Five Phases of CRM Projects

Phase 1. Develop he CRM Strategy:

CRM strategy can be defined as follows:

CRM strategy is a high-level plan of action that aligns people, processes and technology to achieve customer-related goals.

Situation analysis:

Development of the CRM strategy starts with a situation analysis. This analysis sets out to describe, understand and appraise the company’s current customer strategy. It helps to have an organizing framework to guide your analysis. Another useful framework is the customer strategy cube.

This is a three-dimensional analysis of your company’s served market segments, market offerings and channels (routes to market). The situation analysis answers the questions, ‘Where are we now? ‘and ‘Why are we where we are? ‘in terms of the three dimensions of the cube.

Phase 2. Build CRM Project:


Having created the CRM strategy, the next phase involves building the foundations for the CRM implementation.

Identify Stakeholders:

The first step is to identify stakeholders. Stakeholders include any party that will be impacted by the change this could include senior management, users of any new system, marketing staff, salespeople, customer service agents, channel partners, customers and IT specialists. Their participation in the CRM project may be required at some future point.

Research suggests that the early involvement of parties affected by change helps pre-empty later problems of resistance. Vendor experience indicates that the early involvement and participation of senior management is likely to promote a more successful implementation.

System users are important stakeholders. The importance of involving system users in the implementation of new technologies is reinforced by research conducted by Fred Davis and others. Davis found that intention to use a new technology is predicted by the perceived ease-of use of the technology and the perceived usefulness of the technology.

This is expressed in the Technology Acceptance Model which has been subjected to considerable testing and validation since Davis’s initial work. Early engagement of user stakeholders can help ensure that the technology is perceived as both easy-to-use and useful by users.

Identify Change Management Needs:

Even small CRM projects can prove challenging in terms of change management. A sales-force automation project might involve centralizing data that is presently kept on individual representatives ‘computers and making that information available to everyone in the team. Representatives will need to learn to share. In a distributed sales-force, these representatives may not have even met each other. If they also have to change their selling methodology, record keeping and reporting habits, there might be some worries, if not outright resistance.

The eight steps are as follows:

  1. Create a sense of urgency so people begin to feel’ we must do something ‘
  2. Put together a guiding team to drive the change effort
  3. Get the vision right and build supporting strategies
  4. Communicate for buy-in
  5. Empower action by removing organizational barriers to change
  6. Produce short-term wins to diffuse cynicism, pessimism and scepticism
  7. don’t let up, but keep driving change and promoting the vision

Phase 3. Needs Specification and Partner Selection:

Having built the CRM project foundations, the next phase involves specifying needs and selecting suitable partners.

Process Mapping and Refinement:

The first task of Phase 3 is to identify business processes that need attention – making them more effective or efficient or flagging them as candidates for automation. Business processes can be defined as follows: A business process is set of activities performed by people and/or technology in order to achieve a desired outcome. Put more simply, business processes are how things get done by your company. Processes can be classified in several ways: vertical and horizontal; front and back-office; primary and secondary.

Vertical processes are those that are located entirely within a business function. For example, the customer acquisition process might reside totally within the marketing department.

Horizontal processes are cross-functional. New product development processes are typically horizontal and span sales, marketing, finance and research and development functions. Front-office (or front-stage) processes are those that customers encounter. The complaints handling process is an example.

Back-office (or back-stage) processes are invisible to customers, for example, the procurement process. Many processes straddle both front and back-offices: the order-fulfiIment process is an example. The order taking part of that process sits in the front-office. The production scheduling part is back-office. A distinction is also made between primary and secondary processes.

Primary processes have major cost implications for companies or, given their impact on customer experience, major revenue implications. The logistics process in courier organizations – from picking up a package, through moving the package, to delivering the package – constitutes about 90 per cent of the cost base of the business, and is therefore a primary process. Customers may have a different perspective on what is important. They typically do not care about back-office processes.

