Building A Business Case For Crm Methodology

Building a Business Case for Building a Business Case for Cross Functional Cross Functional

Customer Relationship Mgmt. Customer Relationship Mgmt. (CRM)(CRM)

Process and MethodologyProcess and Methodology

2204/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates

OverviewOverview

How to champion, plan, and propose How to champion, plan, and propose crosscross--functional CRM at your company.functional CRM at your company.

Some practical suggestions for:Some practical suggestions for:How to get startedHow to get startedWhat information to include and,What information to include and,How to represent it.How to represent it.

* Although these business case principles should apply more broadly.


A ChampionA ChampionIs a Is a visionaryvisionary, evangelist, and strong advocate for the , evangelist, and strong advocate for the work. work. Sees the need for the work; serves as a Sees the need for the work; serves as a catalystcatalyst, raises , raises awareness about the project effort. awareness about the project effort. Provides a sense of Provides a sense of energyenergy and passion for the work. and passion for the work. Demonstrates why the Demonstrates why the work iswork is importantimportant. . Builds Builds supportsupport for the cause. for the cause. Helps Helps clear the pathclear the path ahead. ahead.

Source: http://web.mit.edu/pm/glossary.html


Good News for ChampionsGood News for ChampionsThe Future of CRMThe Future of CRM

““The days of largeThe days of large--scale, mammoth CRM implementations scale, mammoth CRM implementations are, for the most part, behind us. It will be are, for the most part, behind us. It will be smaller firmssmaller firmsand and departmental implementationsdepartmental implementations that pick up the that pick up the spending slack in the near future.spending slack in the near future.””

““Look for cheaper alternatives such as Look for cheaper alternatives such as hosted solutionshosted solutionsand and shortshort--term, departmental projectsterm, departmental projects to dominate the to dominate the scene. But unlike in the past, more of those shortscene. But unlike in the past, more of those short--term term initiatives will work toward a initiatives will work toward a longlong--term, enterpriseterm, enterprise--wide wide integration goalintegration goal. . ““

---- Source: Pepper and Rogers Source: Pepper and Rogers Inside 1to1Inside 1to1 4/034/03


Evolving Approach to CRM Evolving Approach to CRM ImplementationImplementation

Yesterday --Big Bang Implementation

Going Forward --Strategic Plan w/ iterative implementations

VisionDepth of Relationship

Project / technology Implementations


Why?Why?

Realization that building customer Realization that building customer relationships is a relationships is a long term business long term business strategystrategy …… not an event.not an event.CRM is not a silver bullet CRM is not a silver bullet …… other other business challenges still matterbusiness challenges still matter..Improving Improving technical interoperabilitytechnical interoperabilityRelationships are built on the Relationships are built on the customers customers timetabletimetable..

The Business CaseThe Business CaseA Tool for ChampionsA Tool for Champions


Key ElementsKey Elements

1.1. Situation Analysis (current)Situation Analysis (current)2.2. Vision and PlanVision and Plan3.3. Financial modelFinancial model


Business Case Development Business Case Development ProcessProcess

Situation Analysis Vision and Plan FinancialsWhyInputs Outputs Who, What, Where, When, How

External: Consumer Analysis

Internal: Business Discovery

SWOT Analysis

Various Illustrations

Objectives

Metrics

Key Initiatives

Process

Technology

Organization

Timeline

Cash Flow

Payback

ROI

NPV

IRR

1.1. Situation AnalysisSituation Analysis


Situation AnalysisSituation Analysis

•• SWOT Analysis (summary)SWOT Analysis (summary)•• Current State Picture:Current State Picture:

•• Data flow, process Data flow, process maps, & organizationmaps, & organization

•• Consumer AnalysisConsumer Analysis•• Business DiscoveryBusiness Discovery

INPUTSINPUTS OUTPUTSOUTPUTS


Consumer AnalysisConsumer Analysis

Mining existing dataMining existing dataResearchResearchInformal assessmentInformal assessment


Business DiscoveryBusiness DiscoverySurvey the business. WhoSurvey the business. Who’’s doing something s doing something ““interactiveinteractive””??

