A Quantitative Model for CRM Performance Evaluations

Abstract

ABSTRACT This paper identifies important performance measurements for the operation of CRM units in the call center industry, and then uses Data Envelopment Analysis (DEA) to compare the performances of a selected set of call centers. The results provide several managerial insights that will assist CRM managers in effective decision making, especially in the areas of increasing efficiencies and improving customer service. Overall, this paper contributes towards managing resources and processes that would aid in the acquisition and support of information technology within a firm. INTRODUCTION Although Customer Relationship Management, popularly referred to as CRM, has been around for almost over a decade, there is little or no consensus about the exact depth and breadth of the CRM concept across a wide array of enterprises. Often time, it is left to the discretion of the managers to define the customer relationship management function to best suit their customer facing interfaces. However, a generic definition outlines the seamless integration of technology and marketing strategy to effectively manage and improve the relationship with existing and potential customers to meet the evolving business objectives. CRM units are used by companies in all aspects of services including financial, healthcare, airlines, recreation, and manufacturing. For instance, IBM's CRM offerings include strategy and change-consulting, system integration, enterprise application implementation for partners such as Siebel, SAP, Peoplesoft, Genesys and Avaya, business reengineering and process redesign, as well as speech recognition and Interactive Voice Response (IVR) (Kelsey, 2002). The early application of CRM was offered as a solution to redefine customer relationships using computer-based tools. However, CRM has evolved both in its functionality and adoption in more recent years. According to a recent Forrester Research estimate, the total CRM market--including applications, infrastructure and services--is likely to grow from $42.8 billion in 2002 to $73.8 billion in 2007 (Prahalad, Krishnan, & Mithas, 2002). But, today's CRM is a dramatically slimmed-down version of the original--it lost its swagger, its acne, and much of the baby fat (Greenberg, 2002). CRM is still expensive and still little cloudy of its benefits; but when it works, it yields great results and remains worthy of the risk of investment. With the IT budget squeeze in recent years, the need to demonstrate the connection between IT spending and business results has become even more critical. Customer satisfaction remains a major objective in CRM operations. Higher customer satisfaction facilitates building and cultivating customer loyalty that results in the ability of a company to retain its existing customers and increase the value of these customers via cross-sell and up-sell (Karbowiak, 2002). Having an IT staff that understands the business and its customers' needs is one key to improving customer satisfaction (Chabrow, 2002). Investing in skilled IT personnel who understand the clients and the business process is probably more beneficial than investing on pure technology. The human factor is very important in implementing an IT system. If the product is too cumbersome to use, employees will quickly find ways to work around it, defeating the very purpose of its implementation. With most IT issues, there is, as the Gartner Group puts it, the Hype Cycle (Fernandes, 2002). The CRM glitter has passed by, and realty has set in. It is time now to aim for operational efficiency. CURRENT LITERATURE Klenke (1995) identifies call center managers as matchmakers who decide which agent can best meet a particular caller's needs, using a skill-based routing system. Bordoloi (2004) offers a quantitative model for determining an optimal recruitment policy amidst vibrant turnover rates in knowledge-intensive call centers. …