Find a new approach to the hard sell of CRM

The process of justifying additional budgets for IT projects has been tough enough in the past two years, and when it's for customer relationship management (CRM) tools, it's even more of a struggle for CIOs.

The primary difficulty is that CRM tools are not usually installed for achieving black and white goals like cost cutting, which is typically the easiest way to sell a technology project to the finance department.

In fact, a survey from last September showed that two-thirds of people were inhibited from undertaking a CRM project because they had no idea how to justify it from an investment perspective.

George Lawrie, a senior analyst for enterprise applications at analyst firm Forrester Research, says companies have traditionally justified big enterprise projects on cost reductions.

'If you look at how ERP cases were justified, it was typically done on costs and balance sheet savings that were easy to quantify, such as reduced work in progress, reduced raw materials inventory and reduced debtors,' he said.

But Lawrie argues that CRM is far more analogous to a marketing or advertising campaign and should be justified accordingly.

'Marketing campaigns are often justified by some kind of survey that shows how customer behaviour would change if a certain campaign went ahead. The same kind of approach can work with CRM.'

'It's very much the same kind of thinking as justifying advertising, but the extra value that CRM brings with it is its ability to directly measure the impact on customer's buying behaviour,' said Lawrie.

The main implication of this is that the sales and marketing department should be responsible for convincing a company's finance department to approve budget for a CRM investment, rather than the CIO.

And while return on investment (ROI) has become an industry clich‚, it remains an appropriate tool for measuring what value a technology project creates for shareholders.

'There's nothing wrong with ROI, there's only something wrong with either the way that ROI cases have been developed or that they were based on the wrong measures and components,' said Lawrie.