Relationship Management

Customer Relationship Management is always the cost based activity for any company but the output will considered as value added customers. Companies which are using the CRM needs to make cost-benefit analysis to evaluate how the CRM is performing, we can know the ROI (Return of Investment) and the experience of the customers. The case should be analyzed which includes the total system cost, total savings and the NPV (Net Present Value) of the system. That is it should include the tangible benefits (Cost Based Analysis) and intangible benefits as wells as risk assessment.

Three categories should be analyzed: System Implementation Cost, CRM is a well designed system which involves two types to costs i. e. IT cost and Implementation cost. IT cost is for renting and maintaining the software for CRM and Implementation cost for support functions, labor and administration charges. Cost-Benefit Analysis - 10% of the budget should be allocated for the IT cost and as service industry is well driven by apple stakeholders, we require 40% towards Implementation cost, which includes high administration services, labor and support functions.

Other functions will also be included in this Implementation cost such as planning, organizing and decision making. – Cost based Analysis for CRM Implementation, George Marwick 2007. 20% of the budget should be kept for savings and maintaining functions, where the risks should be analyzed like loss of investment, isolation and lack of measurement. Benefits of Customer Relationship Management include high productivity among employees, cost-effective work, service orientation, Increase in revenue and margin of the business and usage of inventory etc… which should be analyzed which calculating the Net Present Value (NPV).

Net Present Value is calculated for CRM implementation by determining the Return on Investment (ROI). Net Present Value will be a calculated on the total cost of the investment expenditure and the return on the investment and the expected rate of return. If the NPV is positive it is said that the CRM is running in profitable position. If the NPV is negative it is said that CRM is not properly implemented, need for revision.