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How Can We Use a Balanced Scorecard to Maximize Our CRM Performance?
The Balanced CRM Scorecard has become a primary tool for successfully driving strategic performance in thousands of organizations around the world.
Posted Dec 6, 2004
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The Balanced Scorecard, described by Harvard Business Review as "one of the most important management practices of the past 75 years," has become a primary tool for successfully driving strategic performance in thousands of organizations around the world. An adaptation of this powerful tool, The Balanced CRM Scorecard, can be used to drive and maximize the success of an organization's CRM strategy. The Balanced CRM Scorecard is defined as a measurement system that deliberately links long-term CRM strategy, objectives and measures to short-term tactics, measures and action that drive CRM performance. The following illustrates an example of The Balanced CRM Scorecard:
Strategic CRM Perspective Strategic CRM Success Factor Strategic CRM Measure
Financial
  • Maximize Customer Lifetime Value
  • Maximize Share of Wallet
  • Customer Lifetime Value ($)
  • Share of Wallet (%)
  • Customer
  • Increase Retention o Increase Penetration o Increase Win Backs
  • Increase New Business
  • Increase Satisfaction
  • Retention Percent (%)
  • Penetration Ratio (#)
  • Win Back Percent (%) oCustomer Acquisitions (#)
  • Customers Highly Satisfied (%)
  • Process
  • Maximize Sales Productivity o Maximize Marketing Effectiveness
  • Maximize Service Quality
  • Conversion Rate per Sales Channel (%)
  • Revenue per Conversion Rate per Sales Channel ($) Cost of Sales per Sales Channel ($) Number of Leads per Marketing Channel (#)
  • Service Level per Channel (%)
  • Cost per Service Encounter ($)
  • Staff
  • Increase Employee Satisfaction o Maintain High Employee Retention
  • Increase Core CRM Competencies
  • CRM Employees Highly Satisfied, by CRM Function(%)
  • CRM Employee Retention (%)
  • Strategic CRM Core Competency Coverage, by CRM Function (%)
  • Building a Balanced CRM Scorecard requires the careful planning and execution of five key steps:
    1. Define Your CRM Strategy Before any measures are selected for monitoring the performance of your CRM strategy, your organization's leadership team must come to a consensus as to what the CRM strategy will be. Without a clear definition of your CRM strategy, any discussion of what measures should be used to monitor its performance will be unfocused and unproductive. The result of defining your organization's CRM strategy should be the development of a CRM strategy map. The CRM strategy map must on one-page clearly illustrate the path your organization will take to maximize CRM strategy success. The CRM strategy map highlights what should be measured to manage and maximize CRM performance (i.e., strategic CRM success factors) and includes both the desired outcomes of your CRM strategy and the key drivers of those outcomes linked in a cause-and-effect fashion. 2. Select Your CRM Strategic Measures Armed with your CRM strategy map, you next need to identify and select the measures that best determine performance for each strategic CRM performance outcome and driver. How many strategic CRM measures are enough? While it will vary based on each organization's CRM strategy, the total number of strategic measures in a well-designed Balanced CRM Scorecard should fall between 15 and 25 (one to two, per success factor) to be both manageable and sufficient. 3. Cascade Your CRM Strategic Measures Through the Organization The greatest return from strategic measurement comes from measures being used to guide day-to-day decision-making and action by managers, coaches, and employees. For CRM strategy, this can be effectively accomplished by systematically linking strategic CRM measures in your Balanced CRM Scorecard to each level of the organization -- from CRM strategy to CRM process (i.e., marketing, sales, and service) to the CRM team, and finally, to each CRM employee. 4. Implement a CRM Performance Reporting Solution With strategic CRM measures in place, a reporting system is needed to keep enterprise managers at every level continuously informed about the performance of each CRM measure, and where improvement is needed. To be effective a CRM performance reporting system must get the right information to the right people at the right time; the right information too late is useless. For a dynamic strategy like CRM this often means reporting CRM performance in real time across all customer touch points. 5. Entrench CRM Measurement in Organizational Culture To make strategic CRM measurement and the benefits it provides long lasting, it must become entrenched in the culture of the organization. To maximize success, organizations should integrate their The Balanced CRM Scorecard with their core management systems, including HR systems (e.g., CRM employee selection and hiring, learning and development, performance recognition and reward); management systems (e.g., CRM performance review, continuous CRM improvement); and finance systems (e.g., CRM budgeting). With a Balanced CRM Scorecard in place your organization will be able to clearly communicate what's important and where, and how each level of the organization contributes to CRM strategy success. Moreover, your organization will be able to quickly identify and take action on those customer touch points and initiatives in need of improvement for maximizing CRM strategy performance and return on CRM.
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