DEVELOP CUSTOMER

CENTRICITY WITH CRM

BEST PRACTICES GUIDE

 DEVELOP CUSTOMER Best Practices Guide
CENTRICITY WITH CRM
Table of Contents
Executive Summary 3

Introduction 4

Return on Investment Strategy 5

Implementation Costs 6

Implementation Benefits 7

CRM System Architectures 8

CRM Features & Functionality 9

Risks and Key Success Factors 11

Analyst Bottom Line 12

Action Plan 13

About Demand Metric 24

EXECUTIVE SUMMARY DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 3

Executive Summary
This guide has been designed to provide practical advice for adopting a
customer-centric business strategy. Customer Relationship Management
(CRM) is a top priority for mid-sized enterprises; leverage it effectively to
differentiate your firm.

Read this report to:

Understand the Definition of CRM

Develop a Return on Investment Strategy
Identify Implementation Costs & Benefits
Perform a Cost/Benefit or ROI Calculation
Differentiate CRM System Architectures
Learn CRM Features and Functionality
Build a Business Case and Project Charter for CRM
Identify Risks and Key Success Factors
Provide Implementation Best Practices

Read this guide to learn how to make customer relationship

management work for your organization.
INTRODUCTION DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 4

Introduction
Info-Tech Research Group defines CRM as: Effectively implementing a customer-focused business strategy requires
a cultural shift that converts the focus from products to customer needs.
Is your product management process supported by empirical market
“A term that encompasses how an organization manages research data? Do you ever stop to consider what the lifetime value of a
its interactions with its customers. The end goal is to elimi- customer is to your organization?
nate disparate departmental information systems, and have
a 360-degree profile of each customer…in order to hone and Rather than heavily promoting products to create perceived needs,
personalize each customer interaction in the future. CRM consider working collaboratively with customers to really understand
allows companies to make more meaningful contact with their how you can help them. Advancements in customer self-service and
customers, giving the customer access to the products and support technologies are making it much more convenient for customers
information they need when they need it.” to help themselves while simultaneously reducing costs.

With the rise of software-as-a-service (SAAS), or “on-demand” applica-

tions, which are hosted by the vendor and available over the internet,
Contrary to popular belief, Customer Relationship Management (CRM) is mid-sized organizations are taking advantage of the low start-up costs
not a system or a technology or a simple application. CRM is a holistic and rapid deployments.
strategy that places customers at the center of all business operations. In a perfect world, your company would have the budget and resources
Some call this customer-centricity; others coin this approach as listening to fully integrate CRM with ERP and/or financial systems before the first
to the “voice of the customer.” user acceptance tests. Realistically, you will find more success by starting
Regardless of semantics, CRM is the integration of people, processes, with a simple sales force automation (SFA), marketing automation, or
and technology, which allow a company to leverage its information customer service module.
assets to identify, attract, and retain profitable customers. CRM appli- Eventually, you can add more functionality to your CRM platform, and
cations should not be viewed as the Holy Grail that will fix all your busi- perform back-end integrations, but to mitigate risks we recommend a
ness challenges; they are simply facilitators. structured approach.
RETURN ON INVESTMENT STRATEGY DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 5

Return on Investment Strategy

Developing a return on investment strategy is essential for deter-
mining initial and ongoing costs, and estimating returns or benefits
from deploying a CRM system.

The simplest method for demonstrating ROI is to ask each stakeholder

for a key performance indicator (KPI) that they are looking to improve as
a result of the project.

Customers may want to reduce support ticket resolution time; Sales may
have an eye on increasing win-rates; Marketing will likely want to reduce
acquisition cost per customer; and Senior Management should be inter-
ested in benchmarking and improving the average Customer Lifetime
Value (CLV) of your client base.

When building your business case for the CRM implementation, it is

important to clearly communicate the up-front and ongoing support
costs. These costs should be amortized over 3-5 years and compared to
the benefits derived in each functional department.

Cost reductions for sales, marketing, and support are the first areas to
analyze when determining long-term return on investment. Increased
revenues are hard to match directly to CRM initiatives, but can gener-
ally be expected.

This section will help you demonstrate the impact that investing in CRM
can have on your business.
IMPLEMENTATION COSTS DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 6

Implementation Costs
What are the key implementation costs to consider?