They care about the processes that touch them. In the insurance industry these are the claims process, the policy renewal process and the new policy purchase process. In the courier business they are the pick-up, delivery and tracking processes.

Secondary processes have minor implications for costs or revenues, or little impact on customer experience. Strategic CRM aims to build an organization that is designed to create and deliver customer value consistently better than its competitors. Designing processes that create value for customers is clearly vital to this outcome. 3M’s mission is ‘ to solve unsolved problems innovatively’.

It does this in part through new product development processes that are designed to identify good ideas and bring them to the market quickly. For 3 M, the innovation process is a primary process that enables the company to differentiate itself from its competitors. Operational CRM involves the automation of the company’s selling, marketing and service processes, and generally requires the support of analytical CRM.

Data Review and Gap Analysis:

Having identified processes that require attention, the next step is to review the data requirements for the CRM implementation and to identify shortfalls. Strategic CRM uses customer- related data to identify which customers to target for acquisition, retention and development, and what to offer them.

Operational CRM uses customer-related data in the everyday running of the business, for example in handling billing queries in the contact centre or mounting campaigns in the marketing department. Analytical CRM uses customer-related data to answer questions such as ‘who are our most profitable customers’ and ‘which customers are most likely to churn’? Collaborative CRM uses customer-related data to enable channel partners to target their communications more precisely.

The fundamental issue companies have to ask is: what customer- related data do we need for strategic, operational, analytical and collaborative CRM purposes? Members of the programme team should be well placed to answer the question ‘what information is needed? ‘For example, the programme team’s marketing lead would be expected to appreciate the information needs of direct marketers running event-based campaigns.

Typically, these marketers want to know response rates to previous mailings broken down by customer group, the content of those offers, sales achieved by the mailings and the number of items returned unopened. They would also want to know the names and addresses of selected targets, their preferred method of communication (mail? e-mail? phone?), their preferred form of salutation (first name? Mr? Ms?) and the offers that have been successful in the past. In a globalized business world, it is important to respect cultural connections.

At this stage of planning the CRM project, you are identifying the data that is needed for CRM purposes and creating an inventory of data that is available for these purposes. The gap between what is available and what is needed may be quite significant.

A useful distinction can be made between’ need-to-know ‘ and ‘ like-to- know ‘ that is, between information needed for CRM purposes and information that might be useful at some future point. Given the costs of developing and maintaining customer-related databases, companies need to be rigorous in screening data requirements.

Write Request for Proposals (RFP):

Before calling for proposals you need to write a detailed RFP. This document becomes the standard against which vendors’ proposals are evaluated. It summarizes your thinking about the CRM programme and invites interested parties to respond in a structured way.

Typical contents of the RFP include:

  1. Instructions to respondents
  2. Company background
  3. The CRM vision and strategy
  4. Strategic, operational, analytical and collaborative CRM requirements
  5. Process issues:
  6. customer interaction mapping
  7. process re-engineering.
  8. Technology issues:
  9. delivery model – SaaS, on-premise, blended
  10. functionality required – sales, marketing and service
  11. management reports required
  12. hardware requirements and performance measures
  13. architectural issues
  14. systems integration issues
  15. customization requirements
  16. upgrades and service requirements.
  17. People issues:
  18. project management services
  19. change management services
  20. management and staff training.
  21. Costing issues – TCO targets
  22. Implementation issues – pilot, training, support, roll-out, timeline
  23. Contractual issues
  24. Criteria for assessing proposals
  25. Timeline for responding to proposals.

Call for proposals:

The next step is to invite potential partners to respond to the RFP. You’ll see from the RFP contents that CRM projects sometimes require input from several process, people and technology partners. On the technology side, if your company is already paying for CRM modules as part of its enterprise IT system, you’ll certainly want to add this technology vendor to the list of those invited to respond. Between three and six potential technology vendors are typically invited.

Revised technology needs identification:

Proposals from technology vendors will sometimes identify opportunities for improved CRM performance that you may not have considered. Perhaps there is some functionality or an issue that you had not considered. For example, you might not have considered the need to provide implementation support to sales representatives in the field. A vendor who indicates that they’ll be able to help representatives learn the new technology in remote locations might be very attractive.

