Get CRM Right The First Time Best Practices

Get CRM Right The First Time: Best Practices for CRM Success Steve Bonadio Senior Program Director Enterprise Application Strategies META Group steven. bonadio@metagroup. com

Business & Technology Scenario l CRM continues to be a strategic priority Critical Issues a. Developing a CRM Strategy a. Avoiding CRM Program l CRM investment is bifurcated Failure between tactical LOB projects and CRM “infrastructure” a. Rationalizing CRM l Prevailing economic conditions are mandating hard ROI vs. “leap of Technology l Risk-tolerant early adopters have given way to pragmatic, riskadverse, and more moderate organizations faith” l CRM technology is maturing, yet continues to evolve

Develop a CRM Strategy: Design Around the Customer Best-Practice CRM Principles Customer Life Cycle Management (CLCM) as a Three-Domain Business System Customer Life Cycle l Derive customer patterns by applying “ETFS” as a lens to drive sales, service, marketing and commerce chain process Engage Service Cust. Transact Pattern Fulfill l Anchor offer, channel, and business processes around customer patterns Customer-Related Business Processes l Technology-enable customer relationship with CRM ecosystem Sales Channels & “POIs” CRM Technology “Ecosystem” Collaborative. Analytical Mktg. Service “Offer” Operational CRM is not an IT project — it is an iterative and continual transformation of people, process and technology

Building the CRM Business Plan l 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? l Organizational Constructs: Program Management Office and Chief Customer Officer. Business Plan T. O. C. Value Measurement Critical Success Factors Risks Financial Analysis Schedule and Portfolio Strategic Partners Legal, Regulatory Impact Staffing and Organization Competitive Analysis Market Research Opportunity Outline Strategic Fit: Customer Philosophy Brand CRM Customer Value Proposition Construct CRM business plan iteratively; it does not have to be a novel, but must codify (and value) future customer strategies

Assessing CRM Capabilities l Maturity Assessment • Measures the maturity of CRM Readiness: Sample program methods and how well it has been institutionalized relative to others in similar industries • Helps predict failures and recommends remedies l 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 Assessing true CRM capabilities requires looking at both CRM maturity and CRM readiness

What About CRM Value? Direct Driver Revenue Impact l CRM investment is justified by top- and bottom-line impact l CRM creates business value through “hard, ” “soft, ” and “hybrid” returns • • • Increase Revenues Hard: Preferred, but difficult Soft: Easier, but lack credibility Hybrid: Viable, but require KPI consensus l Most credible/ measurable ROI • • • Cost displacement Customer penetration/wallet share Improved resource productivity Reduce Costs Indirect Revenue Impact Acquire new customers Increase revenues from existing customers Develop new products and services Increase brand awareness Increase brand perceptions Increase customer satisfaction Increase loyalty of customers Improve productivity Direct Cost Reduction Displace costs Reduce capital requirements Increase speed to market Indirect Cost Reduction Reduce customer contact/ support requirements Reduce fulfillment and customer response errors 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 Word Failure 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 Example 1 Engage 2 Transact 3 Fulfill 4 Service Customer Interaction Building CLCM 2 3 3 ERP Supply Chain Mgmt. Order Prom. 2 Service Automation 3 Legacy Systems 1 4 Mobile Office Front Office Integration Back Office Non-CRM app. 2 1 Marketing Automation Sales Automation 4 4 Field Service Mobile Sales (prod cfg) 1 4 1 4 Voice (IVR, ACD) Conferencing E-Mail Web Conf Resp. Mgmt. Closed-Loop Processing (EAI Toolkits, Embedded/Mobile Agents) Legend CRM application Analytical CRM Operational CRM Data Warehouse Customer Activity Data Mart Customer Data Mart 1 -4 Product Data Mart 1 Vertical Apps Marketing Automation Category Mgmt. Campaign Mgmt. 1 4 Web Storefront 1 4 Direct Interaction Collaborative CRM There is no “ecosystem in a box”; CRM will remain a multivendor/product/domain effort for the foreseeable future.

Issue 1 Exploring Operational CRM l Implement discrete CRM functions (e. g. , sales, marketing, service) to enable management of customer: • • • Transactions Interactions Expectations l Surface and re-use underlying application services (e. g. , business rules, workflow, various “engines”) to enable: • • Integrated processes Flexibility and re-use Operational CRM Domains a CIC/Call Center (agent-facing) a Campaign Mgmt. /EMM a Channel/Partner Mgmt. a Incentive Mgmt. a Product Configuration a Sales Automation a Service Automation (live and field) CRM strategies mandate strong support for operational services to automate customer-related business processes

Issue 1 Exploring Collaborative CRM l Implement portals to enable UI aggregation and contextual navigation l Develop multi-channel interfaces to enrich interactions and increase exit barriers l Infuse personalization into all customer interactions l Organize content and knowledge for use by customers and employees Collaborative CRM Domains a CIC/Call Center (customer-facing) a Content/Knowledge Mgmt. a Customer Interaction Mgmt. a Personalization a Portals a Service Automation (e -service) Exploit collaboration to enable rich interactions with customers and to improve communication and information sharing

Issue 1 Exploring Analytical CRM l Leverage analytical applications to recognize customer behavior patterns l Support multiple analytical methods (e. g. , reporting, OLAP, data mining) l Build a strong foundation (e. g. , DW) to enable analytical CRM l Implement effective data management (e. g. , ETL) strategies Analytical CRM Domains a Balanced Scorecard a Behavior modeling & profiling a Data Mining & Recommendations a Marketing a Segmentation a Scoring a. Planning/Analysis a Performance Measurement a Reporting/OLAP CRM will fail without support for analytics — leverage existing infrastructure to jump-start analytical CRM

Rationalizing CRM Integration Approaches l Plan integration strategy early • CRM integration can account for 60% of total implementation cost l Recognize that integration methods, costs, and effort varies dramatically l Use customer patterns and ETFS processes to ascertain integration scenarios CRM Integration Domains Front Office/ Back Office Batch, API, EAI Internal/ External Batch, API, Portal Across Channel API, EAI, CTI Operational/ Analytical Batch, ETL Integration technology is the glue that binds people, process, and technology

TRANSFORMATION STEPS To Get CRM Right, Enterprises Should. . . l Refocus on business and CRM planning to align existing technology investments to enterprise goals l Avoid potential failure by perceiving early warning signs l Automate and optimize business processes, while developing a framework to manage customer data

TRANSFORMATION STEPS To Get CRM Right, Enterprises Should. . . (continued) l Rapidly sense and respond to environmental change through tightly coupled analytics l Expose collaborative interfaces (e. g. , portals, touch-point synchronization) to enrich interactions l Pull everything together by fixating on integration Business Impact: CRM is a business strategy that will transform your business; Understand this fact and you’re on your way to program success

Next Steps l Attend META Group’s Events • METAmorphosis 2004 — The Adaptive Organization: Building Value by Remodeling for IT Flexibility • See metagroup. com for dates and locations l Listen to Upcoming Webcasts and Teleconferences • • Connect With metagroup. com/events for Details Contact Your Client Services Representative

Next Steps (continued) l Engage META Group’s Analysts and Consultants • • Teleconference Half-Day, On-Site Briefing l Browse Related Research • Connect With META Group’s Enterprise Applications Resource Center on metagroup. com