Maximizing and measuring the roi on your crm investments
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Maximizing and Measuring the ROI On Your CRM Investments. Tom Spitale Principal Peppers & Rogers. CRM: Attempting to Cross The Chasm Between Visionaries to Pragmatists. Geoffrey Moore wrote how high-tech companies fail and succeed in crossing the Visionary - to – Pragmatist “chasm”

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Maximizing and Measuring the ROI On Your CRM Investments

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Maximizing and measuring the roi on your crm investments

Maximizing and Measuring the ROI On Your CRM Investments

Tom Spitale

Principal

Peppers & Rogers


Crm attempting to cross the chasm between visionaries to pragmatists

CRM: Attempting to Cross The Chasm Between Visionaries to Pragmatists

  • Geoffrey Moore wrote how high-tech companies fail and succeed in crossing the Visionary - to – Pragmatist “chasm”

  • CRM – a strategy enabled by high-tech – is in the critical crossing the chasm period


The message that some visionaries missed measurement discipline

… and move it over time

The Message That Some Visionaries Missed: Measurement Discipline

Number of Customers

Picket Fence

Mass Marketing

CRM and 1to1 Marketing

Customer Value


Agenda

Agenda

  • Convincing the Pragmatists

    • The Truth about CRM ROI

  • How CRM ROI Is Measured Today

    • Tools, Techniques and Tips For Measuring Impact

  • How CRM ROI Will Be Measured In The Future

  • Maximizing CRM ROI: The First Mover Advantage

    • Why You Must Turn Your Pragmatists Into Visionaries To Really Win

This presentation is for Visionaries in Pragmatist firms, software

marketers selling to Pragmatists…and Pragmatists themselves!


Maximizing and measuring the roi on your crm investments

First Step To Convincing Pragmatists:

Replace the Hype With Facts

  • Over 70% of CRM Projects Succeed

    • CRMGuru.com studied 600 CRM-implementing companies

  • Biggest predictor of success: a comprehensive, specific CRM strategic plan

    • Failures are “self-inflicted”

  • Other key success factors:

    • Line-level training

    • Organizational/executive support

    • Setting measurable goals (measurement discipline)

  • Bottom line: No “gain” without the “pain”

    • But that’s what will make successful CRM a differentiator

    • Our experience: Without the metrics, many abandon ship due to the pain

Source: “The Blueprint for CRM Success”, 2002 study by Caribou Lake Customer-1, CRMGuru.com and Mangen Research Associates


Results of prg in depth study of 15 crm implementations 32 average irr

Results of PRG In-Depth Study of 15 CRM Implementations: 32% Average IRR

But these companies are just getting started on the path of CRM


The searchcrm prg roi measurement and effectiveness survey

The searchCRM/PRG ROI Measurement and Effectiveness Survey

Survey Was Still “Open” at Time of Slide Publication

Tom Will Summarize the Results To You Now…


Treating different customers differently the learning relationship

Customer talks

with you

Save

me

time

FEEDBACK

You tailor your product, service or interactions

  • The more effort customer invests, the greater

  • their stake in making relationship work

  • Going to a competitor = reinventing the relationship

Treating Different Customers Differently: The Learning Relationship


Typical status of a thus far successful crm initiative

don’t know

customers

know

transactions

know

history

know

preferences

Identify

Differentiate

treat

everyone

the same

by value

only

by value

then needs

by enhanced

customer

needs

talk at

customers

talk with,

but forget

talk with,

remember

feedback

loop

Interact

one size

fits all

some

choice

customize

some

mass

customize

Customize

Typical Status of a Thus-Far Successful CRM Initiative


Result from improving the customer experience en masse

Result From Improving the Customer Experience En Masse

Through 2003, achieved benefits have been 78% on a $3.7M investment. Projected ROI, through 2005 is 122%


Expected results when treating different customers differently

Expected Results When Treating Different Customers Differently

  • Entertainment industry client needed to determine the financial impact from implementing CRM software solution

    • Result: 78% ROI realized; anticipated 122% ROI through 2005

  • Impact realized without significant changes to customer treatment

  • Additional analysis uncovered opportunities to increase contribution or decrease costs by applying customer valuation and needs strategies

    • Conservative estimates at $1 million per year

    • Aggressive estimates at $2.5 million per year

    • If implemented for one year, these strategies could increasethe realized ROI between 50-95%!

