BEST PRACTICES

December 13, 2005

Best Practices For CRM

Deployment
by William Band

Helping Business Thrive On Technology Change

B E S T P R AC T I C E S
Client Choice topic

December 13, 2005

Best Practices For CRM Deployment
Lessons From 22 Leaders
by William Band
with John Ragsdale and Ian Schuler

EXECUT I V E S U M MA RY
Forrester talked with 22 large organizations in North America, Europe, and Asia to understand their
methods for achieving business performance improvement through investment in CRM initiatives.
Organizations spend heavily to improve customer-facing processes, but they still struggle to achieve
satisfactory returns on their effort. Despite these challenges, CRM leaders are learning what it takes
to succeed. They use 10 best practices to address five critical issues: governance, process management,
data management, user adoption, and technology. As a result, these businesses have captured four types
of benefits: increased revenues, lower costs, higher return on investment, and improved competitive
strength. Enterprises should compare their approaches with best practices to uncover weak points in
need of remediation and thereby improve the odds of CRM success.

TABLE O F CO N T E N TS N OT E S & R E S O U R C E S
2 Unlocking The Value Of CRM Is Still Forrester interviewed 22 companies: Alcatel
A Challenge Networking, ATB Financial, Bolton Metropolitan
2 CRM Can Deliver Outstanding Results Council, British Telecommunications, Capita
Insurance Services, Cisco Systems, Cortal
4 Ten Best Practices Make The Difference
Consors, Deloitte, DHL International, Energie AG,
8 Avoid Common Pitfalls Energis UK, Inter-Tel, Kimberly-Clark, Lyondell
RECOMMENDATIONS Chemical Company (Equistar), Pella Windows,
9 Use Best Practices To Capture The Benefits Pitney Bowes, Rohm and Haas, SaskTel, Tata
Of CRM International, The Bank of New York, Vodafone
10 Supplemental Material Ireland, and YorkshireWater.

Related Research Documents

“The Forrester Wave™: Enterprise CRM Suites, Q2
2005”
July 13, 2005, Tech Choices
“People Plus Technology Determines CRM
Success”
May 31, 2005, Best Practices

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2 Best Practices | Best Practices For CRM Deployment

UNLOCKING THE VALUE OF CRM IS STILL A CHALLENGE

Enterprises view customer-facing strategies and technologies as critical to gaining competitive
advantage. They continue to spend a great deal on CRM, though many organizations still struggle to
find the right practices to leverage CRM to its greatest benefits.

· Enterprises continue to invest heavily in CRM-related capabilities. Enterprises will spend

more than $3 billion worldwide on new CRM software licenses in 2005.1 Total spending on
CRM, including maintenance, integration, and related hardware and software, will be more than
$12 billion. This high investment level is driven by unrelenting pressure on organizations to
create differentiated customer experiences to distinguish themselves from competitors.

· Satisfaction with CRM implementations remains problematic. Despite high levels of

spending, satisfaction with CRM implementations is not strong. Forrester recently surveyed 94
business and IT executives about their satisfaction with CRM software applications.2 Only 10%
strongly agreed that the business results they expected to achieve were met or exceeded. Only
10% strongly agreed that they were able to quickly realize value from their CRM applications.
And only 14% strongly agreed that their CRM applications improved the productivity of end
users.

CRM CAN DELIVER OUTSTANDING RESULTS

Despite these challenges, CRM leaders are learning what it takes to succeed. Forrester talked with 22
large organizations in North America, Europe, and Asia to understand their methods for achieving
business performance improvement from investment in CRM initiatives.3 These organizations
represent a cross-section of industries, including manufacturing, financial services, communications,
and utilities. They captured four types of benefits: increased revenues, lower costs, higher return on
investment, and improved competitive strength.

