What is CRM? The Definitive Guide to Customer Relationship Management

2. Identify Opportunities and Benefits

CRM is a business initiative that will require significant company resources to develop, implement and support. So your business case will need to show that there is a payoff for the company.

In general terms, customer-centric companies have proved to be 60% more profitable than those not focused on the customer.⁴ In addition, multiple studies and sources over the years have shown that retailers with successful customer-centric initiatives can enjoy an average 5% lift in revenue and a 7% increase in market share. Plus, identifying top customers and optimizing those relationships could increase sales as much as 17%.⁵

What’s more, the customer database that’s a key component of any CRM initiative allows companies to fully leverage data across the organization, increasing its effectiveness in both marketing and operations.

4. Financial Justification Part 2: Calculate Costs

Full-scale CRM programs typically cost hundreds of thousands — even millions — of dollars, in addition to considerable time and human capital investments. And your business plan will need to pass muster with the CFO and with non-financial types who will be charged with implementing the customer database and CRM program. This is precisely why a careful evaluation and estimation of costs — and the ROI — is key to gaining buy-in. Following are some common costs to consider.

People

The different skillsets each employee brings to the table, i.e., breadth of knowledge, are often the very thing that makes your company a standout among its peers. But this is exactly what can lead to risk in a CRM initiative.

Each individual tasked with participating in the initiative and gleaning insights from customer data should be trained for the specific tasks he or she will be performing. And training should continue as new processes and strategies are created.

A caveat: Great caution should be taken when setting expectations for individuals. Be realistic and know the limitations of your in-house team. Many organizations turn to a third party to augment their “bench strength.”

Processes

The processes for the individual functional areas — marketing, customer service, merchandising, operations, digital and ecommerce — are typically siloed. But CRM requires more cross-functional processes. To minimize risk, every business process must be looked at holistically, from end to end, to understand how the data flow and customer touchpoints cross areas. A seamless customer experience is the key to successful CRM implementation.

Change Management

Change management also plays a large role in the launch of a CRM initiative. Different stakeholders have vested interests in seeing their roles and responsibilities change — or not. Change management issues must be addressed and ownership must be assigned to ensure buy-in.

Funding

Many CRM projects end up underfunded. Often, this arises from the misguided notion of “try before you buy” to see if CRM will work for the organization. Your business case must include cost, benefits and value calculations that show CRM’s pro forma impact over several years if you want to win buy-in and adequate funding to do CRM correctly.

Technology

Any CRM software, technology or tools purchased and leveraged must be carefully evaluated to ensure it is scalable, flexible and robust enough to meet both current and future needs. A thorough examination of risks will include a review of internal systems, skillsets and resources to determine not only the type of technology to use, but also the type of support needed to maintain, update and leverage the systems properly and to their fullest potential. Often, an outside resource is the best option to conduct such a technology assessment.

Customer Data Collection: How you’ll learn about the customer.

What you recommend here will depend on your available channels, customer touchpoints and technical capabilities. Both offline and online data need to be tracked and stored in a usable format, including unstructured data from social networks.

Data collection initiatives need to consider all payment forms as well as all customer touchpoints, including but not limited to the following:

You’ll want to ensure that your data collection tactics protect customers’ privacy, do not slow down or impede the sales process, and provide enough value to incent customers to offer personal information. If your data collection effort includes a loyalty program, it should include both an initial data capture strategy and an ongoing data capture strategy, i.e., giving customers reasons (benefits) to keep shopping or banking with you while providing transactional, attitudinal and behavioral clues about themselves.

Customer Communications Matrix: How you’ll build relationships with the customer.

Just as the 360-degree view of the customer is critical to developing your CRM strategy, your customer communications are key to building and growing customer relationships.

Your communication plans will be driven by the customer knowledge gleaned from your customer data and should also take into account your ability and intention to manipulate data using analysis, modeling and segmentation. Your recommendation should include frequency, channels, and key messages and objectives. You should also address opportunities for personalization, behavior-based triggers and lifecycle management.

Ideally, your communications will provide the opportunity for customer feedback, too, such as through readership surveys and two-way communication, including actively monitoring social media channels.

Recommended Technology Solutions: How you’ll collect, manage and distribute customer information.

Your customer data is vital to your CRM strategy, helping you decide whom to talk to and when, as well as providing insights or relevant targeted content. So a customer database must be the foundation on which your CRM program is built.

What you recommend here will depend on whether you currently have a CRM platform, how reliable and complete the data is, and how you intend to start (or continue) to collect data. It will need to address your company’s current IT infrastructure, skillsets and resources. And it should take into account your ability and intention to manipulate data using analysis, modeling and segmentation.

A partner is invariably needed here to help you better assess your company’s situation and help align your needs and objectives to the best-of-breed solutions. A partner can either provide you with a cloud-based outsourced solution or help you bring a hosted platform in-house. A partner can also continue to manage and maintain the solution, as well as provide ongoing data analysis, strategy and consulting, if appropriate.

Key Milestones: How you’ll divide each phase of implementation, plus costs and timeline.

With the plan in place, the last item to address is the speed at which you intend to implement each of the recommendations. Many companies push the launch and implementation too quickly and don’t take into account the time needed to procure hardware/software, train users, align departments, change processes and so on.

It makes good business sense to tie important milestones to company objectives where possible (such as the rollout of a loyalty program before the holidays to help make projected revenues). But be sure adequate time is given to do it correctly. This is another area where risk can increase if not managed correctly.

Another consideration is where your company is on the CRM evolution chart. This will provide clues as to whether milestones should be large leaps or small steps. For example, if your company is at Stage 2 (customer focus), small steps would be more manageable not only in terms of budgets, but also in terms of change management. Throw too much, too soon at employees, and you may experience significant bottlenecks.

Identify Opportunities

When we begin building a case for a client, our consultants do extensive interviewing to ferret out strengths and challenges in that client’s particular situation, oftentimes leading us to unique opportunities. For instance, the typical retailer is resistant to making changes on the “front lines,” despite this being the primary customer point of contact. Retailers resist because of issues related to turnover, training, time at the cash-wrap and so on.

Yet, in one case when we asked a department store’s managers what differentiates their company in the marketplace, they agreed that, “We’re a neighborhood department store where the employees really know and care about the customer.” It became apparent that there was a much stronger associate in this setting than we usually find. As a result of this research, we identified opportunities at the point of sale that previously would not have been entertained.

Leverage Experience

A carefully chosen partner brings specific experience in multiple disciplines that you may not have internally. One example is the ability to develop customer strategies based on your company, industry, market and what you currently know (or plan to learn) about your customers. A partner who has worked across industries and markets, and developed programs for companies large and small, sophisticated and antiquated, has the background to help you decipher what works and what makes the most sense for your scenario, budget and timelines.

A partner can help you set up your program in a way that makes sense for your current and future objectives. For instance, you may not currently have a social buying or voice-search strategy. But you can work with a partner experienced in these areas to begin testing these tactics.

A partner can also bring strategic insights to your data capture, analysis and reporting objectives, helping you really understand what data points are needed, how best to acquire them, and then how to segment, strategize and leverage all that data.

Moreover, by continuing the partnership, you can rely on those outside experts to continuously look for ways to make your CRM initiative work better for you, since they’ll have an in-depth knowledge of your needs, program, strategy and infrastructure.

Neutralize Politics, Gain Objectivity

There are very few companies today where you won’t find strong opinions about CRM since many CEOs say they don’t have a solid grasp of the returns from marketing and technology investments.

Partners can help bring objectivity while arming you with industry statistics and best practices. They can show what other industry players are doing, including your competitors. And they’re able to delve into your company and specifically show — based on your metrics, customers and objectives — what a CRM strategy can accomplish.

Partners can also help bring perspective to the technology options and best practices, and pair you with appropriate technology services and solutions. Through targeted, objective exploration and recommendations, a partner helps mitigate personal opinion and agendas, and brings consensus into focus.

Maintain Momentum

A partner can keep the initiative on track when your internal resources are already tapped. Experience has shown that any time a significant project is introduced — even if it will ultimately save resources — it is a challenge to get it implemented.

For example, an omnichannel marketing platform initiative requires a multi-departmental taskforce, encompassing finance, marketing, operations and IT. And invariably, something comes up in one of those departments to delay or stop the project. An outside resource, though, can keep the momentum going and ensure key milestones are met, shouldering a great deal of work your employees would otherwise have to bear.

We helped one client build a business case for CRM that included a pilot program. Despite lacking the resources to do it successfully, the client decided to implement the pilot using internal resources. The client experienced significant issues and launched the program six months behind the initial schedule. A year later, they approached us with concerns that their CRM strategy was not meeting financial expectations. They asked us to review it and make recommendations.

After an extensive review, we found that many of our original recommendations (many involving outsourcing) still made sense. After their experience and our review, the client finally saw the need for a partner to work with them throughout the continuum — planning, launch, rollout, and ongoing measurement and refinement.

Strengthen Weak Links

An effective partner brings best practices, benchmarks, case studies, experience and proven methodologies for making CRM initiatives work. Perhaps most important, the right partner brings experience proving to the powers-that-be that CRM works. Leverage this knowledge in the areas where it makes sense for you (i.e., boost your weak areas and supplement your strengths).

For example, if your IT department has limitations, you can bolster that with a technology solutions partner. If the financial people are not strong supporters of your CRM business case, you can bring in help to strengthen the financial section of the business case. If Operations is not backing the need for a CRM platform, a partner can illustrate how a fully leveraged solution positively affects Operations.

And last, a partner can be a way to get senior management’s attention. Often, a paid consultant finds it easier to move your case up the ladder.