Building A Business Case For Crm Methodology

Building a Business Case for
Cross Functional
Customer Relationship Mgmt.
(CRM)
Process and Methodology

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

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


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


Evolving Approach to CRM
Implementation

Depth of Yesterday --
Relationship Big Bang Implementation Vision

Going Forward --
Strategic Plan w/ iterative implementations

Project / technology Implementations


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.


The Business Case
A Tool for Champions

Key Elements
1. Situation Analysis (current)
2. Vision and Plan
3. Financial model


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


Situation Analysis

INPUTS OUTPUTS

• Consumer Analysis • SWOT Analysis (summary)
• Business Discovery • Current State Picture:
• Data flow, process
maps, & organization


Consumer Analysis
Mining existing data
Research
Informal assessment


Business Discovery
Survey the business. Who’s doing something
“interactive”?
Target marketing
Promotions
Customer Service
E-commerce/web marketing
Kiosk
In store


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?

SWOT
Evaluate the situation
Services
Data capture
Data usage/maintenance
Messages
Leverage


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.


Data/Process/Organization
Paint the Picture (current scenario)
Graphic representation of data/process flow charts,
org charts (whatever is relevant to illustrate SWOT)

Sample


Creating a Vision and Plan
Maintain Strengths
Improve Upon Weaknesses
Capitalize On Opportunities
Mitigate Threats


Vision
Describe “end state” (3-5 yrs.)


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


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


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


Data/Process/Organization
Paint the proposed picture

am ple
S


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


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


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.)


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)


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.


Payback
When the cumulative inflows = cumulative outflows
Measure of time
Longer time = more risk

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


ROI Calculation
ROI = (Gains – Cost) / Cost
How do expected returns compare to cost
ROI is a percentage
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%



Next Steps

Propose Re-Tool Approval


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


Brett LaDove

Customer Relationship Management
&
Customer Care
Consulting Services


Building A Business Case For Crm Methodology

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