Target marketingTarget marketingPromotionsPromotionsCustomer ServiceCustomer ServiceEE--commerce/web marketingcommerce/web marketingKioskKioskIn storeIn store


Business DiscoveryBusiness DiscoveryThe InterviewThe Interview

What are you What are you communicating/servicescommunicating/services providing to providing to customers?customers?What What data sourcedata source are you using? (for outbound are you using? (for outbound communications)communications)What What datadata are you are you capturingcapturing??Where are you Where are you storing datastoring data??How is the data being How is the data being utilized/maintained/managedutilized/maintained/managed??How much are you How much are you spending spending on the program/data on the program/data management?management?WhoWho is doing what?is doing what?What are you What are you measuringmeasuring??


SWOTSWOTEvaluate the situationEvaluate the situation

ServicesServicesData captureData captureData usage/maintenanceData usage/maintenanceMessagesMessagesLeverageLeverage


SWOTSWOTStrengths:Strengths:

High volume of rich transactional data coming through Customer SHigh volume of rich transactional data coming through Customer Service and web channels.ervice and web channels.Information provided through Customer Service and web site is coInformation provided through Customer Service and web site is consistent.nsistent.

Weaknesses:Weaknesses:Data from Customer Service and Web is not being leveraged for prData from Customer Service and Web is not being leveraged for product improvement or oduct improvement or direct marketing campaignsdirect marketing campaigns……Customer Customer ‘‘opt outopt out’’ procedure is not reliable.procedure is not reliable.It is difficult for consumers to get to the right place to get tIt is difficult for consumers to get to the right place to get their questions answered.heir questions answered.Activities are not coordinated across customer touch points ...Activities are not coordinated across customer touch points ...

Opportunity:Opportunity:By creating feeds from Customer Service, and web marketing databBy creating feeds from Customer Service, and web marketing database to centralized data ase to centralized data warehouse, we can increase direct marketing database by X warehouse, we can increase direct marketing database by X ……., create a more reliable ., create a more reliable ‘‘opt opt outout’’ procedure procedure ……Forming a cross functional Customer Contact committee...Forming a cross functional Customer Contact committee...

Threats:Threats:Duplicate data issues Duplicate data issues ……Could receive fine and negative PR due to non compliance with FTCould receive fine and negative PR due to non compliance with FTC regulations.C regulations.

Sample


Data/Process/OrganizationData/Process/OrganizationPaint the Picture (current scenario)Paint the Picture (current scenario)

Graphic representation of data/process flow charts, Graphic representation of data/process flow charts, org charts (whatever is relevant to illustrate SWOT)org charts (whatever is relevant to illustrate SWOT)

Sample

2.2. Vision and PlanVision and Plan


Creating a Vision and PlanCreating a Vision and Plan

MaintainMaintain StrengthsStrengthsImproveImprove UponUpon WeaknessesWeaknessesCapitalizeCapitalize OnOn OpportunitiesOpportunitiesMitigateMitigate ThreatsThreats


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


Plan HighlightsPlan HighlightsObjectiveObjective

Strategy (priorities)Strategy (priorities)Metrics (current and planned)Metrics (current and planned)Key Initiates and activitiesKey Initiates and activitiesProcessProcessTechnologyTechnologyOrganization ImplicationsOrganization ImplicationsTimeline (phases)Timeline (phases)Finances

WHAT

HOW

Finances

WHO

WHEN

WHY


PlanningPlanningSet SSet S--MM--AA--RR--T* Objectives T* Objectives

Address Strengths, Weaknesses, Opportunities, Address Strengths, Weaknesses, Opportunities, and Threats (SWOT)and Threats (SWOT)

StrategyStrategyHow youHow you’’re going to achieve your objectives.re going to achieve your objectives.Priorities (and rationale for prioritization)Priorities (and rationale for prioritization)PhasesPhases

* S-M-A-R-T = Specific – Measurable – Actionable – Realistic - Timebound


MetricsMetricsKnow the Know the ‘‘hot buttonshot buttons’’ …… link to macro business link to macro business strategies (cost reduction, improved service, profit strategies (cost reduction, improved service, profit contribution contribution ……))

