The Business Case for CRM

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CIM Sussex branch CRM conference presentation - March 2007

CIM Sussex branch CRM conference presentation - March 2007

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  • Team member selection Strong team members - don’t let managers offload weak team members to the project Needs some technical competency and non-technical ‘boundary-spanning’ skills Political lubrication Cross-functional project, so there are many touchpoints Identify the barriers in advance, or work on them Dedicated resources Dedication and focus - could also be incentivised Problem of ‘ivory tower’ syndrome Less chance of redeployment Dedicated resource = project is focused, skilled Task delimitation Break the project down into clear, achievable milestones Removes functional boundary constraints
  • Looking at a purely financial case is misleading, and does not reflect the reality of the complex strategic decisions. Build the management concensus
  • Tangible factors Customer retention Market penetration Cross-selling opportunities Strategic factors Competitive pressures Loss of core product differentiation Strategic fit Linked decision factors Resource allocation Salesforce automation Finance system integration or replacement

Transcript

  • 1. The business case for CRM How can you get the investment for CRM? Thom Poole Managing Consultant February 2007
  • 2. Paths to competitive advantage Customer satisfaction Operational excellence Revenue & margin enhancement New Customer Acquisition New & More Personalised Products & Services Customer Profitability Return on Customer & Partner Investments Cross-Selling & Up-Selling to enhance margins & deal size Streamline & Automate Administrative Processes Lower Operational Costs Reduce inventory Integrate “Stove Piped” Systems & Relationships Reduce Cycle-time Determine Unique Requirements of Customer Segments Adapt to changing customer needs and market trends New products & services Provide Customers with Excellent Service, even when components come from partners
  • 3. Sample CRM Performance Metrics
    • Average revenue/person
    • Number of accounts/person
    • Average revenue/employee
    • Average revenue/contract
      • Increase average deal size
    • Average growth/territory (%)
    • Cost of sales & marketing
      • Expressed as % of revenue
    • Marketing campaign response rates
    • Customer Lifetime Value (CLV)
    • Average commission/person
    • Quota attainment for new rep’s
    • Forecast accuracy
      • Improve predictability/planning
    • Improve closing %
      • Win/loss analysis
      • Number new contracts/quarter
    Revenue & Margin Enhancements
  • 4. Sample CRM Performance Metrics
    • Average time to market for new product development process
    • New product development expense as % of Revenue
    • Gross profit by product line
    • Order fulfilment cycle time
      • % On time deliveries
    • % Returned products
    • Cost per customer contact
    • First contact resolution %
    • Number of customer complaints
    • Revenue per employee
    • % Ordered parts filled immediately from warehouse shelf
    • Number of cancelled orders
    • Number and cause of credit memos issued
    Operational Excellence
  • 5. Sample CRM Performance Metrics
    • % ‘ On-Time ’ deliveries
    • Mean response time to customer service incident
    • Customer complaints
    • Customer satisfaction index
    • Share of key customers ’ purchases
    • Customer Lifetime Value (CLV)
    • Number of repeat customers
    • Shopping cart abandonment rate
    • Number of referrals to other customers
    • % Revenue to new versus existing customers
    Customer Satisfaction & Retention
  • 6. The corporate requirement
    • Individual view of each customer
    • Increase the customer interaction
    • Increase cross-sell and up-sell opportunities
    • Improve direct selling performance and efficiency
    • Develop/source products that are relevant to your customers
  • 7. CRM implementation teams
    • Team member selection
    • Political lubrication
    • Dedicated resources
    • Task delimitation
  • 8. Justification
    • Tangible factors
      • Customer retention
      • Market penetration
      • Cross-selling opportunities
    • Strategic factors
      • Competitive pressures
      • Loss of core product differentiation
      • Strategic fit
    • Linked decision factors
      • Resource allocation
      • Salesforce automation
      • Finance system integration or replacement
  • 9. CRM justification key Linked decision factors Strategic factors Tangible factors Infrastructure Strategic Competition Market Increased revenue Cost savings Clark, M; Smith, B & McDonald, M. 2003
  • 10. A CRM results measurement system The primary building blocks of CRM results measurement
  • 11. Are you ready for CRM?
    • Targeted business users display an understanding of CRM & accompanying benefits
    • Management displays an understanding of CRM & accompanying benefits
    • CRM applications opportunities are identifiable
    • A business sponsor exists for each discrete CRM opportunity
    • Obvious stakeholders exist for each discrete CRM opportunity
    • Company has expressed a need for market differentiation
