494 The Marketing Book
including salesforce automation and call centre
management. These applications are used to
increase revenues by improving customer reten-
tion and raising sales closure rates. Back-office
applications support internal administration
activities and supplier relationships, involving
human resources, procurement, warehouse
management, logistics software and some finan-
cial processes. The overriding concern about
front- and back-office systems is that they are
sufficiently connected and co-ordinated to opti-
mize customer relations and workflow.
The performance assessment
process
The performance assessment process ensures
that the organization’s strategic aims in terms
of CRM are being delivered to an appropriate
and acceptable standard, and that a basis for
future improvement is established. Shareholder
results provide a ‘macro’ view of the overall
relationships that drive performance, while
performance monitoring gives a more detailed
‘micro’ view of metrics and key performance
indicators.
Shareholder results
To achieve the ultimate objective of CRM – the
delivery of shareholder results through an
increase in shareholder value – the organization
must understand the three key drivers of
shareholder results: building employee value;
building customer value; and reducing end-to-
end supply chain costs.
Recent research on the relationship
between employees, customers and sharehold-
ers has highlighted the need to adopt a more
informed and integrated approach to exploiting
the linkages between them. For example, the
‘service profit chain’ research conducted at
Harvard illustrates the connection between
good leadership and management behaviour,
improved employee attitudes, consistent cus-
tomer satisfaction and increased sales, profits
and shareholder results (Heskett et al., 1994).
Two means of cost reduction are also
relevant to CRM: deploying electronic systems,
such as automated telephony services, which
lower costs by enabling reductions in staff and
overheads; and utilizing new channels, such as
on-line self-service facilities, which lower the
costs of customer acquisition, transaction and
servicing.Performance monitoring
Despite the increasing focus on customer-facing
activities, there is growing concern that metrics
generally used by companies for CRM are not
nearly as advanced as they should be. In
particular, more detailed standards, measures
and key performance indicators are needed to
ensure CRM activities are planned and prac-
tised effectively, and that a feedback loop exists
to maximize performance improvement and
organizational learning.
Traditional performance measurement and
monitoring systems, which tend to be function-
ally driven, are inappropriate for the cross-
functional and holistic management approach
of CRM. Metrics and key perfomance indica-
tors (KPIs) for CRM must adequately reflect the
performance standards across the five major
CRM processes.
Much of the emphasis on CRM has been
placed on the activities necessary to create
enduring consumer relationships. However,
rather less attention has been paid to the issue of
buildingcustomerfranchises and achieving supe-
rior supply chain performance, at least in the
marketing literature. Paradoxically, most organi-
zations market to other organizations. Hence a
major opportunity exists to apply the concepts
and tools of CRM to building long-term relation-
ships in a business-to-business (B2B) context.Supply chain management
In many industries there has long been a
tradition of adversarial relationships between