Building A Business Case For Crm Methodology

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Methodology and Tips for building a business case for CRM

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Building A Business Case For Crm Methodology

  1. 1. Building a Business Case for Cross Functional Customer Relationship Mgmt. (CRM) Process and Methodology
  2. 2. Overview How to champion, plan, and propose cross-functional CRM at your company. Some practical suggestions for: How to get started What information to include and, How to represent it. * Although these business case principles should apply more broadly. 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 2 Copyright © 2004 LaDove Associates
  3. 3. A Champion Is a visionary, evangelist, and strong advocate for the work. Sees the need for the work; serves as a catalyst, raises awareness about the project effort. Provides a sense of energy and passion for the work. Demonstrates why the work is important. Builds support for the cause. Helps clear the path ahead. Source: http://web.mit.edu/pm/glossary.html 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 3 Copyright © 2004 LaDove Associates
  4. 4. Good News for Champions The Future of CRM “The days of large-scale, mammoth CRM implementations are, for the most part, behind us. It will be smaller firms and departmental implementations that pick up the spending slack in the near future.” “Look for cheaper alternatives such as hosted solutions and short-term, departmental projects to dominate the scene. But unlike in the past, more of those short-term initiatives will work toward a long-term, enterprise-wide integration goal. “ -- Source: Pepper and Rogers Inside 1to1 4/03 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 4 Copyright © 2004 LaDove Associates
  5. 5. Evolving Approach to CRM Implementation Depth of Yesterday -- Relationship Big Bang Implementation Vision Going Forward -- Strategic Plan w/ iterative implementations Project / technology Implementations 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 5 Copyright © 2004 LaDove Associates
  6. 6. Why? Realization that building customer relationships is a long term business strategy … not an event. CRM is not a silver bullet … other business challenges still matter. Improving technical interoperability Relationships are built on the customers timetable. 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 6 Copyright © 2004 LaDove Associates
  7. 7. The Business Case A Tool for Champions
  8. 8. Key Elements 1. Situation Analysis (current) 2. Vision and Plan 3. Financial model 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 8 Copyright © 2004 LaDove Associates
  9. 9. Business Case Development Process Situation Analysis Vision and Plan Financials Inputs Outputs Who, What, Where, When, How Why Objectives Cash Flow Metrics SWOT Analysis Payback External: Consumer Key Initiatives Analysis Process ROI Technology NPV Internal: Business Various Illustrations Organization Discovery IRR Timeline 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 9 Copyright © 2004 LaDove Associates
  10. 10. 1. Situation Analysis
  11. 11. Situation Analysis INPUTS OUTPUTS • Consumer Analysis • SWOT Analysis (summary) • Business Discovery • Current State Picture: • Data flow, process maps, & organization 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 11 Copyright © 2004 LaDove Associates
  12. 12. Consumer Analysis Mining existing data Research Informal assessment 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 12 Copyright © 2004 LaDove Associates
  13. 13. Business Discovery Survey the business. Who’s doing something “interactive”? Target marketing Promotions Customer Service E-commerce/web marketing Kiosk In store 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 13 Copyright © 2004 LaDove Associates
  14. 14. Business Discovery The Interview What are you communicating/services providing to customers? What data source are you using? (for outbound communications) What data are you capturing? Where are you storing data? How is the data being utilized/maintained/managed? How much are you spending on the program/data management? Who is doing what? What are you measuring? 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 14 Copyright © 2004 LaDove Associates
  15. 15. SWOT Evaluate the situation Services Data capture Data usage/maintenance Messages Leverage 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 15 Copyright © 2004 LaDove Associates
  16. 16. SWOT m ple Strengths: Sa and web channels. High volume of rich transactional data coming through Customer Service Information provided through Customer Service and web site is consistent. Weaknesses: Data from Customer Service and Web is not being leveraged for product improvement or direct marketing campaigns… Customer ‘opt out’ procedure is not reliable. It is difficult for consumers to get to the right place to get their questions answered. Activities are not coordinated across customer touch points ... Opportunity: By creating feeds from Customer Service, and web marketing database to centralized data warehouse, we can increase direct marketing database by X …., create a more reliable ‘opt out’ procedure … Forming a cross functional Customer Contact committee... Threats: Duplicate data issues … Could receive fine and negative PR due to non compliance with FTC regulations. 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 16 Copyright © 2004 LaDove Associates
  17. 17. Data/Process/Organization Paint the Picture (current scenario) Graphic representation of data/process flow charts, org charts (whatever is relevant to illustrate SWOT) Sample 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 17 Copyright © 2004 LaDove Associates
  18. 18. 2. Vision and Plan
