Building the Business Case for CRM

In this column, I want to describe the critical role of the CRM business case

In my last column, "CRM Projects: Why the Doom and Gloom?" (see eWeek, April 23), I suggested successful CRM initiatives are possible, but they require a company to set base-line metrics and improvement objectives for the parts of the business that will be automated. They also require companies to regularly measure and report on the accomplishment of each objective.

In this column, I want to describe the critical role of the CRM business case, which I believe is the document that expresses todays base-line metrics as well as tomorrows desired metrics and the measurement procedures that will be used to ensure that desired metrics are achieved.

A good CRM business case will contain the following five sections:

Executive summary. This provides a description of your companys current state of CRM; a summary of your CRM value proposition, including the metrics that will be measured throughout the project; details on key financials, including cost/benefit analysis, break-even analysis and ROI calculations; as well as a statement of executive commitment to CRM metric reviews at least three times per year. The summary also details the project scope and implementation timetable.

Key business risks and mitigating factors. This section lists the various business, user and technical risks that may be associated with your project. For example, the technology may prove too complex, or the proposed system support may fail to meet user needs. Include a plan for countering each identified risk.

Recommended technical solution. Provides a description of alternatives considered, the proposed technical solution, existing system interfaces (for example, back-office ERP systems), your disaster recovery policy, hot-spares policy and support/help desk policy.

Operational/organizational impact. Specifies who will be trained on the system and when, which business processes will be impacted by the system, what is the basis for organizational buy-in, how rewards will be used to motivate consistent system usage and how system metrics will make their way down to the user level.

Appendices. These are by far the most important sections of the CRM business case. The appendices (one for each set of system users) lay out exactly which current activities will be impacted by the CRM system and how they will be impacted. CRM system impacts tend to fall into the following areas: productivity improvements, cost savings, better employee satisfaction, enhanced customer satisfaction, greater customer knowledge, higher customer loyalty and superior customer retention rates. The appendices should show not just, for example, that the CRM system is likely to save sales reps 8 hours per week, it must also define how these 8 hours will be spent (for example, more calls, better calls, more time to coach, higher close ratios and so on). Alternatively, if you are able to realize a $20,000 annual savings in catalog mailings, how will this money be reallocated?

In summary, drive your CRM initiatives success via a succinct and meaningful CRM Business Case with concrete metrics for each user group. Then use the Business Case as the tool to regularly measure the business impact of the system for each user group.

As Peter Drucker reminded us years ago, "If you cant measure it, you cant manage it."