· CRM contributed to sales growth. Enterprises typically look to CRM to deliver increased
revenues, and the companies interviewed achieved this benefit:

“By providing a transparent view of the customer, we will achieve an estimated increase of
1% in revenue ($20 million) by the end of 2005.” (Global logistics management company)

“We achieved a measurable increase in sales and got a payback in two years.” (Retail bank)

“We now are able to make cross-sell offers to in-bound customer calls for service; about 50%
of the calls lead to an offer being made.” (International wireless communications services
provider)

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 Best Practices | Best Practices For CRM Deployment 3

· CRM achieved cost savings. The CRM leader companies documented reductions in costs and
resources used:

“We needed only 30% more employees to handle three times the workload.” (Regional
telecommunications services company)

“Most of our justification was taking out costs — reducing headcount in the call center. We
successfully moved hundreds of people as a result of the implementation.” (Global office
equipment company)

“Initial implementation saved us $4.5 million. Beside the cost savings, it was imperative that
we upgraded technologies to support our service business, which is the fastest-growing part
of the company.” (International telecommunications equipment supplier)

· CRM delivered high ROI. Many of the CRM leader companies measured the ROI they
achieved from CRM and reported positive results:

“We did an ROI study using an independent consulting firm. We achieved an IRR (internal
rate of return) of 23% over three years based on quantifiable measures such as reduced
transaction time for billing, marketing campaign results, and reduced system support and
administration costs.” (European energy utility)

“We achieved 15% to 20% ROI based only on ‘hard measures’ like more sales, time savings,
lower infrastructure costs, less people.” (Financial services company)

“We expected a 2 to 1 return: $20 million return on a $10 million cost. We are actually
getting a 4 to 1 return.” (Insurance claims processing company)

· CRM helped strengthen competitive position. CRM initiatives are part of the core competitive
strategy for the companies Forrester talked with:

“We went from No. 10 (last) to No. 3 in our industry. We reduced call volumes by 10% to
15% by improving first-call resolution. Repeat calls are down by 15% to 20%. Response
times to written complaints have been reduced by 40%.” (Regional water utility)

“CRM is a ‘gotta-have’ in our industry. It was critical to helping to standardize our sales
processes and customer information in the wake of the mergers we went through.”
(International commodity chemicals producer)

© 2005, Forrester Research, Inc. Reproduction Prohibited December 13, 2005

4 Best Practices | Best Practices For CRM Deployment

TEN BEST PRACTICES MAKE THE DIFFERENCE

How did these CRM leader organizations achieve outstanding results? They used 10 best practices
that address five critical issues: governance, process management, data management, user adoption,
and technology (see Figure 1). Follow these guidelines to succeed:

· Build strong executive sponsorship. The executives interviewed emphasized the importance
of having strong and visible commitment by top management for customer-facing initiatives to
succeed. There is no single-best way to secure top-level sponsorship. However, if sponsorship
is absent, the risk of failure increases significantly. The more closely aligned that CRM is to
important business strategies, the more likely senior management will see it as important.

For example, a water utility faced a significant challenge to its survival in the wake of a poor
performance review by industry regulators. In response to this challenge, top management
formed a multidivisional task force to find ways to become the “best in their industry.” They
decided the organization needed to transform to become more customer-centric. The utility
revamped customer-facing processes and adopted new technologies to support the delivery
of better customer service. In this case, CRM was led by top executives who viewed it as a
core strategy to improve competitive position and increase the organization’s standing with
regulators.

· Require that business executives lead CRM, with support from IT. Information technology
professionals have an important role to play in helping business leaders understand how to
take advantage of mature CRM technologies (e.g., packaged CRM application software) as well
as emerging approaches (e.g., CRM software-as-service). In most organizations, however, it is
the “business” parts of the organization that are accountable for delivering profit and loss. CRM
initiatives must therefore be led by business executives who own and manage the customer-
facing processes that impact organization success metrics.

As an example, a CIO of a leading insurance company refuses to launch new technology

initiatives until there is funding and program ownership commitment from business users. He
believes business leaders need to demonstrate their commitment to the project by funding
the technology investments and human resources needed to achieve the goals. He views his
responsibilities to be helping business users become familiar with new opportunities available
through the use of technology and, further, assisting with the implementation of the best
solutions.

· Put in the right governance structure. Successful CRM projects require a constant balancing
of objectives, priorities, resources, and schedules. A clear governance structure is required to
establish accountabilities, allocate resources, and make decisions.

