Part two: what should businesses measure?

28th Jun 2007

Stuart Lauchlan

By Stuart Lauchlan, news and analysis editor

There are firms that simply specialise in delivering ROI analysis, such as Nucleus Research which is able, for example, to argue that PredictiveMarketing from SPSS can enable customers to reduce mailings by up to 50 percent, while maintaining or improving campaign response volumes; or that, contrary to SAP’s advertising claim that its customers are 32 percent more profitable than their peers, SAP customers are in fact 20 percent less profitable than their peers.

But while it’s the hard numbers that attract the headlines, Nucleus argues that there is more to ROI than number crunching. “When you look into ROI, there’s a lot of data out there and a lot of information you can access,” Rebecca Wetteman, vice president of research told recently. “Decision makers have advantages that they now have access to a lot more information than they have ever had before. Vendors obviously make their own claims. But you have to put them in context. Vendors will go out of their way to create close partnerships with customers, but at the same time they’re out there marketing stuff to them as well."

Companies need to think in terms of value, not just ROI. “You can never have a complete idea of how complete value will be, but you can have a good idea of what the best case is and what the worst case is,” she says. “It’s the same mindset that says ‘if I implement CRM then I have great CRM’. If you don’t look very carefully at what you’re getting into from a management perspective and a cultural perspective then that won’t be the case.”

So what sort of things should organisations be measuring in order to develop ‘the business case for the customer’ as it were? Well, they can include elements such as customer loyaly programmes, which need to be measured against the increase in the average number of purchases from existing customers; the increase in the average deal size of purchases from existing customers; the increase in new customer referrals from existing customers; and the reduction in customer churn.

In a recent study by Ventana Research, 79 percent of companies rated improving customer satisfaction as the number one priority for their contact centre. You want to be able to quantify customer satisfaction levels, so you’re going to be thinking in terms of post-call customer satisfaction surveys of some type. These should ideally be completed by the customers themselves rather than by a company customer service rep. Alternatively you can get call centre agents to rate customer satisfaction as part of post-call processes, but be aware that the agent is prone to inflate the success of their own interactions.

You could of course make use of your website and have a web-based survey to which the customer is directed. The customer completes a questionnaire online and the results are collected and analysed electronically. But remember that not all customers will have access to the web, or will simply ignore the request to visit the website, so these factor may distort the results.

Part three, the death of marketing ROI, click here.

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