This relates to the opportunities for a detailed evaluation of costs and benefits on the subject of »CRM as a project« from an economic perspective.

In this area, statements from analysts, specialists, consultants and providers range from »absolutely impossible« through »this assessment is not necessary because CRM always pays off« to »it is always essential to clearly demonstrate the ROI of CRM software«.

We do not want to provide a highly scientific view of this subject here. Numerous studies of this kind are available in the literature (e.g. Moriarty and Swartz, Gar tner Group, CapGemini, KPMG, Accenture, to name a few).

These studies are often based on

models from customer value analyses,

ABC classification models (before/af ter analysis),

an assessment of the portfolio based on various criteria/key figures and

various benchmark procedures.

From a practical point of view, these models cannot be put into practice in a concrete case; often, too, there is a lack of understanding, comprehensibility and acceptance in the company. And is of ten difficult if not impossible to adapt them to “my own” particular company. Many studies, for example, are drawn up based on the ”TOP100 or TOP10” companies (in particular in the United States) . This information has only limited relevance for a German midsize company.

Studies of this kind often result in global statements such as:

Company xyz could increase it s sales by 22 million euros (or by 13%) by using a CRM system

The service level has improved by 8%

Marketing costs has fallen by 10%, or depending on the study, have increased!

The offer figures have tripled

The deal closing rates were increased by 20% through the use of CRM while at the same time, the deal closing cycles were reduced

Project lead times have halved

and so on.

I do not want to devalue this work, but of ten the »theoretical relativity« of these studies and figures needs to be stated. Let me give a few examples that I have personally experienced:

In 1998, I was commissioned to carry out a ROI analysis for a global company in the air conditioning and sanitary sector. The aim was to produce information that would enable senior management to classify the CRM project as »successful yes/no« prior to possible deinstallment. They wanted concrete sales figures wherever possible.

CRM had been rolled out there as a sof tware project from the bottom-up and was used every day. It was therefore possible for us to draw up a before/after analysis.

As a result of this analysis, I determined that in the year of CRM implementation, sales increased by 12% (and subsequently did not fall again). These statement could be clearly proven.

The day of the presentation to the board came, and the slide with the increasing sales f igures appeared. The first reaction from the board: “But that ’s clear and has nothing to do with CRM! We had a very cold winter and business was bet ter because of that.”

Imagine the laugh that got in the room. In this special case, it was possible to put the discussion and thus the decision down to other existing advantages of the CRM application that were acceptable for the decision-makers, but here I would like to show how “relative” this information often is.

In another case that is personally known to me (and in which I was involved) , a German mechanical engineering company was able to improve of fer creation by almost 50% as a result of using a CRM tool (offer creation was thus faster overall and of a higher quality -> reduction of errors as a result of configuration). These values were also included in the ROI analysis. However, the analysis did not address the question of whether the market was even in a position to handle double the number of of fers in the first place.

The conclusion in this case: looked at over time, the offers were not doubled, but rather the “saved time” was used for other sales work.

On this note I would like to conclude this general par t and describe an example of a model/process that I have used successfully in recent years in concrete projects.

I must state first that there is no one single, global ROI analysis; rather, each company must def ine and draw up its ROI itself. Af ter all, CRM itself is a company-specific topic.

In addition, a purely classic analysis based on the principle of investment assets (costs/benefits on the basis of f inancial data such as material costs, production costs, length of use etc.) is simply impossible, not least because CRM is a perpetual process, a corporate model based on human and organizational factors. Time limits and purely quantitative analyses are therefore destined for failure from the start.

It is first necessary to draw up and prioritize the individual strategic and operational CRM goals (see earlier information in this series) . All points planned for implementation (e.g. those with priority 1) are listed one by one and their previous procedures are evaluated. Description of actual situation: Process f low, required resources (personnel, material) and results achieved.

The definition of goals for this section is then carried out with the help of or on the basis of the new area. This does not necessarily have to be a CRM software function, it could also be an organizational or process change. We all know that without a goal, there is no one single right way or any number of right ways).

From this information on before/af ter CRM, quantitatively measurable time factors (productivit y increases) are drawn up, which can be converted to concrete internal rates, i.e. euro values (note: think of the cost s that are there anyway) . In addition, these measures result in qualitative improvements in the company, such as identification with the company, loyalty to the company and to colleagues, the ability to f inally carr y out work put to one side, and ultimately more pleasure in THIS work.

The definition of goals is fixed before implementation and during subsequent costing is used as a measure for the positive or negative success of an individual CRM measure.

An example of a table containing standard ROI points is shown below:

All the individual topics listed are then transferred to a ROI table, the company -specif ic values are added, and this is analyzed on the basis of practical experiences of CRM installations gathered over years, and def ined as a specified goal.

The diagram below shows a concrete, project-specific ROI table (for parts of CRM) with actual and planned values and the resulting overall view:

The associated list of costs:

And finally the final ROI analysis:

In the graphics that are shown, one thing seems particularly important to me: the point at which most improvements began: Anyone who thinks that immediate changes are possible and can be calculated immediately after implementation is mistaken. First, CRM – as a system, organization and process – must start to live in day-to-day business (e.g. usually a lot

of data first has to be entered).

An uncomplicated, non-scientific ROI model of this kind produces understandable ef fect s for everyone in day-to-day business and can be drawn up at a reasonable cost . It is therefore an ideal tool in the phase of CRM project planning and budgeting.

In closing, I would like to ask the fundamental question of whether the subject of CRM must necessarily lead to a quantitative ROI analysis. I do not think so!

There is no question that CRM is necessary for every business. The question is rather: How much CRM do I need and what should it look like?

Customer orientation is – in theory at least – a given in companies. What is important is therefore not why and at exactly what cost s integrated marketing campaigns, sales controlling, customer loyalty programs or

project controlling are possible. The decisive factor is rather the ef fectiveness of these individual factors from a cost and benef it perspective, and the procedure described above can be used to verify this.

If »a lived and breathed« CRM strategy is to be successful with our employees, our market par tners and, above all, our customers, the daily benefits for all are beyond question!