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 Best Practices | Best Practices For CRM Deployment 5

A financial services company created a CRM steering committee composed of both senior
IT and business unit heads with direct accountability to the board of directors for success of
CRM. The board directed managers to participate in the governance structure and nominated
specific individuals to work on the project. The steering committee is supported by a program
committee that meets once per month with project and operational managers to allocate
resources as needed. Reporting to the program committee is a project board composed of IT
managers. The project board meets with business counterparts once every two weeks to monitor
progress, document issues, resolve problems, or escalate the issues to the program committee.
Under this structure, there is clear line of accountability to the board, decision-making
processes are well-defined, and there are mechanisms to deploy company resources where they
are needed.

· Define objectives and processes first, and then apply technology. CRM technologies are a
means, not an end. It is essential to define CRM objectives and the business process changes
necessary to meet the objectives before considering a technology purchase. For example, is
the goal to: Increase revenue per sales rep? Increase average order size? Decrease customer
acquisition costs? Improve customer retention? Decrease service response times (see Figure 2)?

A global auto manufacturer worked for three years to re-engineer its dealer management
processes to improve service delivery to auto buyers. The goal was to increase customer
service satisfaction at the dealer level to protect against buyer defections to rival auto brands
that were entering the domestic market in the wake of global free-trade agreements. The auto
manufacturer worked closely with dealers to improve three specific processes: presales, sales,
and post-sales. Only after the “ideal” processes were defined and agreed to, did the company
look for technology solutions to support the requirements of the new designs.

Figure 1 Ten Best Practices For Successful CRM Deployment

1. Build strong executive sponsorship

Strategy and
governance 2. Require that business executives lead CRM, with support from IT
3. Put in the right governance structure

Objectives and 4. Define objectives and processes first, then apply technology
processes 5. Follow a realistic pace for rollout

Customer data
management 6. Define data requirements and data quality management approaches early

7. Strive for high user involvement

User adoption
8. Place a high priority on software usability

9. Simplify the CRM platform

Technology
10. Manage the vendor relationship actively

Source: Forrester Research, Inc.

© 2005, Forrester Research, Inc. Reproduction Prohibited December 13, 2005

6 Best Practices | Best Practices For CRM Deployment

Figure 2 Examples Of CRM Objectives

CRM objectives

Increase revenue Shorten sales Increase average

per sales rep cycle order size
Sales
Increase close Increase conversion Increase revenue
rate rate per customer

Increase campaign Decrease lead- Decrease customer

response rate generation cost acquisition cost
Business
function Marketing
Increase marketing Improve targeted Accelerate lead
sourced revenue prospecting maturation

Increase customer Increase customer Reduce customer

retention service productivity service costs
Service
Decrease service Decrease call Decrease request
response times waiting times solution time

Source: Forrester Research, Inc.

· Follow a realistic pace for rollout. Successful CRM requires an organization to learn and
accept new business process and supporting technologies. This is never easy, and leader
companies have found that a deployment strategy based on “continual improvement” works
best. The 22 companies studied took three to six months to develop a CRM business case and
define their requirements, three to four months to implement pilot programs to test prototypes,
and six months to roll out functionality to the initial set of targeted users. This was typically
followed by a continual-release schedule whereby new capabilities were introduced to the
organization every 90 to 120 days.

For example, a building materials company planned to take nine months to implement
new sales force effectiveness and call center technologies, but it actually took 18 months. In
retrospect, the company recognizes that its original plan was not realistic. It did not have
standardized sales processes in place, and computer literacy of the sales organization was low.
In addition, the call centers were being expanded rapidly, there was high personnel turnover,
and job roles were being redefined. As a consequence, it was premature to introduce CRM
technology changes because so many elements of the company’s business model were in a
state of flux. The company recalibrated its approach and now introduces new processes and
technologies more gradually.

