1. Bridge the CRM Value Gap Setting the Course for CRM Erin Kinikin Vice President, Research Director Forrester Research

2. CRM Value Gap $ Time CRM Value Gap Costs Benefits Executive Attention Span

3. Critical CRM Issues 1.Vague, high-level strategy 2.Technology-driven implementation 3.No customer information strategy 4.People, process and technology efforts not integrated 5.Failure to measure and improve

4. Issue 1: Vague, High-Level Strategy “360-degree customer view” “Best-in-class process” “World-class customer service” “Right product, right time, right channel” “Implement Siebel” “Delight the customer” “Whatever helps my department”

5. Solution 1: Develop an Actionable Strategy Business Goals Why? Strategies What? Tactics How? Metrics/ Value Equations Corporate business objectives Customer-focused approaches in support of business goals Specific business actions required to implement each strategy Measurements of the effectiveness of the tactic in achieving the business goal Value Plan CxO Functional Manager IT End User Finance People

6. Solution 1: Use the Strategic Framework for Value-Driven CRM Tactics GoalsStrategy Internal Process Customer Interaction Channels Customer Lifecycle CRM Goals Business goals Company strengths Competitive pressures Industry dynamics Demand trends Financial plan Customer Strategy Profitability Retention Acquisition Channel optimization Share of wallet Life time value Contact optimization Metrics Customer results and experience are shared across the enterprise UnderstandRespondDeliverTarget Browse ConfigureBuy Manage Upgrade

7. Issue 2: Technology-Centric Implementation 0 Phase 2: Implement Service Modules 6 months12 months18 months24 months Future State Phase 1: Implement Sales Modules Phase 3: Implement Marketing Modules

8. Solution 2: Value-Focused Implementation Plan 0 Initiative 2 Initiative 3 Initiative N … 6 months 12 months 18 months 24 months Initiative 4 Future State Initiative 1: Immediate Opportunities Initiative 1: “Immediate Opportunities” Strategy Tactics Metrics Initiative 1: “Immediate Opportunities” Strategy Tactics Metrics Project 1Project 2Project N Implement the enablers

9. Issue 3: No Customer Information Strategy Information Collection Information Organization Influence To Sell To Ship To Bill To Service To Company Information Management NAEMEAROW IBM International Business Machines IBM Corp IBM EMEA PDA, Outlook, Excel Finance, Sales, Service, Fulfillment

10. Solution 3: Build Data Quality Into the Process Discover Identify potential sources Capture/assess state of metadata and documentation Source business owner feedback Develop CRM Strategy Develop CRM Strategy Define Requirements Select Vendor Design & Prototype Build Rollout Analyze Profile sample data sets Assess intersource relationships Rationalize results – seek to understand Document business rules Identify Issues Prioritize sources Define transformation and integration rules Define edit rights and cleansing processes Define quality baseline Define ongoing manual processes DesignVerify Validate rules Identify issues Make adjustments Test alert processes Monitor Ongoing automated and manual review and assessment Attempt to fix quality issues at source

11. Issue 4: People, Process, Technology Efforts Not Integrated People Initiate Change Implement Change Refine Change Process Initiate Improvement Implement Improvement Refine Improvement Technology Initiate Technical Project Implement Project Operate Technology

12. Solution 4: Integrated Program Approach Describe Concept Initiate Technical Project Implement Project Operate Project Define Program Manage/Refine Program Initiate Change Implement Change Modify/Refine Change Initiate Process Improvement Implement Improvement Modify/Refine Improvement IT is accountable — business assists IT or the business owns — as appropriate Process People Technology

13. Solution 4: Ongoing Business Ownership Line of Business Vice Presidents CEO Chief Strategy Officer CRM Project Team Chief Information Officer CMO Divisional CIOs CRM Steering Committee CXO… Focuses on critical customer processes and interaction points Defines how information can be utilized to increase customer revenues, profitability and loyalty Acts as a critical bridge between the business and IT Empowered by the CEO and top level business executives who participate in an advisory board or steering committee CRM steering committee: prioritizes initiatives, approves funding and resolves issues/conflicts as required Customer Strategy Marketing Sales Service …

