Akibia's Nine Steps to ROI

CRM integrator Akibia Consulting released a white paper today entitled, "Creating the Business Case for CRM: An Approach That Works." Within its pages are nine steps for predicting returns from CRM investments. The first step is to determine what type of business case approach is appropriate -- and it's not as easy as you might think. The financial metrics used in the analysis will be the elements of the business case. Some of the key measurements of return include:
  • Return-on-Investment, which is simply the ratio of net gains to the total costs.
  • Net-Present-Value, which gives a measure of the net benefit, not in percentage terms but in terms of the value of a series of cash flow in today's dollars.
  • Total-Cost-of-Ownership, which is a measure of the overall cost of the project.
  • Internal-Rate-of-Return, which is basically the rate of return necessary to make the net present value of a project equal to zero.
  • Payback Period, which determines how much time must elapse before a project breaks even..
  • The second step is to define a hierarchy of benefits. In some cases, the hierarchy can be broken down into three parts: revenue enhancers, cost cutters and intangible benefits. The third step is to define rough costs, ranging from software and hardware costs to implementation costs and assimilation and learning costs. The fourth and most time consuming step is gathering data. This might include conducting a study of how critical customer-facing personnel, such as customer-service representatives and sales people, spend their time. This leads into the fifth and hardest step, which is quantifying your efforts. Easily quantifiable benefits might be headcount reductions expected from efficiency improvements; harder benefits might be gains in revenue due to higher levels of customer satisfaction. In step six, the CRM package that comprises the business case is pulled together. The package should showcase four primary deliverables: ROI model; "guide" document; overview presentation; and supporting documents. And step seven is presenting it to decision makers. "Providing direct, non-evasive answers to questions about the content and approach of the business case lends it credibility," advises Roy Schuster, vice president of expert consulting services at Akibia Consulting, and author of the white paper. All good things must come to an end; step eight is defining a process to finish the job. This means creating a list of open items during the project. Once these items are completed, the job is done. Without a way to finish the job, "you risk killing momentum or creating lingering doubts that can paralyze the organization and prevent progress," writes Schuster. Lastly, step nine is institutionalizing the business case. Think of it as a way to capture the intellectual knowledge and methodology gained by the business-case team.
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