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 Best Practices | Best Practices For CRM Deployment 7

· Define data requirements and data quality management approaches early. Customer data
integration and management was a sore spot with most of the companies interviewed. On
reflection, they realized they did not spend sufficient time on this issue early enough in their
CRM initiative to avoid problems later. Progressive companies are moving away from previous
efforts that focused on technology and after-the-fact customer data cleansing. Organizations are
starting to manage and use customer data more proactively.4

A North American chemicals producer struggled for six months with customer master data
problems after it implemented a CRM solution for its sales force. It took this length of time
to clean up duplicate, incorrect, and missing data from legacy systems and data bases. The
company tried to “auto load” customer data into the new CRM tool, and the effort failed
miserably. The poor data in the CRM tool caused users to reject the new application as
untrustworthy. In retrospect, the company now understands that the CRM team should have
cleaned up customer data in advance of implementing operational CRM applications and spent
more time defining data transformation and quality management strategies.

· Strive for high user involvement. New CRM processes and technologies that have a clear
benefit for users but are not properly introduced into the organization will not be adopted.
Enterprises must make sure that the community of users is highly involved in all phases of
design and implementation. They must put in place mechanisms to support users in learning
new skills. They must ensure that users have opportunities to influence application functionality
and enhancements.

For example, a bank that operates in more than 32 countries allowed 84 users to participate
directly in the decision to choose the specific technology vendor to support the bank’s CRM
effort. These users participated in videoconference sessions to review vendor solutions and
then voted to select the one that best fit their needs. This was followed by series of Webinars in
which users from around the world viewed and critiqued prototype solutions developed by the
CRM team. Finally, the strongest prototype was tested in pilot programs in four countries. This
process built a strong user constituency who eagerly embraced the final solution.

· Place a high priority on software usability. End user benefits must remain the center of CRM
process and application enhancements. CRM applications are not user-friendly from the
viewpoint of frontline employees when 20 to 30 steps are required to complete a process. Give
attention to the application user interface and workflows to ensure that these are well-aligned
with the working practices of day-to-day users.

To keep the focus on usability, a bank follows a strategy of “continuous dialog” with users. A
designated group of CRM “super users” from the business units provides feedback to CRM
developers. The bank also convenes regular conference calls with larger groups of users to

© 2005, Forrester Research, Inc. Reproduction Prohibited December 13, 2005

8 Best Practices | Best Practices For CRM Deployment

collect comments and suggestions. And the company surveys users continually to make sure
planned enhancements are what the field personnel want and need.

· Simplify the CRM platform. The companies interviewed seek to reduce the complexity and
cost of their enterprise applications portfolios. This need is driving a reduction in the number of
CRM point solutions and a consolidation of investment into fewer multifunctional CRM suite
“platforms” (e.g., Amdocs, Oracle, SAP, and Siebel).

An illustration of this strategy is an international office machines company that needed to

consolidate 26 unintegrated legacy systems. Customers were dissatisfied with poor sales and
service coordination and duplication. There was no integrated view of customer information,
and every time a frontline sales or service person left the company, customer information was
lost. It was becoming too costly to maintain the disparate set of customer-facing technologies
and too hard to sustain the breadth skills needed to support all these unique tools. The company
decided to standardize onto one CRM vendor’s multifunctional suite solution to support the
company globally. It retired the existing CRM point solutions.

· Manage the CRM vendor relationship actively. Consolidating CRM solutions requires that
enterprises rethink the type of relationship they have with their technology and professional
services providers. The relationship must move beyond a focus only on cost, project schedule,
and system performance to include a shared vision for achieving business outcomes.

For example, a well-known telecommunications switch company is striving to move from

managing software “bugs” to embracing vendors as business partners. It seeks to create deep
relationships with technology providers, realizing it cannot meet goals without help from
vendors that share a common vision of success. The company insists on connecting at high
levels with vendor organizations and uses dialogue-based project management structures to
support give-and-take discussions. The CRM vendor relationship is too important to leave only
in the hands of the company’s corporate procurement department.

AVOID COMMON PITFALLS

CRM initiatives will be more successful if best practices are followed. However, the 22 companies
Forrester talked with also warned of the types of pitfalls to avoid:

· Technology glitches can sink CRM programs. Technology-related pitfalls cover a broad
range of risks. For example, customer data loading and integration continues to be a major
headache at many organizations. The executives interviewed caution that integration with
legacy applications is never easy. Mobile CRM applications are not yet fully mature, and the
technical infrastructures in some countries may set limitations on solutions intended for use on
worldwide basis. Adoption will be significantly retarded if users have to struggle during their

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 Best Practices | Best Practices For CRM Deployment 9

initial experience with new CRM tools. Therefore, it is imperative to provide adequate technical
support during deployment.