Customer SatisfactionCustomer Satisfaction

Web site conversionWeb site conversion……

Customer Service:Customer Service:PlannedPlannedCurrentCurrent

Sample


Data/Process/OrganizationData/Process/Organization

Paint the proposed picturePaint the proposed picture

Sample


Timeline/PhasesTimeline/Phases

Phase I Phase II Phase III

Pull It AllTogether

BuildFoundation for Advanced CRM

Grow Consumer

Value Segments

Sample

Year 1 Year 2 Year 3


Key Initiatives and Activities Key Initiatives and Activities Phase IPhase I

Phase I: Pull It All Together

A. Develop direct marketing capabilitySample

B. Define brand objectives:Adopt consistent metrics and means for measuring

• Ensure compliance with privacy reqmts.• Improve program consistency • Improve consumer satisfaction • Drive short term sales through targeted prgms• Improve process efficiencies

C. Prioritize and integrate current activities


Phase 1: Initiative APhase 1: Initiative A

Actions Responsibility Cost Estimate

• Centralize data management – Develop short term and long term

strategies – Outsource vs. internal

– Research – Information

Technology

$XXX

• Develop consistent consumer protection policies, standards, and procedures (‘do not contact’ etc.)

CRM Lead $XXX

• Set standards for cross functional activities (data capture, outbound, etc.)

CRM Lead $XXX

Sample

3.3. Financial AnalysisFinancial Analysis


FinancialsFinancialsCash FlowCash Flow

ProposedProposedBusiness as usualBusiness as usual

Payback PeriodPayback PeriodROI (Return on Investment)ROI (Return on Investment)

Assessing the costs/savingsAssessing the costs/savingsKnowing what to measureKnowing what to measureEstablishing a value to those measuresEstablishing a value to those measures

NPV (Net Present Value)NPV (Net Present Value)IRR (Internal Rate of Return)IRR (Internal Rate of Return)


Cash FlowCash FlowProposal ScenarioProposal Scenario

Most of the financial summaries are derived from cash flow.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 TotalCash Inflows / Benefits and Gains `

Benefit item 1 150 170 180 240 295 1,035Benefit item 2 490 595 700 720 790 3,295Benefit item 3 840 830 815 900 990 4,375

Total cash inflows 1,480 1,595 1,695 1,860 2,075 8,705

Cash Outflows / Costs & ExpensesCost 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 SummaryTotal 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

Sample

Copyright © 2003 Solution Matrix Ltd.


PaybackPaybackWhen the cumulative inflows = cumulative outflowsWhen the cumulative inflows = cumulative outflowsMeasure of timeMeasure of timeLonger time = more riskLonger time = more risk

Year 1 Year 2 Year 3 Year 4 Year 5 TotalTotal 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

Cumulative Incremental Cash Flow (120) (170) (42) 133 301

Payback Period: 3.2 Years

Sample



ROI CalculationROI Calculation

ROI = (Gains ROI = (Gains –– Cost) / CostCost) / CostHow do expected returns compare to costHow do expected returns compare to costROI is a percentageROI is a percentage

Year 1 Year 2 Year 3 Year 4 Year 5 TotalTotal 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%

Simple ROI, 5 years: 72.2%

Sample



Next StepsNext Steps

Propose Re-Tool Approval


SummarySummaryDeveloping a compelling business case requires Developing a compelling business case requires a basic understanding of: operations, planning, a basic understanding of: operations, planning, technology, and finance technology, and finance …… but you donbut you don’’t need to t need to be an expert in each.be an expert in each.ItIt’’s a matter of working through the process.s a matter of working through the process.Developing a business case Developing a business case

Assess and communicate Assess and communicate ““the problem/opportunitythe problem/opportunity””Define and communicate Define and communicate ““the solutionthe solution””Leverage the functional expertsLeverage the functional experts

Working in a cross functional roleWorking in a cross functional role


Brett LaDove

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Building A Business Case For Crm Methodology

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