  19. 19. Creating a Vision and Plan Maintain Strengths Improve Upon Weaknesses Capitalize On Opportunities Mitigate Threats 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 19 Copyright © 2004 LaDove Associates
  20. 20. Vision Describe “end state” (3-5 yrs.) 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 20 Copyright © 2004 LaDove Associates
  21. 21. Plan Highlights Objective Strategy (priorities) WHAT Metrics (current and planned) Key Initiates and activities HOW Process Technology Organization Implications WHO Timeline (phases) WHEN Finances WHY 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 21 Copyright © 2004 LaDove Associates
  22. 22. Planning Set S-M-A-R-T* Objectives Address Strengths, Weaknesses, Opportunities, and Threats (SWOT) Strategy How you’re going to achieve your objectives. Priorities (and rationale for prioritization) Phases * S-M-A-R-T = Specific – Measurable – Actionable – Realistic - Timebound 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 22 Copyright © 2004 LaDove Associates
  23. 23. Metrics Know the ‘hot buttons’ … link to macro business strategies (cost reduction, improved service, profit contribution …) Current Planned Customer Service: Web site conversion… Sample Customer Satisfaction 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 23 Copyright © 2004 LaDove Associates
  24. 24. Data/Process/Organization Paint the proposed picture am ple S 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 24 Copyright © 2004 LaDove Associates
  25. 25. Timeline/Phases Phase I Phase II Phase III Pull It All Sample Build Grow Together Foundation for Consumer Advanced CRM Value Segments Year 1 Year 2 Year 3 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 25 Copyright © 2004 LaDove Associates
  26. 26. Key Initiatives and Activities Phase I Sample A. Develop direct marketing capability Phase I: Pull It All Together B. Define brand objectives: Adopt consistent metrics and means for measuring • Ensure compliance with privacy reqmts. • Improve program consistency C. Prioritize and integrate current activities • Improve consumer satisfaction • Drive short term sales through targeted prgms • Improve process efficiencies 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 26 Copyright © 2004 LaDove Associates
  27. 27. Phase 1: Initiative A Actions Responsibility Cost Estimate • Centralize data management – Research $XXX – Develop short term and long term – Information strategies Technology – Outsource vs. internal CRM Lead $XXX • Develop consistent consumer Sample protection policies, standards, and procedures (‘do not contact’ etc.) CRM Lead $XXX • Set standards for cross functional activities (data capture, outbound, etc.) 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 27 Copyright © 2004 LaDove Associates
  28. 28. 3. Financial Analysis
  29. 29. Financials Cash Flow Proposed Business as usual Payback Period ROI (Return on Investment) Assessing the costs/savings Knowing what to measure Establishing a value to those measures NPV (Net Present Value) IRR (Internal Rate of Return) 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 29 Copyright © 2004 LaDove Associates
  30. 30. Cash Flow Proposal Scenario Most of the financial summaries are derived from cash flow. Full value cash flow in $ Year 1 Year 2 Year 3 Year 4 Year 5 Total Cash Inflows / Benefits and Gains ` Benefit item 1 150 170 180 240 295 1,035 Benefit item 2 490 595 700 720 790 3,295 Benefit item 3 840 830 815 900 990 4,375 Total cash inflows 1,480 1,595 1,695 1,860 2,075 8,705 ple Sam Cash Outflows / Costs & Expenses Cost item 1 (90) (95) (90) (90) (90) (455) Cost item 2 (400) (400) (400) (350) (320) (1,870) Cost item 3 (1,020) (800) (620) (700) (680) (3,820) Total cash outflows (1,510) (1,295) (1,110) (1,140) (1,090) (6,145) Cash Flow Summary Total inflows 1,480 1,595 1,695 1,860 2,075 8,705 Total outflows (1,510) (1,295) (1,110) (1,140) (1,090) (6,145) Net cash flow (30) 300 585 720 985 2,560 Copyright © 2003 Solution Matrix Ltd. 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 30 Copyright © 2004 LaDove Associates
  31. 31. Payback When the cumulative inflows = cumulative outflows Measure of time Longer time = more risk Year 1 Year 2 Year 3 Year 4 Year 5 Total Total incremental inflows 200 250 240 200 225 1,115 Total incremental outflows (320) (300) (112) (25) (57) (814) Net incremental cash flow (120) (50) 128 175 168 301 Sam Cumulative Incremental Cash Flow (120) (170) (42) 133 ple 301 Payback Period: 3.2 Years Copyright © 2003 Solution Matrix Ltd. 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 31 Copyright © 2004 LaDove Associates
  32. 32. ROI Calculation ROI = (Gains – Cost) / Cost How do expected returns compare to cost ROI is a percentage Year 1 Year 2 Year 3 Year 4 Year 5 Total Total incremental inflows 233 268 229 214 215 1,159 Total incremental outflows (339) (301) (115) 21 61 (673) Simple ROI, 3 years: -3.3% Simple ROI, 4 years: 28.6% Sample Simple ROI, 5 years: 72.2% Copyright © 2003 Solution Matrix Ltd. 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 32 Copyright © 2004 LaDove Associates
  33. 33. Next Steps Propose Re-Tool Approval 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 33 Copyright © 2004 LaDove Associates
  34. 34. Summary Developing a compelling business case requires a basic understanding of: operations, planning, technology, and finance … but you don’t need to be an expert in each. It’s a matter of working through the process. Developing a business case Assess and communicate “the problem/opportunity” Define and communicate “the solution” Leverage the functional experts Working in a cross functional role 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 34 Copyright © 2004 LaDove Associates
  35. 35. Brett LaDove Customer Relationship Management & Customer Care Consulting Services 04/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 35 Copyright © 2004 LaDove Associates

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