Key Ingredients in a CRM Business Case

John Eccles, 01 December 2015


A  business case for a CRM system must examine benefits and risks involved with implementing CRM and, conversely, not implementing CRM. Provided the benefits outweigh the costs and risks, the conclusion should be a compelling argument for implementation.

Chances are your organisation has a Business Case template or prescribed process so that decision-makers can more easily compare and prioritise business cases. If so, then use it but be sure to cover these key ingredients.

Answer the Why question

Why does this organisation need a CRM system now?

The answer to this question frames how the business case needs to be evaluated.

It may be that you need a CRM system to improve effectiveness and efficiency of your sales team or to automate some processes.  If so, the costs and benefits can be compared with other means to improve effectiveness and efficiency.

But if your existing system is about to expire or if it is a legacy system dependent on a single (possibly aging) person then evaluation will focus on the best method to mitigate a pending and significant disaster.

Similarly, if your competitors have implemented CRM and are starting to eat away at your market share, evaluation needs to focus on catching up and halting the downwards trend.

Fit with corporate strategy

For a CRM system to deliver optimal value, it must support the organisation’s strategy. It must enable the organisation to achieve competitive advantage.
If the strategic focus of the organisation is not aligned with a CRM system, you may not be ready for CRM and you should consider parking the business case. If it is aligned, the business case must show this clearly. Help the decision-makers join the dots and see how the CRM system gives legs to their strategy.

Consider the changes required

What changes will need to be made to the organisation, to business processes and to related systems?

By its nature, a fully-functional CRM system is cross-departmental and brings changes in the way people work and interact. Some work and hence jobs may be eliminated by automation and some new roles may be needed to analyse customers demographically, geographically and economically for greater insights or to identify and target loyal customers and proactively relate with them.

Very rarely will a CRM implementation be just an IT exercise.

Financials - costs, benefits and ROI

Make sure you include ALL the costs. The obvious costs are the license costs, the initial customisation and implementation cost and the on-going support costs. Consider also the on-going costs of enhancements and upgrades because you will want your system to stay up-to-date and take advantage of the new functionality and power that becomes available.

Remember to factor in the time required to implement and manage the system. Include your project team, staff involved in workshops to define the detailed system requirements, UAT (user acceptance testing), time out for training and on-going internal system support.

The benefits may be more challenging to quantify. You should discuss and agree on these with the key managers involved.

Quantify benefits from the following as applicable:

  1. Increased revenue. Better managed customer relationships inevitably leads to more sales because existing customers stay and more prospective customers come on-board. In addition, your sales team will be equipped with faster access to the latest information about customers and have tools to help them plan their time and ensure all opportunities are systematically explored.  Your marketing will be more measureable and smarter and your marketing team more closely connected to your sales team.
  2. Efficiency. Your CRM system will reduce data input time, eliminate double-entry of data, reduce costly errors and automate many of your processes.
    Regarding ROI calculations, you should use the same formula as is used for other business cases – so the business cases can be compared. But beware of overly-simplistic calculations. A CRM project should be evaluated over a reasonable time-frame (perhaps 5 years) so a discounted ROI will normally be required

Regarding ROI calculations, you should use the same formula as is used for other business cases – so the business cases can be compared. But beware of overly-simplistic calculations. A CRM project should be evaluated over a reasonable time-frame (perhaps 5 years) so a discounted ROI will normally be required.

List the "soft" benefits

Where a benefit cannot be quantified with any level of confidence, then it should be stated. Soft or intangible benefits may include:

  1. Increased customer satisfaction
  2. Ability to offer improved customer service and support
  3. Less errors due to better system usability and error-detection
  4. Increased user satisfaction and lower stress-levels
  5. Faster information from improved/automated business processes
  6. Better understanding of customer and trends
  7. Better forecasting
  8. Improved software vendor support and service

Show how the benefits will be measured

It is worthwhile at the business case stage to provide the metrics that will be used to measure the success of the CRM project. This adds credibility to the benefits and provides a valuable focus to the project when it is approved.

Some of the metrics will be existing and already monitored. Others can be easily measured as part of the CRM system implementation. For example system usage can be monitored and reported and elapsed time per sales opportunity or service case can be calculated by the system.

Outline the risks and show how they can be mitigated

It’s true – not all CRM projects are successful. Some CRM projects are embarked on without even a business case! 

Your business case will eliminate or minimise the major reasons why CRM systems fail. Your planned CRM project will:

  1. have high-level management buy-in
  2. be clearly linked to organisational strategy
  3. take into account the organisational changes required
  4. allow for sufficient staff input into the project
  5. be focussed on measurable outcomes

Yet there are other risks you may need to consider:

  1. Rapidly changing business requirements. Ensure key stakeholders are engaged throughout the project and that the project is structured so as to accommodate changing requirements without major delay or budget overrun.
  2. A change in key personnel. The project should not be critically dependent on a single person.
  3. An under-performing CRM partner. Select CRM software supported by multiple CRM development companies. And select your CRM partner carefully.
  4. User resistance to change. Ensure the system provides a “win” for users and that users are well trained and supported through the transition.