Our Conclusion: It’s Better Than We Even Thought It Could Be


How to conduct a crm roi analysis

How To Conduct a CRM ROI Analysis

  • Today’s limitations to measuring CRM ROI:

    • Lack of company history in measuring impacts to customer equity

    • Lack of baseline data

    • Very little industry data to provide benchmarks

  • Two critical needs:

    • Facilitation

    • Historical and Benchmark Data

  • Facilitation leads to credibility of the ROI result; historical and benchmark data is nice if you can get it!

    • Get cross-functional executives to participate


Getting the executive team to participate

Getting The Executive Team To Participate

  • Study will be useful in internal communication efforts and in continuing CRM buy-in and momentum-building within the organization (remember, no gain without the pain)

  • Sets actionable metrics for your CRM program going forward

  • Provides validation for moving forward and can uncover specific areas of new CRM opportunity


Full disclosure counting all of the costs

2%

17%

16%

17%

43%

5%

Licenses

Add'l SW

HW

Vendor Cons.

Other Cons.

Training

Full Disclosure: Counting All of the Costs

Total

$3,707,179


Next step identify metrics and data owners

Next Step: Identify metrics and “data owners”

Acquire

Acquire

Grow

Grow

Retain

Retain

Marketing

Marketing

Sales

Sales

Service

Service


Maximizing and measuring the roi on your crm investments

The Nuances of Tracking Cost Reduction Metrics

Gains in Working U.S. Credit Backlog Because Quotes are Handled Faster


Tracking an increased revenue metric campaign efficiencies effectiveness

Tracking an Increased Revenue Metric: Campaign Efficiencies/Effectiveness

  • 2002 Total Touches (outbound campaigns) = 671,000

  • 2003 Total Touches = 1,138,381

  • Increase in outbound touches = 467,381

  • % impact on sales (1/200) = 0.5%

  • Total incremental yearly sales = 2,337

  • Avg. product profit = $7,927

  • Total Benefit = $18,524,646

  • % due to CRM = 10%


The 1to1 metrics database bounding assumptions in reality

The 1to1 Metrics Database: Bounding Assumptions In Reality

  • 1to1 Metrics Dictionary  tool is the deepest database of CRM metrics in the industry

  • Built from over 10 years of doing CRM business cases and ROI analysis

  • Example: High-tech BtoB company knew that they had gained efficiencies from faster handling of leads through CRM initiative

    • Lack of baseline data caused doubts over the assumptions around impact

    • PRG compared situation with results from several other high-tech BtoB marketers

    • Result: assumptions deemed credible by executive team and CFO


The confidence matrix keeping credibility high

High Degree of Confidence

Low Degree of

Confidence

The Confidence Matrix: Keeping Credibility High

High

Increased Conversion Rate

Reduced Cycle Time

Average Revenue Per Customer

Data History

Increased # of High Probability Opportunities

Increased Customer Satisfaction

Low

Low

High

Degree of Correlation to Financial Impact


Maximizing and measuring the roi on your crm investments

Key To a Successful Study: Get the CFO to “Play” With The Spreadsheet


The next generation of measurement differentiation and customer equity

Actual Value

Strategic

Value

Servicing

costs

Migrate these

(strategic value unknown)

Spend no resources on these

The Next Generation of Measurement: Differentiation and “Customer Equity”

Use 1to1 to keep these customers

...and grow these

MVCs

MGCs

“Migrators”

BZs


The limitations of pragmatism threat or opportunity exercise

The Limitations of Pragmatism: Threat or Opportunity Exercise


To gain a lasting competitive advantage pragmatists must become visionaries

1to1

To Gain a Lasting Competitive Advantage, Pragmatists Must Become Visionaries!

The only true competitive advantage comes from understanding of your customer that you have and that your competitors don’t – the more customer needs you learn and fill, the greater the barrier to defection

This information has to come from the customer.

To Take Full Advantage of This, You

Must Move Faster Than a Pragmatist


Maximizing and measuring the roi on your crm investments

Contact Information

To Opt-In to the PRG ROI Newsletter

Your Peppers and Rogers Group Contacts:

Send an email or call me:

Tom Spitale

(724) 891-1417

[email protected]

Visit our web site at: www.1to1.com

Newsletter registration: - https://www.1to1.com/Subscribe.aspx?Publication=27927


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