CRM: Creating a Credible Business Case and Positioning It with the CEO Part Two: Linking CRM with Organizational Direction

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Linking CRM with Organizational Direction

Research that has linked the statistical relationships between organizational behavior and CRM success has identified the importance of senior management leadership and direction prior to the deployment of CRM applications. In other words, it is important that an organization pursues a strategy that is complementary to CRM before the technologies are actually introduced. Therefore, introducing CRM into an organizational culture that does not recognize these capabilities as part of its future direction and success is very risky. CRM represents a significant cost from both an investment and organizational change perspective. If senior management does not perceive CRM as a strategy that is central to its success, then where will the commitment come from to deal with the changes that CRM inevitably introduces (e.g., management of data quality, sharing data, changes in performance metrics)?

An effective business case must link CRM with achieving organizational objectives; but this step is just the beginning. Credibility implies that the document clearly delineates assumptions regarding cause and effect plus the mechanism that will be used to assess results and declare success. If the business case does not define how the initiative will demonstrate its effectiveness, then what is the basis for credibility?

This is part two of a two-part note.

Part one discussed CRM and the benefits it can bring to an organization.

Part two addresses the issue of how to create a credible business case for CRM and get the CEO engaged in the process.

Creating the Linkage: Cause and Effect

Credibility is a subjective assessment of merit that individuals use when dealing with people and ideas. Specific to ideas or proposals, this assessment revolves around a backdrop of the following considerations:

  • Do the stated assumptions regarding cause and effect appear logical? Are there important unstated assumptions? Is there support for the argument, such as benchmarking or other objective data?

  • Does the approach and positioning appear to be appropriate within the culture?

  • Is there a historical precedent that relates to this situation?

  • Does the thrust of the initiative fit within the person's mental model of the organization?

  • Is this the correct timing?

  • Who is the sponsor? What is at stake?

Before continuing this discussion regarding credibility, a note of caution is in order. It is possible to sell CRM within an organization through the energy and passion of one executive. Through sheer determination and zeal, a senior executive can push the initiative through implementation, but what happens after that? If the initiative is not founded on making CRM operational, then the great expectations are going to go unmet and eventually the system will fall into disuse. So what has been gained other than "poisoning the well" for future initiatives?

Credibility regarding cause and effect is increased when the relationship can be analyzed in the context of process analysis. Process analysis provides a perspective regarding how tasks are accomplished today and what will be different in the CRM environment. Quantification of results and meaningful metrics add a degree of comfort to the conclusions. Comfort turns to credibility through tests, and experience with pilot operations prove the reasonableness of the assumptions. Successful CRM initiatives document a clear definition of what the organization will look like in the future and how it will recognize that it has arrived. A statement of relevant metrics and goals communicate that there will be accountability and a mechanism for assessing success.

Credibility also requires candor. Most professionals recognize that the marketplace is not a laboratory where conditions can be isolated. A description of risk factors and what can be done to mitigate these risks is important to establishing sound management and credibility. This concept can be carried over to the ROI analysis itself through a sensitivity analysis, which essentially recalculates results based on introducing less favorable assumptions relative to timing and levels of benefit and investment.


For most organizations, a CRM initiative will require the approval of the CEO and perhaps the board of directors. Unfortunately, many CRM teams may get an initial blessing from the CEO to investigate CRM and assume that this agreement will result in a favorable reaction when they present the initiative. This situation has two major flaws. The CEO may have shifted priorities, and, as stated at the outset of this article, successful CRM deployments are associated with situations where senior management has already set the direction for the initiative. Not getting the CEO engaged in the initiative early can make the difference between success and failure. No matter how solid the business case, if the senior management leadership is not in place, the initiative will be built on sand, and will lack a solid foundation. The obvious question then is how to get the CEO engaged in the process early?

There is a very simple way of demonstrating the value of CRM to the CEO. Once convinced that the operational strategy makes sense, the CEO must assess his or her appetite for making CRM operational. If the answer is no, then perhaps a functional deployment may be practical but otherwise, it is better to avoid the inevitable.

CRM as an Operational Strategy

The applications of CRM apply to sales, marketing, call centers, e-commerce, field service, and partner organizations. The objective is to design and implement a set of capabilities that will serve the needs of each group and that customer transactions and interactions will be captured in a common database such that both data and analysis will be available to everyone (subject to a set of security rules).

Most organizations are structured into functional silos that compete for limited resources and have differing agendas, none of which are particularly customer centric. If you doubt this, compare the following observations with your organization:

  • Performance of the sales organization is defined in terms of hitting quota while staying within budget.

  • Performance of marketing departments is typically measured in terms of products and programs. For example, my product met its profit objectives or my program generated x leads.

  • Call centers and help desks are often managed on a cost containment philosophy where productivity and risk avoidance policies prevail.

None of these functions would view themselves as being customer antagonistic but no one is really looking at the customer outside of the framework of raw revenue. The customer has a need to fulfill and desires a positive experience in terms of value perception, use, and interactions with the organization. Most organizations depend on customer satisfaction statistics to address overall quality of the experience, but too often surveys reflect what the company wants to hear and high scores may not correlate with loyalty or retention.

If CRM provides tools for studying customer behavior and managing processes that add value, then there needs to be a definition of how the organization wishes to operate in this new environment and how it will recognize success when achieved. The reality is that most successes involving CRM have been at the functional level. Few enterprise installs have been successful. When this has occurred, it is always because it was driven by a senior level executive, who had a clear vision of the desired end state—and the corresponding benefit to the organization. This implies that the creation of a new operational strategy requires the alignment of purpose and performance of the functional silos; it is a CEO responsibility.

