Efficiency criteria of CRM-systems

The CRM-system results in increased sales potential, when CRM is understood as a holistic approach that is less focused on a product rather than a customer orientation (Stokburger and Pufahl, 2002, p. 21). In order to be able to assess the contribution of a CRM-system to the success of the corporation, it is first necessary to analyse the useful components and competitive advantages accordingly. This can be done for CRM-systems out of the corporate context and describes external efficiency criteria. In the overall assessment, efficiency criteria can be weighted and allocated for each point. This can be used to assess the relative profitability of investments, but not the absolute ones. It is therefore possible to determine the best alternative from the number of points, but not to make a statement regarding the return or minimum interest rate (Link, Münster, and Gary, 2011, p. 165).

Figure 11 shows another possibility, in which the impact on certain monetary values is estimated for each efficiency criterion. It forms the basis for investment calculation procedures and thus for statements about the absolute advantages and the actual benefit of a CRM-system, since this procedure can be used to analyse incoming and outgoing flows. At the end of the valuation scheme shown, it is possible to analyse, whether the acquisition costs are offset by a corresponding profit. Points should therefore only be awarded instead of an assessment using monetary values, if these cannot be assessed (Link, Münster, and Gary, 2011, p. 166).

Figure 11: Implementation of efficiency criteria in monetary terms

Source: Link, Münster, and Gary, 2011, p. 166

A better and more targeted response to customer requests, an individual approach, and adapted products or services, as well as higher advisory skills and faster responsiveness, have a positive effect on both, the number of customers and the possible price per customer and, subsequently, sales. This is due to the positive execution of the previously described chain of effects. Repeat purchases and cross-selling potential (e.g. recognition of replacement needs or new sales opportunities) also have a positive effect on sales, due to increasing sales volumes.

Finally, cost savings, which can be achieved e.g. through lower wastage or better control of success, ultimately result in a higher profit (Link, Münster, and Gary, 2011, p. 166).

Figure 11 also leads to considerations as to whether a customer-oriented information system and the associated higher degree of customization lead to increased appreciation by the customer. This is because on one hand more customers can be won and on the other a higher price achieved per customer. Experiences from the past, observations from competitors, but also tests with representative samples from customers can be used as a basis (Link, Münster, and Gary, 2011, pp. 166-167).

Finally, it should be summarized that a cost/benefit-assessment of CRM-systems can in principle be based on quantitative and qualitative components. The quantitative dimension of the cost-effectiveness of CRM-systems can be determined by corresponding cost accounting approaches and utility calculations. In the context of the investment calculation, the cost/benefit-ratio is determined using financial mathematics. However, the qualitative usefulness of CRM-systems can only be assessed subjectively and cannot be translated into a clear monetary dimension using business management tools. The question, whether a monetary cost overhang can be compensated by qualitative variables, such as increased customer satisfaction, is dependent not only on the functionalities of a CRM-system, but also on the underlying customer processing and sales management concepts within the company (Helmke, Uebel, and Dangelmaier, 2017, p. 323).

2.5.7 Summary

The literature shows that there are still deficits with regards to the linking of customer-related topics with central, economic objectives. During a value-oriented management, marketing measures are examined with regards to their positive impact on the corporation’s value. By assessing customer relationships over the entire CLC, successful customer retention can have a sustainably positive impact on long-term company success.

Key indicators for assessing the economic value of customer relationships are primarily the turnover, margin contribution, customer’s share of deliveries, and customer’s value. A review of the literature regarding the effects of customer proximity, customer satisfaction, and customer retention on the economic value proves the achievement of higher sales and RoI-values by long-term customer relationships. There is a positively significant link between higher client retention and buying behaviour, the re-sale, and the further recommendation of customers.

The CRM-system results in increased sales potential, when CRM is understood as a holistic approach that is less focused on a product rather than a customer orientation. To enable the assessment of the contribution of a CRM-system to the success of the corporation, it is first necessary to analyse the useful components and competitive advantages. A better and more targeted response to customer requests, an individual approach, and adapted products or services, as well as higher advisory skills and faster responsiveness, have a beneficial influence on both, the number of customers and the possible price per customer, and, subsequently, sales.

The introduction of CRM-systems in various organizations has led to the evaluation of customers being significantly simplified or even possible without irresponsible effort (Haenlein and Kaplan, 2009, p. 89). In the course of evaluating individual customers, companies in sectors as diverse as logistics (Niraj, Gupta, and Narasimhan, 2001), retail banking (Haenlein, Kaplan, and Schoder, 2006) or the metal processing sector (Bowman and Narayandas, 2004) find that 20 to 30% of their client interactions have not been lucrative. These conclusions are also affirmed by various practitioners (Karle, 2008, p. 106).