    • Communicated strategic initiatives can be supported by CRM
    • Stakeholders can articulate projected CRM benefits for each discrete opportunity
    • Stated opportunities can be improved with customer-related data
    • Projected data sources are highly regarded for data accuracy & integrity
  • 12. Are you ready for CRM - 2
    • Cross-functional customer data exists in a data warehouse or centralised database
    • Departments currently share a cross-section of information requirements
    • The client is already engaging in some sort of customer differentiation or segmentation
    • Questions of data ownership across the company are either non-existent or easily resolved
    • Business units & IT staff agree on CRM ownership boundaries
    • Executive management has an expressed commitment to fund CRM-related activities
    • Company agrees to modify business processes where necessary
    • A willingness to sustain the organisational impact of CRM (reorganisation, additional staffing, etc)
  • 13. Are you ready for CRM - 3
    • General understanding of requirements-driven development exists amongst business & IT stakeholders
    • Management is willing to empower key customer-facing staff based on increased information & improved processes
    • Management is willing to implement incentives or modify employee compensation to encourage CRM adoption
    • CRM solution decisions are approached with an open mind
    • Business sponsors & stakeholders have an understanding of the differences between CRM & other programmes
    • IT staffing infrastructure is in place to support CRM
    • There is consensus that CRM is a process & not a one-off activity
    • Business & IT stakeholders understand the ongoing budget requirements
  • 14. CRM implementation Planning Construction Deployment Business planning Archi- tecture/ design Technology selection Develop- ment Delivery Measure- ment Time Phases Steps Tasks CRM Strategy CRM Business Plan Process planning/ Identification ROI (optional) Project prioritisation Staff planning Pre-implementation checklist Vendor evaluation Technology alignment Product installation Customisation/ development Process integration Prototyping Database design Deployment Documentation User training Internal PR Evaluate metrics
  • 15. Financial justification
    • For most companies today, it is mandatory that new CRM investments be driven by a strong financial justification
    • This justification needs to consider explicitly benefits, costs and risks that are directly linked to the CRM proposal
    • With limited new investment funds available, a successful CRM project funding request must clearly demonstrate that it not only is financially justified but that it is prioritised ahead of other projects under consideration
    • Back of the envelope business case and ROI analysis will not pass the test with most senior management reviewing project funding requests
  • 16. Financial justification
    • Senior management is increasingly involved in reviewing project funding requests
    • The project/proposal team needs to have a board room presence and be able to address CFO issues and questions
    • Clients want to know what ROI can be achieved from process changes and data standardisation with existing systems
    • The time of ‘file and forget’ business cases are in the past
    • Senior management wants to see accountability and a willingness to measure and monitor project results – and possibly put fees at risk
  • 17. CRM checklist  Prioritised higher than competing projects  Risk factors considered  Leverage (i.e., ‘use’) existing IT assets  ‘ Quick wins’ in first 6-12 months  Financial payback within 2-3 years (max)  Assumptions validated and supported  Financially justified and ROI driven  Incorporates people, process and technology  Connected to company strategy Project Approval Requirement
  • 18. Building a compelling business case
    • How does the subject proposal compare to other proposals recently approved in the company?
    • Can the company afford not to go forward with the project?
    • What future business options and flexibility are gained for the company if it goes forward with the subject proposal?
    • What level of IT investments has the company made relative to its industry peer group?
  • 19. Business case deliverables
    • Develop an understanding of your company’s approval requirements:
      • Milestones
      • Steering Committee / Executive Committee
      • Scheduled Meeting Dates
      • Deliverable Requirements: Presentation / Capital Appropriation Request (CAR) / Financial Model
    • Identify the key decision makers and understand their perspective on costs & benefits
    • Consider modelling deliverables after recent successful presentation and CAR
  • 20. Business case deliverables
    • ‘Walk-the-signatories’ and obtain buy-in and support throughout project
      • Executives – approach, key issues and direction of project
      • Company track leads – key issues and underlying assumptions
      • Financial advisor to executive – approach, underlying assumptions and deliverables
    • Develop a storyboard early on and build-up throughout the project
    • Demonstrate there is support with necessary detail backing recommendations
  • 21. Thank you [email_address]