The End Game

There is a strong intuitive appeal to the concept of CRM. It is hard to deny that organizations need to better understand customers and the market and there are viable benefits inherent in the individual applications. Thus organizations get lulled into the prospect of automatically deriving benefits while vastly underestimating the cost. When this occurs, rising costs are not matched by a confidence in disproportionate rewards, so at some point the initiative is abandoned. In some situations this occurs before the applications are deployed while in other cases a lack of user acceptance drives the decision.

The heart of CRM is not being customer centric but rather to use customer profitability as a driver for decision making and action. Before exploring this assertion, it is useful to review the process of resource allocation as it is practiced in most organizations. The budget process largely consists of an extrapolation of the past. Resource constraints pit function against function with back room deals that are based on internal politics versus the marketplace. This decision process has little insight as to what is working and what is not working (as it applies to the marketplace) or for that matter why? Without insight relative to cause and effect, the organization has no choice but to follow intuition and anecdote. It is analogous to the story about the marketing VP who admitted that half the advertising budget was wasted; the problem was he did not know which half.

One must assume that given a preference, the CEO would prefer to be able to steer the good ship Enterprise with something other than inertia or anecdote. CRM provides the data to assess customer profitability while supplying the tools to refine market strategies that provide insight as to how to improve that profitability. To demonstrate this type of analysis, consider the following hypothetical example:

Assume that an organization has deployed CRM and has a reasonable assessment of customer profitability. Also assume that this same organization has segmented its customers by profitability and that the organization also has identified key customer behavior metrics that relate to buying habits and retention. After studying the behavior of the low and negative contribution customers it is determined that a marketing program can be devised that will move 5 percent of the negative customers into low profitability while also propelling 5 percent of the low profitability customers to medium profitability.

The example demonstrates that moving 5 percent of the customers in each group will yield a 35 percent increase in profit contribution and the actual bottom line results could be significantly higher based on the level of fixed costs not incorporated into the profit contribution numbers. When organizations are struggling with how to leverage organic growth, how can a CEO ignore this insight?

This is not pie-in-the-sky wishful thinking but rather it is indicative of how the tools of CRM can be leveraged to understand cause and effect and fine tune resource allocation to achieve results.

The CEO and CRM

If CRM were merely a deployment of technology, the role of the CEO could be reasonably summarized as one of advocate and approver. The deployment of CRM applications as an overlay to existing functions and processes may strike an accord in some areas but more likely it will be viewed as an imposition resulting in minimal adoption. A CRM failure is far worse than merely the lost time and resources; it sends a message to the organization relative to direction and commitment.

Success starts by creating a vision for the initiative relative to how it will impact the organization's ability to compete in the future and the implications of not taking this action. Having created the vision, the next step is to assign a sponsor, program manager, and a change manager. The sponsor must have profit and loss (P&L) responsibility and in fact could be the CEO but this is not necessary for success. The program manager must be selected from one of the functions being impacted and both the sponsor and program manager must be respected in the organization. The change manager should have change management experience or come from the line side of the organization. All assignments should be made on the basis of selecting the best people possible to assure success; the assignment should not reflect who is available. The entire organization will take its queues from this step.

Once the leadership is in place, the CEO needs to work with the team and his or her direct reports in terms of five major topics:

  1. Functional Performance Metrics. As outlined earlier, nonalignment of effort will dilute if not destroy an enterprise deployment of CRM.

  2. Process Ownership. The delivery of customer value is typically derived via processes that cross functional lines. When no one owns the process it is difficult to achieve meaningful and lasting results. This implies that the CEO assigns direct reports to these processes and reviews process performance along with other financial reports.

  3. Continuous Improvement. If the organization has a "shoot the messenger" culture, then continuous improvement, which is central to CRM, will be lost. The CEO must model the desired behavior.

  4. Doing the Right Things for the Right Reasons. CRM is a complex initiative that is likely to produce unforeseen issues. Long term success will depend on whether the right versus the expedient response is taken. CRM is a classic pay-me-now or pay-me-later decision. The challenge is that the pay-me-now part is very visible and the pay-me-later is usually buried in lost productivity, etc.

  5. Cheerleader. The CEO must be a very visible advocate and communicator for the initiative.

Given these implications, each CEO must assess the opportunity and cost in real terms. CRM can change the performance profile of the organization, but benefits will not be derived by simply deploying the technology. There are no shortcuts. It takes total commitment and leadership to achieve success.

This is part two of a two-part note.

Part one discussed CRM and the benefits it can bring to an organization.

Part two addresses the issue of how to create a credible business case for CRM and get the CEO engaged in the process.

About the Author

Glen S. Petersen is an internationally recognized speaker, writer, practitioner, and thought leader in the CRM and e-business industries. As a visionary and early adopter of sales force automation (SFA), in 1986, Petersen led one of the first successful national implementations of SFA in the United States. He has held senior level management positions with system integration and end user organizations. As a consultant, he developed a number of proprietary facilitation techniques to help organizations to better understand technology, and how to rally around a single threaded, phased implementation approach. Prior to founding GSP & Associates, Petersen was senior vice president at ONE, Inc. and Ameridata. He has authored six books including CRM Leadership and Alignment in a Customer Centric World and ROI: Building the CRM Business Case, on which this series of articles is based. He also offers a ROI calculator that helps companies build a business case for CRM. It is available at

Petersen has a Bachelor's and Master's degree in Engineering, and an MBA from the University of Chicago.

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