How to Justify CRM Initiatives in a Changing Market
Project Approach and Assumptions
Secondly, review the project approach that has been taken to determine the appropriate business solution. The purpose of this section is to highlight that the financial benefits are based on certain assumptions. If those assumptions change, then the projections may need to change as well. How many different options were initially considered? Was market or competitor research conducted to support this case? Has an external consulting group recommended the proposed solution?
Include all assumptions that were taken into account to develop the business case. These assumptions could range from assuming the organization is still in business, the market remains stable, the organization is on the same growth path, that revenue goals are met, to the project champion is still in charge, and so on.
The third section, qualitative projections, highlights significantly softer benefits to the organization or its customers as a result of the initiative. For CRM projects, typical qualitative benefits include reduced cost per customer acquisition, reduced churn rate, increased customer satisfaction, productivity gains, increased response rates for marketing efforts and more complete information on customers. For marketing departments that rely on these customer measures, this section of the business case should be lengthy and detailed.
Although this section focuses on qualitative measure, you can generally assign measures for best and worst case scenarios for each of these benefits, compared to a base line, to show projected improvements in customer activities.
Fourth, the qualitative projections show the costs and benefits associated with a given project or initiative. In the past, organizations primarily focused on the quantitative benefits to justify approving a project. However, this may not be true today as different organizational cultures focus on achieving different goals.
There are a variety of financial measures that can be used to determine whether or not a project should be accepted. Return on investment (ROI) is a common metric often used to determine an organization's return on assets invested. This measure is a ratio calculated by taking the total cost of the investment minus the total benefits divided by the total cost times 100. The result is then compared to an internal hurdle rate that each organization pre-determines is acceptable for projects.