14. Issue 5: Failure to Measure and Optimize Business case shelf-ware CRM

15. Solution 5: Build in Metrics and Actions Metric Measurement Results 0 10 20 30 40 50 60 70 80 90 100 1st Qtr2nd Qtr3rd Qtr4th Qtr Target Action Plans Address Short-Falls

16. Where Do We Start (Restart) Evaluate the current state Use the framework Assess and refine the strategy Drill to the business tactics Understand and identify all of the enablers Adjust the road map What has already been done has value — show where it fits Look for the quick wins Make sure that the metrics are in place Engage! Develop Strategy Develop Strategy Identify Enablers Define Road Map Plan and Implement Initiatives Measure and Optimize

17. Case Study: Fortune 500 High Tech Company Business Goals Increase sales profitability by 20% Strategies Shift appropriate transactions to the contact center Tactics Call center sales capability Identify/target transactions Integrate sales and call center Metrics Revenue/sales rep. Sales profitability People: Right people, profitability- based compensation, benefits-based education Process: Lead escalation, pricing and discount structure revised Information: Consistent customer view Functionality: Contact center sales, analytic models, campaign management Technology: Sales synchronization, integration with order management and fulfillment Key Enablers Margins increased by 30%, retention increased by 5%, inbound leads increased by 15% Results

18. Case Study: Multi-channel Retailer Business Goals Increase marketing efficiency and return on direct marketing budget Strategies Improve conversion of multi-channel buyers Tactics Target catalog/Web shoppers to shop in retail stores Metrics Revenue/channel Customer profitability Customer lifetime value People: Eliminate marketing silo Process: Revised circulation planning and campaign management processes Information: Customer view inclusive of transaction history from catalog, Web and retail (retail matching and reverse append) Functionality: Data mining and modeling environment, campaign management Technology: Data warehouse environment Key Enablers Improved channel mix by 1% resulting in $21 million additional revenue Results

19. Case Study: Major European Retail Bank Business Goals Increase revenue and improve customer retention Strategies Increase penetration of existing customers Tactics Provide personalized cross-sell recommendations via customer channels Metrics Products/customer Retention Lifetime Value People: Adjusted compensation and measurement metrics; education Process: Lead-generation process Information: Customer profile (from warehouse, “in session” data) Functionality: Real-time data mining, offer arbitration and distribution Technology: Data warehouse environment, real-time cross-sell engine Key Enablers Six month ROI, 15 % increase in leads, 50% lead conversion rate Results

20. Recommendations Don’t skimp on the strategic planning effort — define a value plan Use the business process and customer life cycle as a guide Don’t try to do it all at once — build incrementally Manage cultural shift Use metrics to optimize business performance

21. My CRM initiative is in the following status: 1. 1. Planning 2. 2. Justifying 3. 3. Selecting Vendor 4. 4. Implementing (initial phase) 5. 5. Implementing (subsequent phases) 6. 6. Tuning/Improving 7. 7. Not Active

22. The person most involved in setting direction for CRM is: 1. CEO/COO 2. CIO 3. Head of Sales 4. Head of Marketing 5. Head of Service 6. Line of Business Exec 7. Cross Functional Steering Committee 8. No Executive Owner 9. Multiple Executive Owners

23. The biggest inhibitor to CRM at my company is: 1.No clear customer strategy 2.High perceived CRM cost relative to value 3. Bad customer data 4. No or weak business sponsor 5. Lack of alignment between CRM and company objectives (metrics, employee incentives) 6. Other competing business priorities

24. The highest priority CRM function or project is: 1.Direct sales 2.Multi-channel sales 3.Customer service/call center 4.Customer self-service/right channeling 5.Marketing 6.Customer analytics 7.Customer data integration/data quality 8.Application/process integration

25. The primary benefit we are expecting from CRM is: 1.Revenue growth 2.Cost reduction 3.Increased revenue per customer/share of wallet 4.Improved customer retention 5.Higher customer profitability 6.Better customer understanding

26. Questions