Assessment and partner selection:

The next stage is to assess the proposals and select one or more partners. This task is generally performed by an evaluation team formed for this purpose and reporting to the steering committee. Assessment is made easier if you have a structured RFP and scoring system. There are two types of scoring system un-weighted and weighted. An un-weighted system simply treats each assessment variable as equally important.

A weighted system acknowledges that some variables are more important than others. These are accorded more significance in the scoring process. Evaluation and selection should involve more than just the written vendor proposals. Short-listed vendors should be invited to demonstrate their solutions in relevant sceneries. Vendors may be required to provide proof-of-concept for technical solutions such as e-mail integration or mobile synchronization. Finally, preferred vendors should be subject to reference checks. The results of all these inputs are then scored to support the final decision.

Phase 4. Project Implementation:

By now, you have developed the CRM strategy, built the CRM project foundations, specified your needs and selected one or more partners. It is now implementation time!

Refine project plan:

The first step of Phase 4 requires you to cooperate with your selected partners in refining the project plan. Remember, this was originally defined without consideration of the needs and availability of your partners. You may find that your partner’s consultants are already committed to other projects and that you’ll have to wait. Your partners will be able to help you set new milestones and refine the budget.

Identify technology customization needs:

It is very common that off-the-shelf technology fails to meet all the requirements of users. Some vendors have industry-specific versions of their CRM software. Oracle, for example, offers a range of CRM suites for banking, retail, public sector and other verticals. Even so, some customization is often required.

The lead developer, database developer and front-end developer, in partnership with vendors, can perform these roles. Customization needs are typically specified using a gap analysis approach. The required business process is supplied to the vendor, who(after some preparation) presents how this process is supported in the software. Any gaps are highlighted for subsequent analysis and action. This continues until all business processes have been examined. The resultant gap register is then assessed, priorities are established and customization of their software and/or modification of the business process begins.

Customization raises problems of ownership of Intellectual Property that both vendors and clients will want to resolve. Vendors have invested millions, perhaps billions, of dollars to create, code, test and protect their product. The view of most software companies is that they will maintain the rights to any customized code and the right to incorporate it into future releases of the software. It is not unusual for a client’s legal team to contest this position.

Prototype design, test, modify and roll-out:

The output of this customization process will be a prototype that can be tested by users on a duplicated set, or a dummy set, of customer-related data. End-user tests will show whether further customization is required.

Final adjustments to marketing, selling and service processes are made at this stage, and further training needs are identified and met. After a final review, a roll-out programme is implemented. In larger companies this often is a phased roll-out. For example, a new sales-force automation system might be rolled out first to the ‘champions’, those identified earlier as buying in both emotionally and rationally. A new service automation solution might be rolled out to newly acquired customers first, before the existing customer base is imported. The idea is to iron out any problems before company-wide adoption.

Phase 5. Evaluate Performance:

The final phase of the CRM project involves an evaluation of its performance. How well has it performed? Two sets of variables can be measured: project outcomes and business outcomes. Project out comes focus on whether the project has been delivered on time and to budget. Your evaluation of the business outcomes requires you to return to the project objectives, your definition of CRM success and the business case, and ask whether the desired results have been achieved. If your single goal was to enhance customer retention rates, with a measurable lift from 70 to 80 per cent, and this is accomplished then your CRM project has been successful.

Congratulations! However, most projects have multiple objectives and it is common for some objectives to be achieved while others are not. Lead conversion by the sales team might rise, but lead generation by campaign managers might fall short of objectives.

A critical issue concerns the timing of any business performance evaluation. It can take users several months to become familiar with new processes and competent in using new technology. Periodic measures of business outcomes can be taken over time, to ensure that the programme outcomes are achieved. Ongoing training, timed to coincide with software upgrades, can enhance business outcomes.

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