CHICAGO -- Successful CRM initiatives depend on the adoption of a balanced set of business intelligence (BI) metrics, according to Gareth Herschel, a research director at Gartner. These metrics should comprise financial, employee, and business processes, as well as customer satisfaction measurements that highlight elements leading to better enterprise performance management, Herschel told an audience at the Gartner Business Intelligence Summit here today.
The need for better CRM is one of the factors driving growth in BI, according to Gartner estimates that project the worldwide BI market will reach $5.8 billion in 2008, an 11.2 percent increase over last year. Gartner further forecasts that worldwide BI platform revenue will increase at a compound annual growth rate of 8.1 percent over the next several years, reaching $7.7 billion in 2012. In fact, BI was the number-one technology priority in 2008, according to a worldwide survey of 1,500 CIOs by Gartner Executive Programs. That level of commitment is one reason the research firm expects BI revenue to perform better during an economic downturn than some other technologies might.
For companies to derive any meaningful value out of BI, however, they need to focus on metrics that actually drive transformation, Herschel said. "Unless something is changed, you can't say that business intelligence has provided any ROI for the organization." On the bright side, he added, the cost of creating and delivering metrics continues to fall, so some organizations are beginning to measure an increasing amount of detail.
Unfortunately, many -- and in some instances, most -- of those metrics don't measure the specific items that will lead to enhanced performance, Herschel said. All of the data "noise" also makes it hard to focus on truly meaningful BI, so he suggested that enterprises use BI applications that can highlight information that will lead to meaningful change in company performance. Rather than just running reports with reams of information, Herschel recommended using reports with "traffic lights" or other signals that alert the reader to the handful or so of the most meaningful data points.
"You won't find abnormal behavior in a [simple] report," Herschel said, adding that, in order to determine the most meaningful BI metrics, finance, marketing, and other stakeholders must work together. For example, though the concept of CRM has existed for more than a decade, few companies or industries have seen consistent improvements in customer satisfaction. Additionally, while some companies have successfully used CRM initiatives to reduce customer churn, many of these efforts have been passive, which is less expensive than more proactive customer retention efforts. These passive efforts have done nothing more than retain dissatisfied customers, according to Herschel. "A happy customer is much more profitable for the company," he told the audience.
So Herschel suggested that companies focus on doing things right, rather than on retaining almost-lost customers. Flexible policies are key, he said: Why force a profitable customer to talk to live agents and threaten to close his account before waiving a small fee? While waiving the fee following a drawn-out procedure might still save the customer account, it would be better to waive it much earlier in the process: That would be less costly for the company (less time used talking to live agents) and result in a much less dissatisfied customer. Business intelligence can help companies assess those situations in order to derive positive outcomes.
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