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Selchert, M. (2005). CFROI of Customer Relationship Management. Empirical Evidence from mySAP CRM Users. 2. Verlag Wissenschaft & Praxis. https://doi.org/10.3790/978-3-89644-942-9
Selchert, Martin. CFROI of Customer Relationship Management: Empirical Evidence from mySAP CRM Users. (2).Verlag Wissenschaft & Praxis, 2005. Book. https://doi.org/10.3790/978-3-89644-942-9
Selchert, M (2005): CFROI of Customer Relationship Management: Empirical Evidence from mySAP CRM Users, 2,Verlag Wissenschaft & Praxis, [online] https://doi.org/10.3790/978-3-89644-942-9
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CFROI of Customer Relationship Management
Empirical Evidence from mySAP CRM Users
Managementschriften Fachhochschule Ludwigshafen am Rhein – Hochschule für Wirtschaft, Vol. 5
(2005)
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About The Author
The author is a professor at Ludwigshafen University of Applied Sciences and a management consultant. He specializes in management, marketing, and e-business. Before becoming a professor, he worked from 1994–2000 with McKinsey & Company, Inc., a leading international management consultancy. Therein he focused on information technology, telecommunications, and multimedia. He has many years of project experience in assessing the profitability of IT investments and optimizing the management of IT project portfolios.Abstract
Customer Relationship Management (CRM) promises to create value for a company through a software-supported customer focus of its entire business system. But the urgent question of CRM's impact on the bottom line is still open. This study, focused on mySAP CRM users in Germany, Austria and Switzerland, produces quantitative evidence of such an impact. It is more than a survey, as cash-flow return on investment (CFROI), the net present value, and the break-even period result from individually crafted, comparable business cases for all participants. These financial decision criteria are founded on a solid and detailed analysis of operational improvements through using CRM. The main results are provided by sector; and many of the potential »factors of CRM success« are tested.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Table Of Contents | 5 | ||
| Prof. Dr. Hartmut Walz: CFROI of CRM: A Challenge Well Met | 8 | ||
| Prof. Dr. Martin Selchert: Introduction and Acknowledgements | 10 | ||
| 1 Management Summary: High Value Creation Potential Through Using CRM | 12 | ||
| 2 Research Design and Key Concepts: Understanding Value Creation by CRM | 18 | ||
| 2.1 The Urgent Challenge of CRM Value Assessment | 18 | ||
| 2.1.1 The Urgent Need to Assess Value of CRM | 18 | ||
| 2.1.2 The Empirical Findings: Sparse and Contradictory | 21 | ||
| 2.1.3 The Challenge in CRM Value Assessment | 22 | ||
| 2.1.4 The Aim of the CFROI of CRM Study | 24 | ||
| 2.2 The Research Design: Meeting the Challenge | 26 | ||
| 2.2.1 Key Concepts for Measuring CRM Value | 26 | ||
| 2.2.2 The Structure of the CRM Value Metric | 35 | ||
| 2.2.3 The Individual Business Cases: More than a Survey | 43 | ||
| 2.2.4 The Trustee Model: Ensuring Openness and Honesty | 45 | ||
| 2.2.5 The Study Process: Ensuring Interactivity | 46 | ||
| 2.2.6 Participants: Focus on mySAP CRM Users in D-A-CH | 48 | ||
| 3 Results: Higher Productivity, Lower Cost, Higher Revenue | 53 | ||
| 3.1 Project Targets: Met by CRM | 53 | ||
| 3.2 Financial Targets: CFROI, NPV, and Break-Even Period | 57 | ||
| 3.2.1 Financial Targets Including Experienced-Based Expectations | 57 | ||
| 3.2.2 Financial Targets Excluding Experience Based Expectations | 66 | ||
| 3.3 Productivity Targets: Potential for Cost Reduction | 68 | ||
| 3.3.1 Improved Customer Information: The Basis for Higher Productivity | 68 | ||
| 3.3.2 Marketing: Valuable Analytic Insights, Improved Campaigns, and Consequential Lead Management | 75 | ||
| 3.3.3 Sales: Operative Process Improvements | 80 | ||
| 3.3.4 Interaction Center: New Opportunities in Telesales and Help Desk Functions | 91 | ||
| 3.3.5 Internet Sales: Automated Order Management | 96 | ||
| 3.3.6 Service: Improvement Potential Not Yet Developed | 100 | ||
| 3.3.7 Other Productivity Effects and Potential Cost Savings | 101 | ||
| 3.4 Revenue Targets: More Customers and More Revenue per Customer | 103 | ||
| 3.4.1 Increase in Revenue: The Basic Logic-Tree and Aggregated Results | 104 | ||
| 3.4.2 New customer acquisition: Leads | 110 | ||
| 3.4.3 “New” Old Customers: Customer Satisfaction and Customer Retention | 116 | ||
| 3.4.4 Increase in Goods Sold: Larger Quantities and Cross Sales | 121 | ||
| 3.4.5 Higher Prices: Absolute and Relative Price Increases | 128 | ||
| 3.5 Speed Targets: Time-to-Market, Time-to-Volume, and Time-to-Delivery | 130 | ||
| 4 Key Factors of Success: Industry Sector, Situational Fit, and Proficient Project Management | 135 | ||
| 4.1 Financial Results by Sector | 135 | ||
| 4.2 Systematic Framework for Key Factors of Success | 141 | ||
| 4.3 External Situational Factors of Success: Technology, Customers, and Competition | 144 | ||
| 4.3.1 Influence of Production Technology: Service Character and Complexity of Goods and Services on Offer | 144 | ||
| 4.3.2 Customer Influence: Insignificance of Large Numbers | 148 | ||
| 4.3.3 Influence of Competitive Pressure: The More the Better for CRM | 149 | ||
| 4.4 Internal Situational Factors of Success: The 7-S of CRM | 152 | ||
| 4.4.1 Organizational Structure: Dynamics Breed High CFROI of CRM | 152 | ||
| 4.4.2 Systems: No Impact of IT Proficiency Before the Implementation | 153 | ||
| 4.4.3 Staff: Specific Skills and Internationalization Matter | 155 | ||
| 4.5 Good Project Management: a Necessary but Not Sufficient Condition for Success in CRM | 157 | ||
| 4.5.1 Management Support and Involvement | 157 | ||
| 4.5.2 Employee Buy-In | 160 | ||
| 4.5.3 Quality of CRM Targets | 165 | ||
| 4.5.4 Proficiency of Project Execution | 166 | ||
| 4.6 Value Drivers by Industry Sector | 170 | ||
| 5 Closing Remarks: Strengths, Limitations, and Best Use of Results | 177 | ||
| 5.1 Strengths of the Study: Neutral, Quantitative, and Systematically In-Depth | 177 | ||
| 5.2 Limitations of the Study: Small Sample, and Limited Geographic Scope | 179 | ||
| 5.3 Best Use of the Results: Guidance for the Company Specific Business Case | 180 | ||
| 6 Appendix | 183 | ||
| 6.1 References | 183 | ||
| 6.2 Table of Figures | 189 | ||
| 6.3 Glossary of Terms and Abbreviations | 192 | ||
| 6.4 Questionnaire "Value Creation by mySAP CRM" | 196 | ||
| Herausgeber | 215 |