CRM

Customer
Relationship
Management
Operations Management
 Outline

» General elements of CRM

» Spending and trends
» Why some companies succeed and others fail at CRM
» Industry uses
» Top 5 providers of CRM
» Don’ts of CRM
» Best practices
 CRM Defined

» “CRM is a technology-enabled business

strategy whereby companies leverage
increased customer knowledge to build
profitable relationships.”

» CRM is first and foremost a business

strategy, not merely a software package.

(1) A Strategic Framework for CRM, by Patrick Sue and Paul Morin. February 2001
 Functional Elements of CRM
Marketing Sales Customer Service
• Market Research • Sales Automation and • Customer Inquiry
Management
• Product Development • Customer product
• Customer Profiling support
• Market Assessment
• Account Management • Customer Information
Management
• Market & Customer
Segmentation • Opportunity Management
• Call Center
• Product Lifecycle • Product, Price, and Effectiveness
Management Contract Negotiation
• Trouble Analysis &
• Product Pricing and • Sales Alignment and Resolution
Profitability Incentives
• Billing

Customer Relationship Management Solutions

• Data Warehouse Management and Decision Support

• Integrated Customer Management Systems
Marketing Functionality

» "Half the money I spend on advertising is wasted; the

trouble is I don't know which half." John Wanamaker, the
department store pioneer, stated in 1886

» A CRM can greatly enhance a company’s marketing efforts

in the areas of :
– Market research
– Price planning
– Product development
– Market assessment
– Customer segmentation
– Product lifecycle
Marketing Functionality
Cont...
» Example: Hewlett-Packard
– Previously, HP sent out mass emails to update
customers on sales offers, new products, technical
support, etc.
– After implementing a CRM, these efforts become
much more customers specific
– 85% of customers said they were satisfied with the
content of the emails and additional revenue increased
by $15M
 Sales Functionality
» Common functions implemented:
– Provide the sales force with detailed and current
information, such as:
• Buying preferences
• Pricing
• Inventory levels
• Billing information
– Automate the sales processing activities (SFA).
Sales Functionality Cont...

» Example: Empire Blue Cross and Blue Shield

– Extremely complex and highly manual sales process
– 33 redundant audit checks and took approximately 27
days
– On-line quote system developed
– Sales processing steps streamlined and automated
 Service Functionality

» CRM can be used to capture such things as:

• Customer’s complaint history
• Outstanding customer services requests
• Billing information
• Customer preferences
• Tracking unresolved issues
» Service representatives are much more prepared to
service their customers
Service Functionality Cont...

» Example: Marriott International

– Collect data on customer preferences and spending
– Data shared by all Marriott Hotels nationwide
– Once you check in they already know your smoking
preference, which floor you prefer, any allergies,
complaint history, whether you drink, etc.
Enable Enterprise-wide Information Integration
Collecting and integrating data from every point in the organization will
allow customer relationship, life cycle and event information to be
analyzed and driven through the marketing organization to the front-
line, enhancing sales and retention.
Phone
Branch
Sales Front line Mobile Sales Force Customer
Support Internet

Marketing and Sales

Support
 Customer demographic and
purchased services data.
 Marketing campaign tracking
and offer development
 Customer and profitability
data matched for service
development and pricing
 Attrition data for retention
modeling
 Customer value and preference
information for customized
experience.
Enable Enterprise-wide Information Integration
Collecting and integrating data from every point in the organization
will allow customer relationship, life cycle and event information to be
analyzed and driven through the marketing organization to the front-
line, enhancing sales and retention.
Phone
Branch
Sales Front line Mobile Sales Force Customer
Support Internet

Back Office Operations

 Customer relationship
information and contact
history available for issue
resolution
 Information gathering
follow-up or alert
messaging to front line
 Rules development for
value-based decisioning
for all product support
Enable Enterprise-wide Information Integration
Collecting and integrating data from every point in the organization will
allow customer relationship, life cycle and event information to be
analyzed and driven through the marketing organization to the front-line,
enhancing sales and retention.
Phone
Branch
Sales Front line Mobile Sales Force Customer
Support Internet

Customer Touch Points

 Customer relationship data
gathering
 Delivery of customized service
delivery or sales offers
 Customer value information
available for decisions
 Product information and sales
process automation enables
effective targeted sales efforts
 Relationship and contact
information allows sales reps
“know” each customer
 Trends in CRM

» Mobile CRM (mCRM)

– PalmPilots, web phones, and pagers are becoming less
expensive and more widely used
– Siebel and Sprint recently signed a join venture selling
wireless CRM
– Domestic businesses are expected to spend $74B on
wireless service by 2005

Wireless CRM: Strings Attached by Marc Songini Computer World, November 2001
 Trends in CRM Cont...

