Steve Downton, Downton Service Management Consultants Ltd, Noventum Group
During a recent workshop review I was asked my opinion of the value of implementing CRM in a business, was it satisfactory to talk in terms of intangibles when considering a CRM solution? The question was based on the assumption that CRM is a safe bet and even though you could not put hard numbers on the value of CRM, it still must be considered a worthwhile investment.
The question set off a host of other questions among the other workshop attendees. There are many books and articles with a lot of information about the profitability associated with a loyal customer. All this information tends to be theoretical and very hard to quantify in the face of tough questioning by the CEO or FD. In this particular workshop the team agreed there was a value to be had by putting numbers to these calculations but the consensus was that the existing measures in place within the business could not be used to yield the necessary facts without the use of a specially developed modelling tool. There was for example no figure for the cost of Customer acquisition, or for the attrition rate of customers, or the reasons for the attrition. There were no numbers as to the profitability by individual customer.
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