Overview

In Chapter 2, we suggested that the CRM services market was still growing fast, despite the downturn in other IT sectors. Gartner (Nairn 2001) predicts that the market will triple in size in the next four years. It also predicts that fail rates for CRM projects will rise from 65 per cent today to more than 80 per cent in two years. The reason is that more and more companies are embarking on CRM initiatives without understanding the full extent of the business changes required, without an appropriate methodology for developing CRM and without relevant performance metrics to measure and manage the impact of CRM investments. Ultimately, these measures, or KPIs (Key Performance Indicators), need to reflect the two drivers of shareholder value: productivity and growth. Productivity cutting costs, investments or price rises may prove the easier to measure and arguably the first to deliver results, but it is growth that delivers shareholder value based on improved customer retention and acquisition.

Companies need both types of measure to assess the performance of CRM, and to identify how to link and manage them to gain short-term efficiency and create longer-term value. In Chapter 2 we identified how firms can link and measure these performance metrics across four main categories:

• strategic integration;

• output effectiveness;

• customer value; and

• operational efficiencies.

When it developed its enterprise performance model, the US retailer Sears, Roebuck and Company (the first case study in this chapter), used metrics spanning all four categories. Using...