building a business case for crm

8/13/2019 Building a Business Case for CRM

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2002 P1 Consulting Services All rights reserved. 1

P1 Consulting Services

Building a Business Case for CRM


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2 P1 Consulting Services

Questions addressed in this presentation

Why is Relationship Management important for business?

Does every business need to invest into CRM?

Do all business need to adopt similar approaches to

implement CRM?

What approach is to be taken while developing a business

plan?

How to plan for risks during the initiative?


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Relationship Management Is it really a new concept?

Human society operates within relationships

Relationships are all around us

Parent Child

Husband wife

Among friends Doctor Patient

Seller buyer

Customer Relationships Management is NOT a new discipline

Effective Customer Relationship Management is GOOD

business


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Why relationships are key to long-term success

Humans value relationships, they are attracted by a prospect of being in

one

Members can expect predictable behavior in a relationship

Engagement parameters are known to all parties, therefore.

It is easier to grow a relationship into different areas because of thedeveloped trust

Since relationships take energy to setup, people tend to consolidate their

interactions with in a few relationships

It is easier to maintain a relationship than to setup a new one. Members

tend to be locked-in


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Focus on Relationships first Before any systems

Define the roles of the participants Company, Customer Type A, Type B

Strive to gain more than superficial knowledge of customers

Proactive actions have greater value than reactive actions

Build a partnership approach in resolving customer issues

Cater for the evolution of the relationship to capture the Life-Time Value

of the customer

These elements are as important to business relationships asthey are to normal human relationships


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Why CRM is increasingly important in todays Business

The first wave of technology has helped many organizations to improve

operational efficiencies

Improving product quality and reduced margins have left little room for

improvement of the product

Today customers expect quality products and flawless operations

Effective Customer Relationship Management (CRM) will be the next

differentiator

The new wave of technology is helping enable CRM strategies

Businesses have to embrace CRM in order to survive in the 21st Century


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Business View of CRM

Business Cycle

CRM

Processes andTechnology based on

clearly articulated

Strategy Marketing

Market research

Customer

Segmentation CampaignManagement

Channelevaluation

Sales Sales forceeffectiveness

Opportunity,Account & OrderManagement

Product, Price andContract negotiation

Service andSupport

Billing andcollection

Trouble analysisand resolution

Customer

feedback onproducts andservice

Product Quality

Speed

Operationalefficiency


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Functional view of CRM The complete picture

Customer Interaction PlatformSales ForceEnablement

Contact Center Customer Service Direct Sales

Phone FAX E-mail Web WAPInteractive

CRM

Transactional EngineCo-ordination, Personalization, Workflow

Management

Transa

ctional

CR

M

Customer Intelligence PlatformCustomer

SegmentationChannel

EvaluationCustomerSurveys

CampaignManagement

ProductManagement

Customer

Data

Enterprise

Data

Analytical

CRM

Sales Force AutomationContact

ManagementAccount

ManagementOpportunityManagement

FunnelManagement

Sales Forecasts

SalesForce

Automation


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CRM relevance quadrants What businesses will benefitthe most from CRM?

Competition High

Customer acquisition cost Low

Companys products portfolio Large

Customer sophistication Low

Support requirements Low

Competition Low

Customer acquisition cost High

Companys products portfolio Small

Customer sophistication Low

Support requirements Low

Competition High


Companys products portfolio Large

Customer sophistication High

Support requirements High

Competition Low


Companys products portfolio Small

Customer sophistication High

Support requirements High

Little need for CRM Tactical CRM Type A

Tactical CRM Type B Strategic CRM


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Definition of CRM needs

CRM required for profitable growth

Analytical CRM and Sales ForceAutomation most appropriate

Little need for CRM

Should focus more on operationalefficiencies

CRM required as a matter of survival

Need to adopt CRM through out theEnterprise

Full and strategic implementationshould be sought

CRM required for profitable growth

Interactive and Transactional CRMmost appropriate




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Examples of businesses in each quadrant

Consumer products companies

Cinemas and entertainment providers

Monopolies

Utilities

petrol companies selling to individuals

Service providers in a unregulatedenvironment

Financial institutions with weak marketpositions

Service providers in a regulated ornewly unregulated environment

Financial institutions with strongmarket positions




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Define appropriate approach and the desired time frame for

implementation

Estimate the expected benefits Increase in revenue attributable to the system

Decrease in expenses / costs attributable to the system

Cost avoidance / intangible benefits

Estimate the investment costs Cost of the initial solution

Yearly maintenance and customization cost

Advertising and roll-out expense

Additional staffing requirements

Training and re-training needs

Build sensitivity analysis into the plan Net Present Value

Break-even point

What-if scenarios

Objective of a Business Plan


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Approach to a CRM Business Plan

Review of business as usual (if no CRM is implemented)

Estimate of profitability after implementation of CRM Determine Break-even point

Net Present Value (NPV) of the solution

Enterprise Profitability

Before After

Time


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Transactional CRM

Increase in customer satisfaction by x% Increase in sales due to personalization by x%

Reduction is costs due to efficient processing by x%

Analytical CRM Reduction in advertising costs by x%

Increase in return from campaigns by x%

Increased sales from new products by x%

Interactive CRM Increased sales from additional channels by x%

Reduction in cost per sales due to new channels by x%

Reduced costs in servicing customer service requests by x%

Sales Force Automation Increase revenue from existing customers by X%

Increase revenue per sales person by X%

Reduce cost of acquiring new customers by X%

Obtain forecasts for each of the expected benefits


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Initial solution implementation cost Analysis and detailed design cost

Software license cost

Hardware cost

Integration costs

Software customization costs

User training and change management expense

Hiring of additional staff for contact centre

IT support staff hiring and training expense

Budgeting for maintenance, upgrades and continuous customization

Telecommunication costs

What will it cost?


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Determination of the NPV and IRR

Net Present Value calculation

based on the estimated benefits

Time

Net Profitability after CRM

Change in value after

application of requireddiscount rate

Net Present Value

i Internal Rate of Return (IRR)

calculation

Time

Net Profitability after CRM

Discount rate which

make the NPV equals

to zero

Net Present

Value = 0


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Build What-if Analysis

Best case and worst case scenarios for CRM benefits

Effect of changes in the hurdle rate and project acceptance

criteria

Effect of project over-run

Investment Returns

NPV % IRR

Worst Case Best Case

Project Parameters


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Evaluate intangible benefits

Increased customer loyalty and satisfaction

Greater management focus on customer

Review of business process to match the strategy

Automating previously manual processes

New training opportunities for the employees

Improved quality of information available to management


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Reduce the risk of failure through effectiveplanning

Do not limit the scope to one functional group such as

customer service, marketing, or sales

Effective CRM is not cheap. The budget allocated must be

consistent with the expected benefits

Select technology which is aligned to the organisational skills

Select technology which is scalable, flexible and robust

Plan for benefit measurement and evaluation before and after


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And do not forget the people who will use thesystem

Seek an executive champion of the project before embarking

People resist change and tend to protect their domains

Users are not fully committed to the idea of CRM and its benefits

Lack of acceptance of the system because it is considered someone elses

baby

The usage of the system adds to the current work-load without evident

benefits

PLAN FOR A CHANGE MANAGEMENT INITIATIVE FOR THE SUCCESS OF

THE PROGRAM

building a business case for crm

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