How to Justify CRM Initiatives in a Changing Market
Other financial metrics, such as Net Present Value (NPV) or Internal Rate of Return (IRR), take into account the time value of money and spread costs and benefits over the estimated life of those initiatives.
Another approach, the "break even" method, is a simplistic approach that is helpful for organizations that do not have the time or financial skills to dedicate to a thorough analysis. This method simply sums the cumulative revenue and benefits from the project subtracted from the cumulative costs to determine if the organization will break even. This method is not recommended for long-term projects with complicated cash flows, because the time value of money is not taken into account.
This section of the business case synthesizes all of the costs and benefits associated with the CRM project and recommends the proposed solution. This section combines both the qualitative and quantitative benefits listed above and highlights any risks involved with accepting the project. The business case should state facts that support the recommended solution and lead readers to the same conclusion.
This section should be brief and to the point so that readers clearly understand the recommended solution. Summarize the primary business problem, recommend the proposed solution, and show the benefits of that solution to the organization.
Today, organizations are being asked to pick and choose which CRM projects they want to support. With limited budgets and more emphasis on producing results, managers are asked to justify their CRM expenditures and to quantify benefits more than ever before.
Now you are prepared to start writing your own business case for your organization's CRM projects!
Sharon Weaver is a marketing consultant for Quaero (www.quaero.com), a CRM services provider, where she works with both traditional and dot-com clients to design and execute e-mail marketing campaigns, as well as help clients evaluate, select, install and employ campaign management software. She can be reached at firstname.lastname@example.org.