Most e-commerce businesses aren’t getting an accurate assessment of their total ROI on web investments, says Jupiter Media Metrix. The problem: existing ROI metrics aren’t capable of determining the web’s effect on customer relations, an area of operation where web technology vendors promise their clients benefits, Jupiter says.
“Web site vendors, development companies, call center management companies, CRM software vendors, e-services companies – almost every one of them is promising that they will improve a company’s relationship with its customers,” says David Taylor, research director at Jupiter. “ROI doesn’t actually get at that.”
Jupiter analysts have found that inconsistent definitions of ROI metrics among companies that undertake such studies in-house may produce misleading results. More than half of the in-house ROI studies – 59% -- produce positive results, demonstrating that it may be difficult for in-house studies to be completely objective, Taylor says. That in turn can make a valid determination of which projects to fund and which to eliminate nearly impossible, according to Jupiter.
“When it comes to the Internet, there isn’t a dollar line item associated with much of the spending; expenditures are coming from all over the place,” says Taylor.
Jupiter has been developing a new metric specifically designed to measure the impact of Internet CRM on companies’ relationship with their customers. Jupiter calls its new measure Return on Relationship and expects to release its findings in coming months. “It’s a purpose-oriented metric as opposed to a general metric, like ROI,” Taylor says.
Its ROR model seeks to define and measure the variable components of a customer relationship. “We wanted to be able to tell people that if there are 10 things they can invest in that they believe will affect their relationships with customers, these five are most highly correlated with improved relationship,” says Taylor . Some of the variables are customer satisfaction, loyalty and referrals.
Jupiter believes that new metrics aimed at ROR will benefit tech vendors attempting to sell such products as well as the companies buying them. “Users are looking for a metric to evaluate the vendors, but because this deals with process change, it means the vendors are having trouble selling on ROI,” he says. “I believe they’re looking for an alternative metric.”
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