1 Hardware – if you select “client-server” architecture, you will likely 4 Support and Maintenance – you will require a CRM Administrator
need to purchase a dedicated server. to manage your system internally, or you may prefer to outsource
the support function. Either way, it would be wise to budget
2 Software Licensing – hosted CRM systems vary in cost from 20-40K/year for user support.
$20-100/user/month, depending on which edition is needed. If
your organization has complex requirements, expect to spend Customization – if extensive customization is required, be sure to
5
$65-100/user/month. add this cost to your ROI calculation. Given the nature of custom-
ization, it is difficult to provide an estimate without first under-
3 Implementation Consulting and Training – business process standing business requirements.
workshops (5-15K); system design & construction (10-20K); data
migration (5-15K); and user training (5-10K) all need to be consid- Back-end Integration – working with a systems integrator to
6
ered. These ranges are all estimates, based on client consulting perform a back-end or ERP integration can be expensive initially,
projects. but will provide a longer-term payback from process automation
and streamlining. There are many “connectors” that have been
specifically designed to integrate CRM systems with other soft-
ware packages. Add middle-ware to your ROI.
IMPLEMENTATION BENEFITS DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 7

Implementation Benefits
Develop a CRM Project Charter and CRM Business Case with an accom-
panying CRM Readiness Assessment to internally communicate the cost/
benefit of this project. Following are key benefits:

1 Increased Revenue – most organizations report an increase in 4 Improved Customer Satisfaction – as your organization becomes
annual sales revenue of between 5-15% per sales representative more customer-centric, satisfaction ratings can be expected to
following a successful CRM implementation. When completing improve. If you don’t have a satisfaction survey process, strongly
your ROI, consider how much time will be saved due to stream- consider developing one.
lined processes, and how that equates to more time for selling.
5 Reduced Sales, Marketing, and Support Costs – a decrease of
2 Boosted Margins – knowing your customers implicitly reduces 5-10% is reasonable for sales, marketing, and support adminis-
the need to discount offerings, helps identify new ways to add tration costs. As you become more proficient with knowing your
value to your products, and reduces the overhead required to customers, segmentation and more highly targeted marketing
cement new business. occurs, saving time and money.

3 Higher Conversion Rates – an increase of 3-5% in sales conver- 6 Informed Product Management – placing customers at the
sion rates can be expected, especially if you add an e-com- center of the product management process will certainly provide
merce module to your system. Having a better understanding of the information needed to make better product management
your sales cycle will facilitate “no-bidding” on less profitable or decisions. Strikingly, many companies are not leveraging focus
low-probability deals. groups or customer advisory panels. Strongly consider doing so.
CRM SYSTEM ARCHITECTURES DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 8

CRM System Architectures

There are two major types of CRM systems: in-house or hosted. Hosted Hosted CRM System Architecture Benefits:
software, or “on-demand” as it is often called, is delivered via the Internet.
Monthly Subscription-Based Pricing – most hosted CRM systems
Examples of common hosted software systems include Google, Hotmail,
provide a very attractive subscription-based pricing model. Ranging
and Travelocity.com.
between $20-$125/user/month, these systems are affordable for
Demand Metric recommends hosted CRM systems for most mid-sized mid-sized enterprises.
enterprises, unless an existing ERP system with a built-in CRM module
Minimal IT Resources Required – organizations that have minimal IT
is available. Following are a few of the reasons why. To learn more, read
resources find exceptional value from the hosted model, as system
our “Evaluating Hosted CRM” research note, which contains a brief
users and administrators can have little or no prior technology
profile of 6 leading hosted CRM vendors.
experience.

Very Quick Implementation – most deployments can be implemented

within a few weeks. When compared to in-house deployments of 6-18
months, the hosted model becomes a much more viable option.

High Availability – hosted CRM Application Service Providers (ASP)

deliver hosted systems with Service Level Agreements, which guar-
antee availability. Although these systems have been known to go
down from time-to-time, there is a better chance that your in-house
system would be less reliable.
CRM FEATURES & FUNCTIONALITY DEVELOP CUSTOMER CENTRICITY WITH CRM BEST PRACTICES GUIDE 9

CRM Features and Functionality

What is available and what should I look for in a system?
Contact and Account Management – tracking of activity history, key Sales Management and Reporting – look for forecasting, sales metrics,
contacts, customer profiles, sales cycle history, current and future sales cycle analysis across teams, and other sales reporting features.
opportunities.
Marketing Management and Automation – email marketing, campaign
Sales Force Automation – account and contact management, oppor- planning, campaign ROI analysis, customer segmentation, integra-
tunity management, sales pipeline forecasting. tion with web analytics, collateral content management, real-time
messaging, lead capturing etc.
Field Sales Support – data uploading and order entry via mobile
devices such as blackberries. Retrieving collateral, proposals, or Customer Support and Self-Service – incident management, tracking,
other documents. and assignment, web-based order tracking and self-service, resource
library, warranty, SLA, and contract management.
Simple User-Friendly Interface – as adoption rates are one of your
chief concerns, having a very easy-to-use system is essential for CRM Partner Relationship Management – visibility into channel partner
success. pipeline, partner recruiting, partner opportunity management, work-
flow, analytics.
Security: Role Based Rights and Access – in the age of Sarbanes-
Oxley, it is critical that your system has inherent role-based security E-Commerce Features – shopping cart and checkout, online order
settings. Ensure that only the right people have access to sensitive entry, request for proposal (RFP), request for information (RFI), email
information. order confirmation.
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