In-house ROI measurements of CRM: a bit of wishful thinking?

WM Circle Logo

By: Wise Marketer Staff |

Posted on October 1, 2001

A new survey from Jupiter reveals that 59% of companies who measure their own e-business ROI could well be deluding themselves.

There is a saying in marketing: "If it can't be measured, it can't be done." Whether it's entirely true or not is open to debate, but it certainly is true of a lot of things, not least, CRM. Figures are bandied about: up to 70% of CRM projects fail. But do they? How are failures judged? What measurements are used? Who makes the measurements? What are they compared with? 

Inconsistent definitions
Now, the analysts at Jupiter Media Metrix have done some real qualitative work on the problem. A new survey from Jupiter reveals that 59% of companies who measure their own e-business return on investment (ROI) could well be deluding themselves. More than half of the do-it-yourself (DIY) ROI studies generate a positive result, leading the analysts to believe that DIY ROI measurement is often a self-fulfilling prophecy. They say that many DIY studies use inconsistent definitions of ROI measurements in an effort to show positive results. This, of course, makes it impossible to decide correctly which projects deserve funding and which don't.

According to Jupiter's research director, David Taylor, "While companies are aggressively employing the internet to develop stronger relationships with their customers, ROI measurements don't effectively gauge their success. Companies must separate hard dollar ROI calculations from soft dollar 'relationship metrics' such as Return on Relationship, which is a metric specifically designed to capture the impact of the web on customer relationships."

Few were negative
The research also found that less than one in five companies have external firms conducting or overseeing their ROI studies. In one in three companies, the project team conducts a self-assessment. Internal consultants do the ROI analysis in one in four companies.

Only one in twenty in-house ROI studies revealed a negative result. Two in ten found a significant positive result. Half of the companies undertaking their own ROI analysis have not yet reached a conclusion. Many companies are not yet conducting any ROI analysis at all. Some 92% of multi-channel retail companies do not measure ROI of online selling.

"The specific ROI from building stronger customer relationships is very difficult to measure and is sometimes impossible," Taylor said. "That's why a separate relationship metric is necessary. A Return On Relationship metric that measures whether or not relationships result in direct or indirect returns to a company will help business managers determine the value the Internet brings to the table sales and marketing initiatives."

Jupiter Research is currently developing a Return On Relationship model and will be releasing findings in a full report in the coming months.

More Info: