Get CRM Right The First Time: Best Practices for CRM Success

Steve BonadioSenior Program DirectorEnterprise Application StrategiesMETA Group

steven.bonadio@metagroup.com

Business & Technology Scenario

CRM continues to be a strategic priority

Risk-tolerant early adopters have given way to pragmatic, risk-adverse, and more moderate organizations

CRM investment is bifurcated between tactical LOB projects and CRM “infrastructure”

Prevailing economic conditions are mandating hard ROI vs. “leap of faith”

CRM technology is maturing, yet continues to evolve

Critical Issues

Developing a CRM Strategy

Avoiding CRM Program Failure

Rationalizing CRM Technology

Develop a CRM Strategy: Design Around the Customer

Best-Practice CRM Principles

Derive customer patterns by applying “ETFS” as a lens to drive sales, service, marketing and commerce chain process

Anchor offer, channel, and business processes around customer patterns

Technology-enable customer relationship with CRM ecosystem

Customer Life Cycle Management (CLCM)

as a Three-Domain Business System

Engage

Service

Customer Life Cycle

Fulfill

TransactCust.Pattern

Channels & “POIs”

Sales

“Offer”

Customer-RelatedBusiness Processes

Mktg. Service

CRM Technology“Ecosystem”

CollaborativeAnalytical

Operational

CRM is not an IT project — it is an iterative and continual transformation of people, process and technology

Building the CRM Business Plan

Addresses three basic ideas:• Business vision —

How do we want to treat customers?

• Business design — How do we want to (re)engineer our business to enable customer treatment?

• Technology enablement — How will technology support the new design?

Organizational Constructs: Program Management Office and Chief Customer Officer.

Strategic Fit:Strategic Fit:CustomerCustomerPhilosophyPhilosophy

Brand and CRMBrand and CRM

Customer ValueCustomer ValuePropositionProposition

Schedule and PortfolioSchedule and Portfolio

Strategic PartnersStrategic Partners

Legal, Regulatory ImpactLegal, Regulatory Impact

Staffing and OrganizationStaffing and Organization

Competitive AnalysisCompetitive Analysis

MarketMarket ResearchResearchOpportunity OutlineOpportunity Outline

Financial AnalysisFinancial AnalysisRisksRisks

Critical Success FactorsCritical Success Factors

Value MeasurementValue Measurement

Construct CRM business plan iteratively; it does not have to be a novel, but must codify (and value) future customer strategies

Business Plan T.O.C.

Assessing CRM Capabilities Maturity Assessment

• Measures the maturity of CRM program methods and how well it has been institutionalized relative to others in similar industries

• Helps predict failures and recommends remedies

Readiness Assessment

• Gauges how well the CRM program concepts will be accepted and indoctrinated within the organization

• Collect and plot key indicator values along eight dimensions

• Look for dimensions in the “danger zone” and a high degree of inconsistency

Leadership/ Sponsorship Culture Process Resources Value Knowledge Technical Architecture

Strength (green)

Weakness (red)

Caution (yellow)

Assessing true CRM capabilities requires looking at both CRM maturity and CRM readiness

CRM Readiness: Sample

Increase Increase RevenuesRevenuesIncrease Increase RevenuesRevenues

Reduce Reduce CostsCosts

Reduce Reduce CostsCosts Increase speed to marketIncrease speed to marketIncrease speed to marketIncrease speed to market

Reduce customer contact/ Reduce customer contact/ support requirementssupport requirements

Reduce customer contact/ Reduce customer contact/ support requirementssupport requirements

Reduce fulfillment and Reduce fulfillment and customer response errorscustomer response errors

Reduce fulfillment and Reduce fulfillment and customer response errorscustomer response errors

DriverDirect Direct Revenue Revenue

ImpactImpact

Direct Direct Revenue Revenue

ImpactImpact

IndirectIndirectRevenueRevenue Impact Impact

IndirectIndirectRevenueRevenue Impact Impact

Direct CostDirect CostReductionReduction

Direct CostDirect CostReductionReduction

Indirect Cost Indirect Cost ReductionReduction

Indirect Cost Indirect Cost ReductionReduction

Acquire new customersAcquire new customersAcquire new customersAcquire new customers

Increase revenues from Increase revenues from existing customersexisting customers

Increase revenues from Increase revenues from existing customersexisting customers

Develop new products Develop new products and servicesand services

Develop new products Develop new products and servicesand services

Increase Increase brand awarenessbrand awareness

Increase Increase brand awarenessbrand awareness

Increase Increase brand perceptionsbrand perceptions

Increase Increase brand perceptionsbrand perceptions

Increase Increase customer satisfactioncustomer satisfaction

Increase Increase customer satisfactioncustomer satisfaction

Increase Increase loyalty of customersloyalty of customers

Increase Increase loyalty of customersloyalty of customers

Improve productivityImprove productivityImprove productivityImprove productivity

Displace costsDisplace costsDisplace costsDisplace costs

Reduce capital Reduce capital requirementsrequirements

Reduce capital Reduce capital requirementsrequirements

What About CRM Value? CRM investment is justified by

top- and bottom-line impact

CRM creates business value through “hard,” “soft,” and “hybrid” returns• Hard: Preferred, but difficult• Soft: Easier, but lack

credibility• Hybrid: Viable, but require

KPI consensus

Most credible/ measurable ROI• Cost displacement• Customer penetration/wallet

share• Improved resource productivity

CRM value metrics must be incorporated into the business plan, monitored, and updated periodically

Avoiding CRM Program Failure

There are several identifiable early

warning signs that predict eventual

failure (and can guide you towards success). Learn how to identify these often surprising

red flag indicators, and the appropriate

mid-course corrections to avoid a potentially fatal CRM

situation.

Headline: CRM is Not Doomed to Failure!

People Still Make the Difference

Failure Warning Sign Recommendation

No executive support or visibility

Establish leadership (and accountability) by proactively seeking out executive support

Too many individual projects going on (usually in different directions)

Harness thematically related projects into a CRM program management office

IT-driven “hero culture” Apply reusable CRM program processes to avoid the “hero culture”

Not using a systems integrator

Use a systems integrator, at least to bootstrap early activities and leverage skills

Appropriate leadership to promote business/IT alignment and mitigate change impact on employees and groups is critical to CRM program

success

“Process” Is Not a Dirty WordFailure Warning Sign Recommendation

No business plan Create a CRM business plan, even if it’s initially just a few pages; Take no more than 4-6 weeks to develop initial plan

Substituting a vendor implementation methodology for a CRM methodology

Embrace a technology-neutral CRM methodology to encompass the big picture

No process re-engineering plan (or criteria by which to judge when to adopt vendor processes)

Create a process re-engineering plan and the criteria to ascertain when to adopt processes instantiated in applications vs. extending the application to handle unique processes

No metrics (developed in advance) Develop success metrics/KPIs, and embed them in CRM processes; Establish governance and accountability

Automating and optimizing customer processes is at the heart of CRM value delivery – Never automate a bad process!

Technology — It’s Not Simply “Add Water and Stir”Failure Warning Sign Recommendation

Over-customization of applications Configure (declaratively) and extend applications; Limit programmatic customization whenever possible

Lack of architectural standards Tap into enterprise architectural standards — if there are none, use CRM as an opportunity to begin developing them

No strategy for development, extension, and integration

Create a strategy for development, extension, and integration BEFORE implementing the application

No CDI approach Understanding who your customers are is a requirement of ALL CRM initiatives, although getting there is the ultimate challenge

CRM technology will ultimately support both people and process – Technology-only CRM strategies will fail

Rationalizing CRM Technology:The CRM Ecosystem

Cu

sto

mer

Inte

rac

tio

nF

ron

t O

ffic

eB

ack

Off

ice

Mo

bil

e O

ffic

e

Resp. Mgmt.Resp. Mgmt.Web ConfWeb Conf

E-MailConferencingVoiceVoice

(IVR, ACD)(IVR, ACD)WebWeb

StorefrontStorefront

Collaborative CRM

DirectDirect Interaction Interaction

1 4 1 4 1 44 41 41

ERP

SalesAutomation

ServiceAutomation

LegacySystems

MarketingAutomation

Mobile Sales

(prod cfg)

Field

Service

Operational CRM

Supply Chain Mgmt.

2 3

4

2 3

1 1

4 4

32

Order Mgmt.

Order Prom.

CampaignMgmt.

CustomerActivity

Data Mart

CustomerData Mart

ProductData Mart

DataWarehouse

Analytical CRM

CategoryMgmt.

1-4

1Vertical

AppsMarketing

Automation

Clo

sed

-Lo

op

Pro

cess

ing

(EA

I T

oo

lkit

s, E

mb

edd

ed/M

ob

ile

Ag

ents

)

There is no “ecosystem in a box”; CRM will remain a multi-vendor/product/domain effort for the foreseeable future.

Engage1

2

3

4

Fulfill

BuildingCLCM

Transact

Service

LegendCRM application

Non-CRM app.

Example

Integration

Exploring Operational CRM

Implement discrete CRM functions (e.g., sales, marketing, service) to enable management of customer: • Transactions• Interactions• Expectations

Surface and re-use underlying application services (e.g., business rules, workflow, various “engines”) to enable:• Integrated processes• Flexibility and re-use

Issue 1

CRM strategies mandate strong support for operational services to automate customer-related business processes

Operational CRM Domains

CIC/Call Center (agent-facing)

Campaign Mgmt./EMM

Channel/Partner Mgmt.

Incentive Mgmt. Product

Configuration Sales Automation Service Automation

(live and field)

Exploring Collaborative CRM Implement portals to enable UI

aggregation and contextual navigation

Develop multi-channel interfaces to enrich interactions and increase exit barriers

Infuse personalization into all customer interactions

Organize content and knowledge for use by customers and employees

Issue 1

Exploit collaboration to enable rich interactions with customers and to improve communication and information sharing

CIC/Call Center (customer-facing)

Content/Knowledge Mgmt.

Customer Interaction Mgmt.

Personalization Portals Service Automation

(e-service)

Collaborative CRM Domains

Exploring Analytical CRM

Leverage analytical applications to recognize customer behavior patterns

Support multiple analytical methods (e.g., reporting, OLAP, data mining)

Build a strong foundation (e.g., DW) to enable analytical CRM

Implement effective data management (e.g., ETL) strategies

Issue 1

CRM will fail without support for analytics — leverage existing infrastructure to jump-start analytical CRM

Balanced Scorecard Behavior modeling &

profiling Data Mining &

Recommendations Marketing

Segmentation ScoringPlanning/Analysis

Performance Measurement

Reporting/OLAP

Analytical CRM Domains

Rationalizing CRM Integration Approaches Plan integration strategy

early• CRM integration can

account for 60% of total implementation cost

Recognize that integration methods, costs, and effort varies dramatically

Use customer patterns and ETFS processes to ascertain integration scenarios

CRM Integration Domains

Operational/Analytical

AcrossChannel

Internal/External

Front Office/Back Office Batch, API, EAI

Batch, API,Portal

API, EAI, CTI

Batch, ETL

Integration technology is the glue that binds people, process, and technology

To Get CRM Right, Enterprises Should. . .

TRANSFORMATION STEPS

Refocus on business and CRM planning to align

existing technology investments to enterprise

goals

Avoid potential failure by perceiving early warning

signs

Automate and optimize business processes, while

developing a framework to manage customer data

To Get CRM Right, Enterprises Should. . .(continued)

Business Impact: CRM is a business strategy that will transform your business; Understand this fact and you’re on

your way to program success

TRANSFORMATION STEPS

Rapidly sense and respond to environmental

change through tightly coupled analytics

Expose collaborative interfaces (e.g., portals,

touch-point synchronization) to enrich interactions

Pull everything together by fixating on integration

Next Steps

Attend META Group’s Events

• METAmorphosis 2004 — The Adaptive Organization: Building Value by Remodeling for IT Flexibility

• See metagroup.com for dates and locations

Listen to Upcoming Webcasts and Teleconferences• Connect With metagroup.com/events for Details

• Contact Your Client Services Representative

Next Steps (continued)

Engage META Group’s Analysts and Consultants• Teleconference

• Half-Day, On-Site Briefing

Browse Related Research • Connect With META Group’s Enterprise Applications

Resource Center on metagroup.com