Customer relationship marketing – a promise broken? how to establish if your CRM investment was worthwhile

Customer Relationship Marketing (CRM) is the most recent of a long list of business strategies that companies have employed to try and improve corporate performance. It has generated a vast library of books, magazines, websites and magazine articles. CRM is now an industry in itself. However, after spending millions of pounds on implementing a CRM system, many companies have now found that it isn’t living up to its promise. For example, last year US based research firm Nucleus Research claimed that two thirds of Siebel customers had not seen a return on investment (ROI) after two years, and it cited 22 of the company’s key reference sites as proof. But how do executives really know if their CRM investment has improved customer relations or not? This paper suggests a simple approach to help companies establish if their investment has been worthwhile. It uses a well known customer segmentation technique, called RFM, that groups customers according to their transactional behaviour. The approach attempts to measure any positive movements in customer behaviour that might have occurred due to CRM implementation.