· People challenges are the toughest problems. The executives interviewed emphasized that
technical challenges constitute only 20% of the effort for successful CRM. Addressing “people”
issues will consume the remaining 80% of management attention. For example, inadequate
training in new CRM processes and technology tools will impede user adoption. Uneven levels
of user technology literacy are a risk factor in global deployments. Choosing a vendor with
poor user interface and not taking into account user needs (in addition to management) will
contribute to user rejection of the application. Internal squabbles over customer data ownership
and management can paralyze efforts to create an organizationwide view of an enterprise’s
buyers.

R E C O M M E N D AT I O N S

USE BEST PRACTICES TO CAPTURE THE BENEFITS OF CRM

Enterprises should follow three guidelines to improve their odds of capturing the benefits of CRM:

· Stay the course to capture CRM value. The 22 leader companies have been working hard
for at least 24 to 48 months to capture CRM benefits, including increased revenues, lower
costs, higher ROI, and improved competitive position. CRM is a long-term strategy to deliver
differentiated customer experiences to set your organization apart from competition. Use an
approach of continual improvement and aim to improve CRM capabilities every quarter of
every year.
· Follow a balanced approach to CRM deployment. Successful CRM deployment depends
on paying attention to both technical and people issues. Leader companies use all 10 best
practices to simultaneously address the critical issues of governance, process management,
data management, user adoption, and technology.
· Evaluate and remediate weaknesses in current CRM initiatives. There are many pitfalls
to be wary of. Compare your CRM initiative with the 10 best practices to identify the risks
in your program. Address weak areas immediately. Failure to implement a comprehensive
approach to CRM deployment will lead to disappointing results.

© 2005, Forrester Research, Inc. Reproduction Prohibited December 13, 2005

10 Best Practices | Best Practices For CRM Deployment

SUPPLEMENTAL MATERIAL
Methodology
Forrester conducted in-depth personal interviews by telephone with executives at 22 leading
organizations. The enterprises comprised a cross-section of industries: manufacturing/process,
financial services, communications, and utilities/public sector. Each of the organizations had
implemented multifunctional CRM applications during the previous 48 months. The size of the
CRM initiatives within the organizations, as measured by the number of users of the applications,
ranged from 2,000 to 10,000. Respondent executives were the senior persons responsible for CRM
initiatives in their respective organizations and had close knowledge of the successes, challenges,
and deployment approaches of these programs.
Companies Interviewed For This Document

Alcatel Networking Inter-Tel

ATB Financial Kimberly-Clark
Bolton Metropolitan Council Lyondell Chemical Company (Equistar)
British Telecommunications Pella Windows
Capita Insurance Services Pitney Bowes
Cisco Systems Rohm and Haas
Cortal Consors SaskTel
Deloitte Tata International
DHL International The Bank of New York
Energie AG Vodafone Ireland
Energis UK YorkshireWater

ENDNOTES
1
The worldwide CRM software market (new license sales) will reach $3.2 billion in 2005 and is dominated
by four major vendors: Siebel, Oracle, SAP, and Amdocs. See the July 13, 2005, Tech Choices “The Forrester
Wave™: Enterprise CRM Suites, Q2 2005.”
2
Forrester surveyed 94 executives about their satisfaction with CRM technology initiatives. See the May 31,
2005, Best Practices, “People Plus Technology Determines CRM Success”
3
Forrester interviewed 22 companies to determine their best practices for CRM deployment. See the June 22,
August 24, and October 5, 2005, Teleconferences “Best Practices For CRM Deployment: Lessons From 22
Leaders,” parts 1, 2, and 3.

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 Best Practices | Best Practices For CRM Deployment 11

4
Customer data integration (CDI) is a new category of software infrastructure that operationalizes the
acquisition, distribution, and management of customer information. See the June 13, 2005, Tech Choices
“The Forrester Wave™: Customer Data Integration, Q2 2005.”

© 2005, Forrester Research, Inc. Reproduction Prohibited December 13, 2005

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