CRM Evaluation - Implementing SAP CRM - page 96

3.2.2 Cost Reduction Approach
This is one of the most direct ways of justifying an investment for the introduction of infor-
mation systems. Assuming that the benefits from the new systems are equal to or greater than
the existing system, one simply compares the costs of the proposed system with the existing
system. A variation on this approach is the value-added analysis of the related business processes
within the organization. In this approach, that is, the essence of the BPM approach presented in
Chapter 7, the organization essentially identifies the non-value-added tasks and either eliminates
them or substitutes for them more efficient processes via automated systems like CRM:
1. Sales support : The Major factors that contribute in reducing sales costs are
a. Automation of proposals, configuration, and quotations
b. Referencing and reviewing notes and files before calls
c. Managing samples, demo stock, sales literature, etc.
d. Preparing sales forecasts and customer call reports
e. Providing better-quality leads in usable format
f. Reducing the number of customer calls necessary to close a sale by enabling capture of
critical information at the point of sale, better customer information, and on-the-spot
reports on different configurations and costs
g. Finding and providing product or technical information to the customers
h. Information and learning about new product/solutions and services, best-practice
templates, domain knowledge guides, etc.
2. Direct marketing : Cost savings can result from better targeting, personalization, and elimination
of duplicates and blank calls. In fact, better targeting and validated data should enable the vol-
ume of direct mail to be reduced while simultaneously increasing the response rates.
3. Call centers/customer contact centers : Staff is the most expensive element in setting up and
running a contact center. By automating as many processes as possible—no. of calls, call
routing, and assisted call answering—companies can save up to 70% on the staff costs.
4. More accurate sales forecasts : For some organizations, better sales forecasting will enable
a. Reductions in inventory resulting in savings on stockholding costs
b. More efficient production schedules resulting in reduced per unit costs
5. Staff motivation and loyalty : Like customer loyalty, employee loyalty also has a positive effect
on profitability. High sales staff turnover has an adverse effect on the sales relationship and
the potential of subsequent up-sell and cross sell opportunities.
3.2.3 Strategic Approach
Unlike the earlier approaches, the strategic approach takes a view on the future. CRM systems
provide support for organizational change as also for rapid delivery of strategic changes to product,
pricing, and customer information. For a better payback, it is important that the CRM strategies
should be linked to the company's business and market strategies.
While CRM strategies are based on the fundamental premise of enhancing customer
relationships, this does not necessarily imply that CRM systems require a single view
of the customer across all channels and customer touch points. As noted in Chapter 1,
Section 1.2 “Concept of Customer Relationship Management (CRM),” all customers
are not equal and may prefer certain specific channels or touch points over the others.