Customer Relationship Management and the CRM Scorecard
Customer relationship management is a very complex field with many facets. A useful tool would be the CRM scorecard to describe and improve performance holistically.
Customer relationship management or CRM refers to the many facets of creating, maintaining, and improving an organization’s relationships with its clients and customers. It can be broken down into a few broad divisions that consist of more or less distinct processes. One would be new acquisitions, or forming relationships, such as by selling products or providing services to new customers. Another would be upselling, which refers to upgrading the relationship with a client by providing them with more expensive products and services. Still another is cross selling, or broadening the relationship with customers by selling them new products. Customer retention and customer service are the last two broad aspects that deal with keeping the customer base happy and coming back for more through various support activities. Thus, it can be seen that customer relationship management consists of many facets – fortunately, a CRM scorecard is a powerful tool for describing, monitoring, and improving CRM performance.
A scorecard, in the business sense, refers to a strategic management tool that aims to take into account all of the various factors and aspects of an organization’s condition and performance. The balanced scorecard approach consists of attempting to describe an organization through its financial, customer, growth and development, and internal business process aspects. The term balanced scorecard was used in reference to the prevailing attitudes when it was first introduced, which focused too much solely on financial measures of success. This paradigm aimed to provide a more holistic picture of the organization by also taking into account the various other non-financial factors that play roles that are just as important.
In practical terms, this approach consists of selecting a set of metrics (or measurable quantities) that together would be able to describe each of the four aspects of an organization. Now, there are very many possible selections for these quantities and thus, it is very important to have a well thought out process to determine which ones to use.
In many cases, it is most beneficial to start with a top down analysis of the organization’s various functions and responsibilities. In particular, with respect to customer relationship management, it would be best to define the different kinds of customers that the company serves, and the needs and requirements of each. This should be done by first looking at what the organization as a whole aims to do and is equipped to do, or in other words, by formulating a coherent mission. Then, more specific goals would follow this overall mission, depending on the particular functions and processes of each department and smaller part of the group.
The CRM scorecard would then be populated by the key performance indicators relevant to the various defined goals. A particular department would then have a different scorecard from other departments, and this specificity will help give managers a better view of what is happening, and also what needs to happen. The proper formulation and implementation of such a scorecard is sure to be a boon to any CRM manager.
