Get CRM Right The First Time: Best Practices for CRM Success

1. 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

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

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

4. Business Plan T.O.C. Building the CRM Business Plan Value Measurement Critical Success Factors Risks Financial Analysis Schedule and Portfolio • 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? • Organizational Constructs: Program Management Office and Chief Customer Officer. Strategic Partners Legal, Regulatory Impact Staffing and Organization Competitive Analysis MarketResearch Opportunity Outline Strategic Fit: Customer Philosophy Brand and 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

5. Assessing CRM Capabilities CRM Readiness: Sample • Maturity Assessment • Measures the maturity of CRM program methods and how well it has been institutionalized relative to others in similar industries • Helps predict failures and recommends remedies • 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

6. Acquire new customers Direct Revenue Impact Driver Increase revenues from existing customers Increase Revenues Develop new products and services Increase brand awareness Indirect Revenue Impact Increase brand perceptions Increase customer satisfaction Increase loyalty of customers Improve productivity Direct Cost Reduction Displace costs Reduce Costs Reduce capital requirements Increase speed to market Indirect Cost Reduction Reduce customer contact/ support requirements Reduce fulfillment and customer response errors What About CRM Value? • CRM investment is justified by top- and bottom-line impact • CRM creates business value through “hard,” “soft,” and “hybrid” returns • Hard: Preferred, but difficult • Soft: Easier, but lack credibility • Hybrid: Viable, but require KPI consensus • Most credible/ measurable ROI • Cost displacement • Customer penetration/wallet share • Improved resource productivity CRM value metrics must be incorporated into the business plan, monitored, and updated periodically

7. Headline: CRM is Not Doomed to Failure! 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.

8. People Still Make the Difference Appropriate leadership to promote business/IT alignment and mitigate change impact on employees and groups is critical to CRM program success

9. “Process” Is Not a Dirty Word Automating and optimizing customer processes is at the heart of CRM value delivery – Never automate a bad process!

10. Technology — It’s Not Simply “Add Water and Stir” CRM technology will ultimately support both people and process – Technology-only CRM strategies will fail

11. 4 Building CLCM CRM application 1 Engage Non-CRM app. Example Transact 2 Integration Fulfill 3 Service 4 Rationalizing CRM Technology:The CRM Ecosystem Analytical CRM Operational CRM Legend 2 2 3 1-4 3 DataWarehouse 2 3 ERP LegacySystems Supply Chain Mgmt. Back Office Order Prom. CustomerActivityData Mart CustomerData Mart ProductData Mart Order Mgmt. Closed-Loop Processing(EAI Toolkits, Embedded/Mobile Agents) 1 4 1 Front Office ServiceAutomation MarketingAutomation SalesAutomation 1 Vertical Apps 4 4 MarketingAutomation Mobile Office Field Service Mobile Sales (prod cfg) Category Mgmt. CampaignMgmt. 1 4 4 4 4 1 1 1 4 1 Voice (IVR, ACD) WebStorefront Direct Interaction E-Mail Customer Interaction Conferencing Web Conf Resp. Mgmt. Collaborative CRM There is no “ecosystem in a box”; CRM will remain a multi-vendor/product/domain effort for the foreseeable future.

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

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

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

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

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

17. TRANSFORMATION STEPS To Get CRM Right, Enterprises Should. . .(continued) • Rapidly sense and respond to environmental change through tightly coupled analytics • Expose collaborative interfaces (e.g., portals, touch-point synchronization) to enrich interactions • 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

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

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