Page 284 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 11: CRM Measurements

The balanced scorecard is broken down into four sections, called perspectives: the financial Notes
perspective, the customer perspective, the customer perspective, and the learning and growth
perspective.
Within each section, companies identify key measures and discover and map the causal linkages
between measures and overall company performance. Typically, learning and growth objectives
have a causal relationship with the internal perspective, the internal processes and programs. In
turn, the internal perspective has a cause-effect relationship with the financial perspective (for
example, if an internal manufacturing process, when changed, produces cost savings) and can
have a cause-effect relationship on the customer perspective. Overall value flows upwards from
the learning and growth perspective to the financial perspective.
CRM systems can serve as the source for data within each of the perspectives. External customer-
focused measures can be used to populate the customer perspective. Internal CRM efficiency
measures could be used to populate the internal perspective. CRM knowledge management
measures could be used to populate the learning and growth perspective.
Despite the wide adoption of the balanced scorecard, problems exist. Firstly, it is not always
possible or it may take too long to prove through statistical means the causal linkages between
perspectives and measures. Secondly, the scorecard is reliant on performance measures from a
variety of sources that must be reliable and timely. Poor data quality or misuse of the data is
diminishing the usefulness of the balanced scorecard (Maisel, 2001). This problem is not unknown
to CRM either. Gartner reports the number one reason CRM fails is that data is ignored or is of
poor quality (Nelson & Kirkby, 2001).

Customer Knowledge Management

Customer knowledge refers to understanding your customers, their needs, wants and aims is
essential if a business is to align its processes, products and services to build real customer
relationships. Many companies do have knowledge of their customers, but frequently this is in
a fragmented form and difficult to share or analyse and often it is incomplete. One problem with
customer knowledge is that it can be confused with CRM (Customer Relationship Management)
which is often used to describe contact management and analysis. Although there is some
overlap, customer knowledge includes a wider variety of less structured information that will
help build insight into customer relationships.

Customer Knowledge Management (CKM) encompasses the management of processes and
techniques used to collect information regarding customers’ needs, wants, and expectations for
the development of new and innovative products/services, and/or product/service
improvements.
CRM systems can collect an enormous amount of data about customers. As pointed out earlier,
the inability to use that data is proving to be a big stumbling block for CRM. Interestingly, very
few companies actually measure their ability to create, manage and communicate customer
knowledge. One of the reasons for lack of measurement is the fact that CRM data is widely
dispersed across business functions.

Notes Each function has its own interests regarding customer information and its own
ways of formatting and structuring the data (Davenport, 1998).

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