) and David Norton as a performance measurement framework that added strategic
non-financial performance measures to traditional financial metrics to give managers and
executives a more ‘balanced’ view of organizational performance. While the phrase balanced
scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and
include the pioneering work of General Electric on performance measurement reporting in the
1950’s and the work of French process engineers (who created the Tableau de Bord – literally, a
“dashboard” of performance measures) in the early part of the 20th century.

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