Measuring the results of customer strategy initiatives was one of the overriding themes of last month's Smart CRM East conference in Atlanta. From keynoter Don Peppers to privacy expert Larry Ponemon to individual panelists such as Carlson Marketing Group VP Audie Dunham, all discussed new pressures to prove return on investment and other metrics in order to keep CRM thriving.
However, the conference also brought to light some conflict among those metrics. The oft-quoted Gartner statistic of a 70% failure rate for CRM initiatives was debunked by Peppers who maintained that a focus on customer equity – the rate of return measured on each current and future customer – could provide a different perspective for management as well as a new approach to the overall customer strategy. A straight measurement of ROI for a CRM initiative is not as relevant as this focus on customer equity, according to Peppers' presentation.
A slightly different approach to ROI was presented by Peppers & Rogers Group principal, Tom Spitale. Spitale, who directs Peppers & Rogers Group's ROI practice, pointed to a recent CRMGuru.com study that reveals more than 70% of CRM projects succeed. According to Spitale, the biggest key to success is a comprehensive, specific CRM strategy. Too many efforts, he said, are doomed from the beginning by a lack of strategic coherence. Therefore, the efforts that do not meet expectations are "self-inflicted" failures.
Other key success factors to achieving ROI success are line-level training, organizational/executive support, setting measurable goals (measurement discipline) and a willingness to maintain commitment to the program. "You will see no gain" without the "pain," Spitale said. "But that's what will make successful CRM. In our experience, without the metrics, many abandon ship due to the pain."
Metrics were also a focus of one of the main case studies presented at the conference. Continental Airlines reservations and contact center director Andre Harris discussed how the airline's contact center, which seats more than 4,600 people and handles 60 million calls annually, "didn't listen to customers because all they were doing was complaining." So, in 1990, under Harris' leadership, the center instituted a "Go Forward plan" that set out to measure the performance of each agent and the metrics of the system as it related to customer satisfaction.
Harris' team learned several things before the implementation effort even commenced. Continental conducted a customer survey to determine what their flyers did and did not value in contact center interactions. Among the findings: customers didn't care whether an agent thanked them for calling Continental, and they didn't like that all calls were strictly scripted. So the new program honored individual styles by promoting best practices among "super agents," those who closed the most sales and reduced the amount of calls that needed to be referred to supervisors.
"You have to understand their needs, give them accurate information, and answer promptly," said Harris. The results speak for themselves: Continental's program has yielded a 1.2% attrition rate over the past two years among contact center agents, a 17% increase in bookings during 2003, an increased proportion of e-ticketing, and an internally measured jump of 10% in average agent quality scores.