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Get Out Your Yardsticks -- A New Report Shows How to Measure CRM

Posted April 10, 2001 By Robyn Greenspan     Feedback

Contrary to analysts' beliefs that CRM cannot or should not be measured, a report from Meridien Research shows how it could be done.

According to the financial technology analysis firm, Meridien Research, customer relationship management (CRM) strategies can be measured for return on investment (ROI). This statement comes as a result of Meridien's report, "Measuring ROI: Yardsticks for Managing Successful CRM Strategies" which includes data that is contrary to analysts' beliefs that CRM cannot or should not be measured.

The report proposes a framework to measure return on CRM investments and includes a calculator that can be used to observe the influence of several variables on customer Life Time Value (LTV) and net present value. The purpose is to help familiarize the reader with LTV calculations and drivers. With an estimated $6.8 billion being spent this year on CRM, these calculations take on renewed significance as management starts to question the achievement of CRM investments and is unclear about its objectives and expectations.

"CRM at many financial services firms often reflects a leap of faith or reaction to competitors rather than a reasoned strategy," says Tom Richards, Research Director at Meridien. "Through our research, we have discovered that several leading institutions are using innovative tools and techniques to measure and evaluate the ROI from CRM investments."

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