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Methodology and Tips for building a business case for CRM
Citation preview
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.
3304/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
4404/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
5504/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
6604/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
8804/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
Key ElementsKey Elements
1.1. Situation Analysis (current)Situation Analysis (current)2.2. Vision and PlanVision and Plan3.3. Financial modelFinancial model
9904/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
111104/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
121204/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
Consumer AnalysisConsumer Analysis
Mining existing dataMining existing dataResearchResearchInformal assessmentInformal assessment
131304/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
141404/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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??
151504/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
SWOTSWOTEvaluate the situationEvaluate the situation
ServicesServicesData captureData captureData usage/maintenanceData usage/maintenanceMessagesMessagesLeverageLeverage
161604/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
171704/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
191904/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
Creating a Vision and PlanCreating a Vision and Plan
MaintainMaintain StrengthsStrengthsImproveImprove UponUpon WeaknessesWeaknessesCapitalizeCapitalize OnOn OpportunitiesOpportunitiesMitigateMitigate ThreatsThreats
202004/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
VisionVisionDescribe Describe ““end stateend state”” (3(3--5 yrs.)5 yrs.)
212104/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
222204/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
232304/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
242404/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
Data/Process/OrganizationData/Process/Organization
Paint the proposed picturePaint the proposed picture
Sample
252504/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
262604/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
272704/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
292904/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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)
303004/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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.
313104/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
Copyright © 2003 Solution Matrix Ltd.
323204/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
Copyright © 2003 Solution Matrix Ltd.
333304/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
Next StepsNext Steps
Propose Re-Tool Approval
343404/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
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
353504/27/0404/27/04 Brett LaDove www.ladoveassociates.com 415.776.0613 Brett LaDove www.ladoveassociates.com 415.776.0613 Copyright Copyright ©© 2004 LaDove Associates2004 LaDove Associates
Brett LaDove
Customer Relationship Management&
Customer CareConsulting Services