怎样真实评判CRM的ROI

In the heat of the customer-relationship management (CRM) software craze, product makers Siebel, SAP and Peoplesoft sold big-ticket enterprise applications packed full of promises. Two years later, the fervor chilled as the return on investment (ROI) remained conspicuously absent. The vendors took a beating and CRM became a dirty word.

In today's complex business environment, the prognosis for CRM is much more encouraging. While some business leaders frown on the hype associated with new ways to manage customer relations, the success rate is improving and the software has started to be viewed as more credible and reliable.

"There was plenty of hype and overselling, but today we do see more success and less overall failure," said Sheryl Kingstone, an analyst at the Yankee Group. "But there is still some disillusionment."

One reason offered for the growing popularity of current-generation CRM software is the availability of on-demand, or hosted, applications. While current CRM successes can be attributable -- at least in part -- to the rise of these leased applications, analysts are not writing off the role of the purchased variety as a player in the CRM space.

Real Cost of CRM

Contrary to a popular misconception about funding customer-management programs, CRM campaigns should not place a company in the red. The start-up expense going into a CRM program might be a bit costly. But a properly executed program also should be a revenue gainer on the other side of the rollout, according to analysts.

That financial situation should not change, whether the business uses on-demand or on-premise applications. "Installed, or on-premise, CRM is not a losing proposition," said Forrester Research analyst Elizabeth Herbert. "Although costlier on the front-end, it can save money in the long-run."

That is the message drilled home by the CRM software giants. Experts claim that the message is not just based on marketing hype to sell more software applications. It is drawn from success stories where the CRM software proved successful.

Consider Custom-Fit

Sometimes, the lack of ROI boils down to a poor corporate fit. If the CRM application is too structured, there is no room to grow. Similarly, if the CRM package is too customizable, then the cart runs ahead of the horse.

advertisement
This is often a case of knowing just what the goals of CRM are. If the goals are aggressive, a more flexible package could be worth the added expenditure. But if fancy bells and whistles are not part of the plan, then companies can justify a more rigidly structured software package.

"On-premise CRM is more flexible but easier to over-customize. It requires a business and I.T. staff but benefits from economies of scale," said Herbert. "It is generally cheaper than hosted and offers greater control."

The converse is true using the same logic, she said. Companies generally find that hosted CRM is less expensive up-front and is easier to customize, but has limited options. Hosted offerings usually require only one business administrator and they have more frequent upgrades.

Hosted vs. Owned

One way to view the difference is to consider a corporate decision to obtain a vehicle. If there is a need for the vehicle, the cost is a necessity regardless of whether the company buys the vehicle and owns it, or leases the vehicle while using it.

advertisement
"Hosted is a subscription-based pricing model," said Laurent Pacalin, vice president and general manager of Siebel CRM Products. "In effect it is renting the product, whereas on-premise is licensing, which means ownership. Whether to rent or to own is best determined by the end goal. Renting can be more expensive over time, but buying does cost more up front." Siebel offers its CRM product line in both pricing models.

Oracle, too, says there are pros and cons both to buying outright and to leasing CRM applications. Perhaps the biggest obstacle to surmount is issues. "On-demand-only offerings that don't tie to other systems are just external rental CRM, and that's a dead-end," said Barbry McGann, vice president of CRM strategy at Oracle.

But on-demand competitors counter that vendor accountability is a bigger issue. "Customer success is critical in a pay-as-you-go application," said RightNow CEO and Founder Greg Gianforte. "Customers will only renew if we deliver. If you have already paid the bill with an on-premise CRM vendor, it is harder to hold them accountable later."

Time Is Money

Another crucial factor in realizing ROI is the element of time. CRM applications that do not have to be installed locally can save time. "One of the biggest advantages of hosted CRM is the faster deployment time," said Forrester's Herbert.

Certainly, time can be a deal maker or breaker in customers' eyes. Lengthy installation throughout the corporate structure could lead to obsolescence.

The time factor was a critical consideration for Home Depot's deployment options, for example. "I am concerned about the time it takes to go live with any project," said Bob DeRodes, executive vice president and CIO of Home Depot. "Sometimes it feels that by the time we get a technology down to the end-user level, it's almost obsolete."

But fast does not always win the race. Sometimes haste can produce waste.

"Quicker to deploy can mean faster to fail for firms who throw technology at broken business processes," said Forrester's Herbert.

From Ring to Bling

The problem in the early days of CRM was the operating premise. The initial goals of CRM were not properly thought out. "The whole initial concept was wrong," said RightNow's Gianforte. "The first generation was about what companies could do to the customer instead of for the customer, and that made it hard to find ROI."

In comparison, today's CRM is more customer-centric and more profitable. According to Gianforte, ROI comes from three distinct areas: increased contact-center efficiency, increased revenue and increasedcustomer satisfaction. The first is the easiest to measure, but the last is valued higher by corporations because a repeat sale is easier to make than a first sale.

"When CRM doesn't deliver as it should, it's usually because the most important customer data tends to be in enterprise resource planning and not in the CRM," said NetSuite's CEO Zach Nelson, adding that NetSuite overcomes the issue by combining the two.

"Adding order management to the CRM is critical," he said.

Other industry experts agree with Nelson. In particular, Siebel's Pacalin said product selection should be based on a full-service game plan.

"To choose a good CRM application, look for one that covers the entire spectrum of sales: from opportunity to quote through order to cash," said Pacalin.

The Crying Game

While cost, reliability and results have changed with CRM software campaigns, the bad reputation CRM acquired earlier still lingers in some business quarters.

Tien Tzuo, senior vice president and chief marketing officer of SalesForce.com, believes that customers have been promised too much, have worked too hard and have wasted too much money to be fooled again. "This is the shameful legacy of the industry," he said.

Some business experts suggest not dwelling on past reputations.

"Yes, CRM is still a dirty word. But when I hear things like, 'Oh, I tried that' and 'CRM doesn't work; stay away from that,' I just smile and say if you care about increasing revenue, decreasing costs and improving your customers' overall experience, then you care about CRM," said Yankee Group's Kingstone. "You cannot measure ROI in small pieces. You have to focus on the Holy Grail."

Perhaps the best advice involves doing one's homework and adequately researching CRM products, suggested NetSuite's Nelson. "Know exactly what you want to accomplish, and try several CRM products before you commit," he said.