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CRM Metrics and the Myth of Benchmarks: How Smart Banks Measure Success
Kathleen Khirallah This Note has been reprinted for IBM Senior Analyst with permission from TowerGroup. Jun 2004 Reference # V39:12R
TowerGroup Take-Aways. Most banks did not have metrics for their pre-CRM implementation status. The banks did not have a stake in the ground to start from and they failed to set realistic goals. With an ill-defined starting point and no defined end, success was elusive. . The Research Note also addresses the difficulties that banks have had in building a CRM business case and the appropriate role of return on investment (ROI) measurements within the business case. Two Charles River Place63 Kendrick street . This Research Note investigates the current state of CRM metrics in leading commercialNeedham, MA 02494United States banks around the globe, including the use of balanced scorecards and the challenges inherent in competitive benchmarking. T +1.781.292.5200F +1.781.449.6982 . What goes up must sooner or later come crashing down. In the past few years, tradetowergroup.com publications have trumpeted with great fanfare the failure rates for customer relationship management (CRM) implementations in financial institutions. . As the talk of CRM failures accelerated into 2002, it quickly became apparent that the "problem" with CRM was one of poor planning and lack of metrics. At many banks, CRM implementations derailed when it came to defining and measuring success. Report CoverageWhat goes up must sooner or later come crashing down. In the past few years, trade publicationshave trumpeted with great fanfare the failure rates for customer relationship managementimplementations in financial institutions. In some cases the Schadenfreude was so thick it could becut with a knife. Although CRM had been considered the great salvation of the financial servicesindustry in the late 1990s, by the middle of 2001, the concept was being dismissed by many asoverblown hype that could not and did not have the ability to transform the way business wasconducted. In retrospect, the inflation and subsequent deflation of CRM as a business strategy wasn't terribly surprising - overly simplistic perhaps, but not terribly surprising. As the talk of CRM failures accelerated into 2002, it quickly became apparent that the "problem"with CRM implementations was one of poor planning and lack of metrics. There's an aphorism inbusiness that states, "Failing to plan is planning to fail." CRM implementations at many financialinstitutions derailed when it came to defining and measuring success. In their eagerness to begin a p roject, banks often overlooked a definition of success. Actually, the problem was even more basic. Most retail banks did not have adequate metricsregarding their pre-CRM implementation status. Consequently, the banks did not have a stake inthe ground to start from and they failed to put a stake in the ground where they wanted to be. Withan ill-defined starting point and no defined end point, success was understandably elusive. For many banks, a definition of success against internal and/or external benchmarks was not possible.
© 2002 - 2005 The Tower Group, Inc. May not be reproduced by any means without express permission. All rights reserved. 1Thus, the appropriate metrics for a CRM business strategy are generally ill defined in the bankingindustry. Bankers have not yet reached a consensus as to whether the metrics should be based oninternal or external benchmarks. And there is great variation among institutions when it comes tothe degree of importance assigned to individual metrics. It wasn't until fairly recently that banks b egan to understand the multidimensional nature of CRM projects and thus the associated metrics. This Research Note investigates the current state of CRM metrics in leading commercial banksaround the globe, including the use of balanced scorecards and the challenges inherent incompetitive benchmarking. Additionally, the Research Note reviews the difficulties that banks havehad in building a CRM business case and the appropriate role of return on investment (ROI)measurements in the business case. The purpose of the research is to discuss some of the metricscurrently in use for measuring CRM by forward-thinking institutions and to determine if there is acommon set of metrics being used across r... [download for more]