Bridge the CRM Value GapSetting the Course for CRM

Erin KinikinVice President, Research DirectorForrester Research

CRM Value Gap

$

Time

CRM Value Gap

Costs

Benefits

ExecutiveAttention Span

Critical CRM Issues1. Vague, high-level strategy2. Technology-driven implementation3. No customer information strategy4. People, process and technology

efforts not integrated5. Failure to measure and improve

Issue 1: Vague, High-Level Strategy “360-degree customer view”

“Best-in-class process”

“World-class customer service”

“Right product, right time, right channel”

“Implement Siebel”“Delight the customer”

“Whatever helps my department”

Solution 1: Develop an Actionable Strategy

Business GoalsWhy?

StrategiesWhat?

TacticsHow?

Metrics/Value

Equations

Corporate business objectives

Customer-focused approaches in support of business goals

Specific business actions required to implement each strategy

Measurements of the effectiveness of the tactic in achieving the business goal

Value PlanCxO

Functional Manager

IT

End User

Finance

People

Solution 1: Use the Strategic Framework for Value-Driven CRM

Tactics

GoalsStrategy

Internal Process

Customer Interaction Channels

Customer Lifecycle

CRM Goals•Business goals•Company strengths•Competitive pressures•Industry dynamics•Demand trends•Financial plan

Customer Strategy•Profitability•Retention•Acquisition•Channel optimization•Share of wallet •Life time value•Contact optimization

Metrics

Customer results and experience are shared across the enterprise

Understand RespondDeliverTarget

Browse Configure Buy Manage Upgrade

Issue 2: Technology-Centric Implementation

0

Phase 2: Implement Service Modules

6 months 12 months 18 months 24 monthsFutureState

Phase 1: Implement Sales Modules

Phase 3: Implement Marketing Modules

Solution 2: Value-Focused Implementation Plan

0

Initiative 2Initiative 3

Initiative N …

6 months

12 months

18 months

24 months

Initiative 4

FutureState

Initiative 1: Immediate Opportunities

Initiative 1:“Immediate Opportunities”Strategy Tactics Metrics

Project 1 Project 2 Project NImplement the enablers

Issue 3: No Customer Information StrategyInformationCollection

InformationOrganization

Influence ToSell ToShip ToBill ToService To

Company

Information Management

NA EMEA ROW

IBMInternational Business MachinesIBM CorpIBM EMEA

PDA, Outlook, Excel

Finance, Sales, Service,

Fulfillment

Solution 3: Build Data Quality Into the Process

Discover•Identify potential sources

•Capture/assess state of metadata and documentation

•Source business owner feedback

DevelopCRM

StrategyDefine

RequirementsSelect Vendor

Design & Prototype Build Rollout

Analyze•Profile sample data sets

•Assess intersource relationships

•Rationalize results – seek to understand

•Document business rules

•Identify Issues

•Prioritize sources•Define transformation and integration rules

•Define edit rights and cleansing processes

•Define quality baseline

•Define ongoing manual processes

Design Verify•Validate rules•Identify issues

•Make adjustments

•Test alert processes

Monitor•Ongoing automated and manual review and assessment

Attempt to fix quality issues at source

Issue 4: People, Process, Technology Efforts Not Integrated

PeopleInitiate Change

ImplementChange

RefineChange

ProcessInitiate

Improvement

ImplementImprovement

RefineImprovement

Technology

Initiate Technical Project

ImplementProject

Operate Technology

Solution 4: Integrated Program Approach

DescribeConcept

Initiate Technical Project

ImplementProject Operate Project

DefineProgram

Manage/Refine Program

Initiate Change

ImplementChange

Modify/Refine Change

Initiate Process Improvement

ImplementImprovement

Modify/Refine Improvement

IT is accountable — business assists

IT or the business owns — as appropriate

Process

People

Technology

Solution 4: Ongoing Business Ownership

Line of Business Vice

Presidents

CEO

Chief Strategy Officer

CRMProject Team

Chief Information

OfficerCMO

Divisional CIOs

CRM Steering Committee

CXO…

• Focuses on critical customer processes and interaction points

• Defines how information can be utilized to increase customer revenues, profitability and loyalty

• Acts as a critical bridge between the business and IT• Empowered by the CEO and top level business

executives who participate in an advisory board or steering committee

• CRM steering committee: prioritizes initiatives, approves funding and resolves issues/conflicts as required

Customer StrategyMarketing

Sales

Service

…

Issue 5: Failure to Measure and Optimize

Business case

shelf-ware

CRM

Solution 5: Build in Metrics and Actions

MetricMeasurement

Results

0102030405060708090

100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Target

Action Plans Address Short-Falls

Where Do We Start (Restart)

Evaluate the current state Use the framework

• Assess and refine the strategy• Drill to the business tactics

Understand and identify all of the enablers Adjust the road map

• What has already been done has value — show where it fits• Look for the quick wins• Make sure that the metrics are in place

Engage!

