Benefits of an Effective CRM Solution
Each Industry Sector Benefits from CRM Strategies.
Apr 14, 2009
The variations in CRM strategies from one business sector to another are often a simple differentiation of customer relationship strategies as they relate to products and services.
These benefits begin with the development and implementation of a data warehouse, the first technology step in the evolution to a CRM strategy. Some benefits are available once the data warehouse has been implemented and data has been stored and organized for analysis, while others will follow with a full CRM implementation.
Typical Data Warehousing Features
There are some general features of data warehousing and CRM implementations that apply to any organization, wherever there are customers, and no matter what business sector they are in. Here are some examples:
- Benchmarking -- comparing sales organizations or departments against each other and against prior periods to identify good performers and those needing additional “coaching”
- Customer one-to-one marketing -- identifies unique interests of potential customers based on purchase patterns
- Direct marketing -- based on tracking responses and householding, the cost of mailings can be reduced
- Identifying opportunities -- cross-selling additional products across lines of business
- Customer profitability -- identifies the total cost of doing business with individual customers based on the type of products, usage of discounts, selling time and effort, and logistics costs
- Initiative management -- for new product or promotional initiatives, the ability to gather information in real-time across functions, can allow mid-campaign adjustments or campaign termination that can save a significant portion of the campaign’s value or cost
Determining the ROI for a CRM Solution
Ultimately, most organizations will want to have effective ROI/business benefit measurements to evaluate the implementation of a data warehouse and a subsequent CRM solution. This can be accomplished most effectively by looking at the ledger before and after the technology is implemented, and comparing costs and revenues.
It is important to address the collection of ROI data before starting the data warehouse development and incorporation of the other technologies on the way to a CRM solution, since collecting data after the fact will be difficult. This is one of the items that needs to be monitored by the data warehouse and CRM solution project team. There are several ways to estimate savings:
- Hidden Gems. One customer identified $234 million in un-billed business with one of the first applications of its data warehouse
- Flat Overhead: One company increased its business by 30% without increasing the staff overhead needed to manage it
- Leverage Large Cost. This assumes that a small change on a large cost item could pay for the data warehouse
- Precise Before/After Savings: The budget for the CRM project may need to be reduced to justify the use of the newly-created budget excess
- Productivity Elimination. This is often defined in terms of “saving 1 hour per month per person for 1000 people,” however, those fractional personnel savings are never realized. Instead, for an activity that is recognized as being important such as building revenue forecasts, estimate how many people it would take to accomplish the equivalent analysis without the data warehouse
- Risk Protection. Estimate the cost of a business catastrophe such as a product recall. Identify the savings possible in narrowing the scope of the recall or speeding the identification of a suspect product
Justifying Data Warehouse Growth
If the data warehouse and the CRM solution are successful, they will grow rapidly. New users will bring new information to the warehouse to support their information needs, and the combination with the existing data will enrich every user’s information experience.
Most organizations spend months of staff resources attempting to justify the initial data warehouse and subsequent CRM solution expenditures, and then become complacent, immersed in the technology and its projects. When the usage grows and the system grinds to a halt, corporate management may challenge requests for more capacity. This issue can be addressed by paying close attention to the business objectives, and using periodic reviews to ensure that the CRM solution continues to meet them.
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