Earning a Positive ROI on Your CRM Initiative

Les Stern

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Build vs. Buy

Now that you understand how to generate a positive return on your CRM investment, the final question is the technology question. What is the best CRM technology solution?

The first decision is the build or buy decision. The natural inclination is to build the system internally. Your IT department will tell you they can do it cheaper. And since this is a major initiative, they will want to do it.

A few words of caution, though. First, you can probably get it done more quickly using an outside supplier. Your IT department is constantly facing shifting priorities and responding to crises. Chances are, despite the best of intentions, conflicts will arise and the project will take significantly longer than expected.

Second, putting together a CRM system is hard. No single vendor has developed a technology suite that satisfied the enterprise CRM technology needs, despite multiple years and billions of dollars of engineering investment. How can an IT department even think they can come close, in addition to providing a flexible, scalable, upgradable solution.

Selecting the CRM technology partner can be an arduous process. It should involve the following steps.

• Begin by putting down in writing what your vision of your CRM program is. Write down exactly what business issues you are trying to address, and your expectations as to how the CRM solution will address them.
• Research the various alternatives. Use the Internet, read trade journals, attend conferences, talk to colleagues. Begin to put down a list of the possible companies you might want to talk with.
• Perform an initial telephone screen with a common, written list of questions. To the extent you have already identified what capabilities you are looking for, you can quickly eliminate companies that don't provide those capabilities.
• Based on those telephone screens, invite several companies to meet with you and to present their capabilities. Provide a written agenda of topics you expect to cover. Expect to see a product demo, but do not settle for a feature-fundtion product demo. You need to be sure your business process can be enabled through the technology, so demand to see a business-process oriented demonstration. For example, ask to see how to initiate a marketing campaign all the way from targeting to execution to measurement. At this point, initial pricing discussions also are appropriate.
• Plan onsite visits to those companies still in the running so you can get a better handle on their people and processes. You will definitely want to meet with the people who will be handling your account. Make sure that, in addition to the technology, you have confidence in their project management expertise. That will be a big part of making the initiative successful.
• Check references. Have a detailed list of questions for the references. Ask about product performance, service, expertise, etc. Make sure to ask the question: If you had to do it all over again, would you select them? If possible, actually visiting clients at their sites so you can see in person how they use the solution is strongly recommended.
• Negotiate the contract.

Conclusion

Establishing a CRM initiative requires a long-term commitment over several years. You cannot expect dramatic results from a CRM program overnight. The program itself takes months, if not years, to set up. More importantly, profitable customer relationships are usually built over several years. But if you build the program right from the start, and carefully maintain it, it should quickly generate a positive return on investment, and be a positive force in your organization for years to come.

Additional Resources

Articles

"This Changes Everything", Alice Dragoon, Darwin, March 2002
http://www.darwinmag.com/read/030102/changes.html

"Avoid the Four Perils of CRM" (HBR OnPoint Enhanced Edition) Harvard Business Review, 2/1/02 Author(s): Rigby, Darrell; Reichheld, Frederick F.; Schefter, Phil

"CRM Special Report" Computerworld, 2/18/02 http://www.computerworld.com/q?k1300

"CRM ROI Best Practice" CRM Forum, Editorial 1/6/02 Author: Richard Forsyth http://www.crm-forum.com/cgi-bin/item.cgi?id=68233&d=345&h=701&f=721&nl=N02E11

"Managing the ROI on eCRM" CRM Forum, Library Author: Arie Goldshlager (Agency.com), 12/3/01 http://www.crm-forum.com/library/art/art-142/?edit

"Show Me the ROI!" Teradata Analytical Services, CRM White Paper. 1/02 Author; Judy A. Bayer http://www.teradata.com/library/res_white_pap.asp

"How Much are Customer Relationship Management Capabilities Really Worth? What Every CEO Should Know" Accenture White Paper, http://www.accenture.com/xd/xd.asp?it=enWeb&xd=services/crm/crm_thought1.xml

"The failure to achieve ROI from CRM: How responsible are the Big 5 consultancies?" CRM Forum, Editorial 03/15/02 Author: Richard Forsyth http://www.crm-forum.com/cgi-bin/item.cgi?id=75213&d=345&h=701&u=34ad9D53&m=3394

Books

"One to One B2B," Don Peppers and Marth Rogers, 2001

Websites

CRM Forum http://www.crm-forum.com
CRM Community http://www.crmcommunity.com
CRM Guru http://www.crmguru.com
Unabridged presentations from Gartner CRM Summit 2002 http://portals.tentv.com/gartner_crm