CRM Measurement Frameworks
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 behavior. 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 behavior. 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 acquisitions costs | How much did the company spend to acquire a new customer? |
| Average customer interaction costs | The total cost for interacting with a customer as part of a campaign divided by the number of interactions. Useful for comparing costs of interacting with customers across multiple media. |
| Attrition, churn | How frequently do customers terminate the relationship by opting out, stop purchasing or choose a competitor. |
| Share of wallet, share of requirements | How much of the customer’s total budget for purchases within a product category do they make with a company. |
| Average order size | The average amount spent by a customer per order. Many companies have goals of increasing average order size through marketing. |
| Category involvement | The amount of money a customer spends or interest a customer shows within a product category. Customers with high involvement in a product category frequently buy more than those with low involvement. |
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Brand-building
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Customer equity building
- Customer behavioral modeling
- Customer value management
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Customer-facing operations
- Marketing operations
- Sales force operations
- Service center operations
- Field service operations
- Supply chain and logistic operations
- Web site operations
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Leading indicator measurement
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Balanced scorecards
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Customer knowledge management
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Sales force operations
This CRM area is perhaps the most mature. Companies have been deploying sales force automation solutions long before CRM became a popular buzzword. The rise of sales force automation (SFA) software parallels that of the portable and laptop computers and the handheld devices. Measurements in sales force operations focus on tracking leads as they develop into sales, measuring performance of individual sales staff members and teams, monitoring the sales performance of products, reviewing the impact training has on performance, and the cost of sales. Some measures include
| Sales quota | The amount of sales each sales representative, team, product or product category has committed or is assigned to solicit. |
| Close percentage | This metric goes by many names. The purpose of the metric is to score a lead with a percentage that it is likely to turn into a sale. As sales personnel work with the customer to answer questions, exchange information, prepare legal contracts and so on, the percentage is changed up or down. |
| Customer score | Not only are leads scored, but customers are too. By scoring a customer, companies can develop a model that helps them predict which customers are likely to purchase their product or service. Many attributes (size of the company, geographic location, level of access into the company, level of cultural, industries the customer serves, size of budget for the solution being sold) can go into scoring a customer. In this regard, customer scoring is similar to a segmentation exercise. However, many sales teams score customers within a segment and the scoring is often subjective. |
| Sales expenses | This metric includes all expenses related to the sale, such as travel, entertainment, printing, shipping, use of other internal resources, 3rd party expenses, etc. |
| Close rate | The percentage of sales leads that convert to sales. This is often tracked at the sales representative, team, customer segment and product/product category level. |
| Sales totals | The total number of sales represented by all leads. This metric is often multiplied by the close percentage for a weighted sales leads number. This metric is used to predict future sales. |
| Sales lost | The number (or percentage) of sales lost, broken down by reasons, which can include loss to a competitor, loss of customer funding, and many other reasons. |
| Training impact | Companies use different techniques to detect the impact of sales training on the sales force, including sales staff surveys on training effectiveness and comparisons in other sales metrics pre- and post-training. |
| Cross-sell rate | The percentage of sales totals that include items that were not specifically requested but recommended by the sale force or through marketing. |
| Number of calls | The number of calls made by a sales representative or sales team. This can be broken down by new account calls and existing account calls. |
| Number of new customers | How many new customers have been added during a period of time. |
Service center operations
With the increased use of phone technology to handle incoming phone calls and manage outbound sales calls, companies have long housed those resources into a single functional group called the call center, service center or interaction center. Much has been written about call center and service center operations, revealing a host of measures (Anton, 1997), some of which are listed here.
| Call counts and duration | The number and duration of calls either received or sent, often broken down by call type, which is input by the call center representative after completing the call. |
| Average hold time | The amount of time a customer has to wait before being served by an agent. |
| Abandonment rate | The number of calls abandoned expressed as a percentage of the total calls. These are customers who hang up while waiting for an agent or get disconnected. |
| Average abandonment time | The average time a caller waited before abandoning the call. |
| Adherence | The amount of time the agent is “in their seat ready to take calls, expressed as a percentage of the total time the agent is scheduled. |
| Wrap-up time | The amount of time, after the call is completed, the agent needs to complete administrative tasks related to the call. |
| Average cost per call | The sum of all costs for running the center divided by the number of calls received. |
| Average talk time | The amount of time the agent spends on the call talking to a customer. |
| Average handle time | The sum of the talk time and the wrap-up time. |
| Agent utilization | The amount of time agents spend on calls versus other internal tasks, expressed as a percentage of available time. |
| Blocked calls | The number and percentage of calls that receive a busy signal and could not even get to the automatic call distribution system (ACD). |
| Service level | A goal for call center performance. A widely used format for the goal and values is for a call center to answer 80% of the calls within 20 seconds. |
| Call quality | Companies have devised ways to monitor the quality of a call and the agent’s abilities. Scores can include vocal intonation, friendliness, promptness, knowledgeableness, and adherence to procedures. |
With the heavy emphasis on internal metrics associated with call efficiency, companies have instituted balanced call center reporting that combines efficiency scores with effectiveness scores (like call quality).