Develop Strategy

Identify Enablers

Define Road Map

Plan and Implement Initiatives

Measure and

Optimize

Case Study: Fortune 500 High Tech Company

Business GoalsIncrease sales profitability

by 20%

StrategiesShift appropriate

transactions to the contact center

Tactics•Call center sales capability•Identify/target transactions

•Integrate sales and call center

Metrics•Revenue/sales rep.•Sales profitability

People: Right people, profitability-based compensation, benefits-based education

Process: Lead escalation, pricing and discount structure revised

Information: Consistent customer viewFunctionality: Contact center sales,

analytic models, campaign managementTechnology: Sales synchronization,

integration with order management and fulfillment

Key Enablers

Margins increased by 30%, retention increased by 5%, inbound leads increased by 15%

Results

Case Study: Multi-channel Retailer Business GoalsIncrease marketing

efficiency and return on direct marketing budget

StrategiesImprove conversion of multi-channel buyers

TacticsTarget catalog/Web

shoppers to shop in retail stores

Metrics•Revenue/channel

•Customer profitability•Customer lifetime value

People: Eliminate marketing siloProcess: Revised circulation planning and

campaign management processesInformation: Customer view inclusive of

transaction history from catalog, Web and retail (retail matching and reverse append)

Functionality: Data mining and modeling environment, campaign management

Technology: Data warehouse environment

Key Enablers

Improved channel mix by 1% resulting in $21 million additional revenue

Results

Case Study: Major European Retail Bank Business Goals

Increase revenue and improve customer

retention

StrategiesIncrease penetration of

existing customers

TacticsProvide personalized

cross-sell recommendations via

customer channelsMetrics

•Products/customer•Retention

•Lifetime Value

People: Adjusted compensation and measurement metrics; education

Process: Lead-generation processInformation: Customer profile (from

warehouse, “in session” data)Functionality: Real-time data mining, offer

arbitration and distributionTechnology: Data warehouse environment,

real-time cross-sell engine

Key Enablers

Six month ROI, 15% increase in leads, 50% lead conversion rate

Results

RecommendationsDon’t skimp on the strategic planning effort —

define a value planUse the business process and customer life

cycle as a guideDon’t try to do it all at once —

build incrementallyManage cultural shiftUse metrics to optimize business performance

29%

11%

3%

11% 11%

29%

8%

1 2 3 4 5 6 7

My CRM initiative is in the following status:

1.1. Planning2.2. Justifying3.3. Selecting Vendor4.4. Implementing (initial

phase)5.5. Implementing

(subsequent phases)6.6. Tuning/Improving7.7. Not Active

11%

7%

11%

16%

12%

8%

14%12%

8%

1 2 3 4 5 6 7 8 9

The person most involved in setting direction for CRM is:1. CEO/COO2. CIO3. Head of Sales4. Head of Marketing 5. Head of Service6. Line of Business Exec7. Cross Functional Steering Committee8. No Executive Owner 9. Multiple Executive Owners

18%16%

8%

16%18%

22%

1 2 3 4 5 6

The biggest inhibitor to CRM at my company is:1. No clear customer strategy 2. High perceived CRM cost relative to

value3. Bad customer data4. No or weak business sponsor5. Lack of alignment between CRM

and company objectives (metrics, employee incentives)

6. Other competing business priorities

14%14%

27%

5% 7%

14%12%

8%

1 2 3 4 5 6 7 8

The highest priority CRM function or project is:

1. Direct sales2. Multi-channel sales3. Customer service/call center4. Customer self-service/right

channeling5. Marketing6. Customer analytics7. Customer data integration/data

quality8. Application/process integration

24%

8%10%

24%

18%16%

1 2 3 4 5 6

The primary benefit we are expecting from CRM is:

1. Revenue growth2. Cost reduction3. Increased revenue per

customer/share of wallet4. Improved customer retention5. Higher customer profitability6. Better customer understanding

Questions