In commercial companies, revenue is generated from customers, through acquiring the right ones, retaining those that are worth retaining, developing the value of retained customers through cross selling to them and by doing this effectively and efficiently.

Companies attempt to influence customer behaviour and attitude by carrying out a number of activities, which of course incur a cost. In an ideal world, the link between cost and benefit would be clear. Some companies with so called 'closed loop' marketing systems, such as mail order companies and some leading financial institutions, get very close to understanding this link. They understand effectiveness and efficiency – the relationship between customer management investment and the benefit that this investment generates in the short and long term.

Independent research has shown the powerful correlation between customer management and business performance. Other studies have shown payback and 400% Return on Investment from CM programmes.

When companies add up their channel costs (those incurred in acquiring or servicing or retaining customers), they normally find it equates to around 40% of their organisations' non-product costs.

The optimisation of this large cost block against the sales and margin received is called marketing (or Customer Management) effectiveness. So we are not just talking about promotional or campaign effectiveness, we need to look at the whole model of customer management.

Throughout the customer relationship cycle, from acquisition through to development, retention and even 'win back', it is important to think about all the interactions or touch points you have with customers and how their attitudes (perception of you) and behaviour (what they actually do as a result of that interaction) is influenced. It is helpful to divide the cycle into a number of stages (see Chart on page 2).

This cycle is the focus of a substantial element of QCi's CMAT™ assessment methodology, where the assessor looks for evidence (this is important) that certain practices are being carried out.

For example, do you measure the time it takes to fulfill an enquiry; are you actually using the data you collect on key customers; do you measure customer dissatisfaction at different touch points; do you know what elements of their dealings with you are most important to customers?

The results of the largest evidence-based study (600+ large/ blue chip companies) of customer management by QCi and its partners (using the CMAT™ methodology) show an uncomfortable picture of companies tending to overlook business basics and in so doing, allowing profits to haemorrhage throughout the life cycle.