Field service operations
Field service operations include a host of post-sales activities, including: warranty and service contract management, scheduling and dispatching field service agents, service call routing for inside service, problem tracking and resolution management, service inventory management, managing the logistics of part fulfillment and replenishment. Measures are less standard than call center measures but can cover a wider variety of areas.
| Response time | Amount of time it takes a service agent to respond |
| Completion time | Amount of time it takes a service agent to resolve a customer’s problem. |
| Repair fulfillment time | The amount of time it takes to deliver a requested part or service needed for a repair. |
| Service level | This metric is similar identical to the call center metric when applied to inbound phone calls. It includes additional measures when applied to all support calls. |
| Customer satisfaction score | Many companies routinely survey their customers after a service call to verify satisfaction. |
| Service call priority | Service calls are frequently prioritized to comply with service contracts or warranty terms or to indicate the importance of the request. |
Supply chain and logistic operations
Frequently discussed as separate and distinct from CRM, supply chain management and logistic functions are significant areas of interest for CRM practitioners. Customers consume physical and digital products. How quickly and efficiently these products flow through the value chain is of importance, especially when the time it takes a product to be delivered is a key component of improving customer satisfaction and driving customer value. As more products allow for mass customization, more of these measures will be tied to specific customers. While most of the measures within supply chain operations and systems refer to suppliers, some of these measures may have applicability for understanding customer behavior. Some of these measures include:
| Fill rate | The number of items ordered compared with items shipped. Fill rate can be calculated on a line item, SKU, case or value basis. |
| On time ship rate | What percent of orders where shipped on or before the requested ship date. On time ship rate can be calculated on a line item, SKU, case or value basis. |
| Performance to promise | What percentage of orders where shipped on or before the promised ship date. In some cases, some items may be on back order or delayed for whatever reason. This metric captures the overall conformance with promised ship dates. |
| Backorders | The number (or percentage) of unfulfilled orders. |
| Customer order cycle time | The average time it takes to fill a customer order. |
| Cash to cycle time | The number of days between paying for raw materials and getting paid for the product by the customer. |
| Supply chain cycle time | The total time it would take to satisfy a customer order if all inventory levels were 0. |
| Perfect Order Measure | The error-free rate of each stage of an order. Error rates are captured at each stage (order entry, picking, delivery, shipped without damage, invoiced correctly) and multiplied together. |
| Upside flexibility | The ability of a supplier to meet additional demand requirements |
Web site operations
With the advent of the Internet, companies have launched web sites for a variety of purposes including, marketing, sales and support. Because of the heavy use of marketing on the Internet, web site operational measures include many marketing operations measures. Some are:
| Visitor count | How many people have visited a web site. |
| Unique visitor count | How many unique people have visited a web site. This measure does not double-count users who visit a site multiple times in a period. Web sites can have difficulty in accurately determining unique visit counts, especially for those visitors who have chosen not to identify themselves by not registering with a site (anonymous users), visitors who use multiple machines to visit a web site, and visitors who disable cookies in their browser preventing the system from anonymously identifying them. |
| Page hits | How many pages have been downloaded from a site, or how many times a single page has been visited in the site. |
| Duration | Total time a visitor spent on a page or a site. |
| CTR | Click-through rate. What percentage of visitors clicked on a banner ad or other form of internet marketing to visit the advertised web site. |
| Impressions | How many visitors viewed a page that contained an advertisement of some kind. |
| Registered users | How many visitors registered with the site. |
| Breakage | What percentage of visitors started interacting with a site (for example, by starting a survey or purchasing a product), but chose not to complete the interaction. |
| Click stream | Not a measurement per se, but a source of many measurements. The click stream is the sequential history of all interactions with a visitor on a web site usually stored within log files in the web server. This behavioral data is used to derive page hits, visitor counts, counts of images and advertisements viewed, etc. |
Most of the measures within a web site are designed to review the health of the web site. 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. One, the structure of the web site reporting doesn’t lend itself well to understanding customers. Second, the measurement tool providers lag behind users needs. Third, cross-channel tracking and measurement is practically non-existent (Souza, 2001).
by Vince Kellen
March, 2002
CIO, DePaul University
Faculty, School of CTI, DePaul University
Chicago, IL. U.S.A.
http://www.depaul.edu