» Netsourcing - Application Services Providers

(ASPs)
– ASP work better in smaller organizations - less
customization
– CRM applications are the second largest segment of
hosting sales, led only by E-commerce applications
– By 2003, Forrester predicts hosted CRM applications
will account for almost $2.5 billion in revenue

The Forrester Report by Stacie S. McCullough. December 1999

Succeeding VS Failing

» Keys to Success
– Managing the data
– Managing the customer
– Business process before implementation
– All levels must buy in
– Flexibility on the company’s side
– Relationship vs database

Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM ”
Succeeding VS Failing Cont…

» CRM Mistakes
– Implementing CRM before creating a
customer strategy
– Rolling out CRM before changing your
organization to match
– Assuming that more CRM technology is better
– Stalking, not wooing, customers

Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM”
 Industry Uses

» Airlines
• AA
• Aadvantage Frequent Flyer Program
» Banks
• Barclays
• Realize profitability of customers
» Car Rental Companies
• Enterprise
• ECARS System

Source: Swift, “Accelerating Customer Relationships: Using CRM and Relationship Technologies”
» Enterprise Computer Assisted Rental System
(Ecars) - introduced in 1992 now supports 1.4
million transactions logged every hour
– Locates cars, tracks customer preferences, measures
customer satisfaction ratings
– Uses Enterprise Service Quality Index(ESQI)to
measure satisfaction - compensation for management
is tied to results
» Enterprise uses its Automated Rental
Management System (ARMS) to allow insurance
companies to access rental information
– Allows agent to book reservations, EFT, and reporting
to support claims processing
– Allows electronic monitoring of repair shop progress
(CIO Magazine - Nov 2000)
 Key CRM Providers

» PeopleSoft
» Siebel
» SAP
» Oracle
» Convergys
» Leading provider of enterprise applications that tie together customers' back-
office operations
» Software addresses such tasks as accounting, human resources, manufacturing,
and supply chain management
» Services such as consulting, maintenance, and training account for about two-
thirds of sales
» Customer relationship management software has rekindled licensing sales
growth and helped offset a slowdown in the broader enterprise software market,
but it has also exposed PeopleSoft to more direct competition with companies
such as Oracle and Siebel Systems. (www.hoovers.com)
» Headquarters: Pleasanton,
CA
» 2000 revenue: $1.7 billion
» Customers: 4,600
» Employees: 8,000
Worldwide
» World's leading provider of eBusiness applications software
» Provides an integrated family of eBusiness applications software,
enabling multichannel sales, marketing, and customer service
systems to be deployed over the Web, in call centers, in the field,
through reseller channels, and across retail and dealer networks
» Sales and service facilities are located in more than 32 countries.
» Founded: 1993
» 2001 revenue: $2.05
billion
» 2001 net income: $255
million
» Employees: 7,400+
» 29 Years in the Business of E-Business
» 10 Million Users, 44,500 Installations, 1,000 Partners, and 21
Industry Solutions.
» Founded in 1972 - recognized leader in providing collaborative e-
business solutions
» Headquartered in Walldorf, Germany
» World's largest inter-enterprise software company, and the world's
third-largest independent software supplier overall
» Employs over 27,800 people in more than 50 countries
» 2000 Sales (mil.): $5,881
1-Yr. Sales Growth: 14.3%
» 2000 Net Inc. (mil.): $596
1-Yr. Net Inc. Growth: (1.6%)
» 2000 Employees: 24,480
1-Yr. Employee Growth: 12.8%
» World's leading supplier of software for information management, and the
world's second largest independent software company
» Headquartered in Redwood Shores, California
» First software company to develop and deploy 100 percent Internet-enabled
enterprise software across its entire product line: database, server, enterprise
business applications, and application development, and decision support tools.

» 2001 Sales (mil.): $10,860

1-Yr. Sales Growth: 7.2%
» 2001 Net Inc. (mil.): $2,561
1-Yr. Net Inc. Growth: (59.3%)
» 2001 Employees: 42,927
1-Yr. Employee Growth: 3.9%
 Don’ts of CRM

» Data is ignored
» Politics rule
» Organization and business users do not
work together
» No plan exists
» CRM is implemented for the enterprise,
not the customer

Source: Gartner, “Seven Key Reasons Why CRM Fails – And How to Avoid Them”
Don’ts of CRM Cont…

» Flawed process is automated

» No attention is paid to skill sets

Source: Gartner, “Seven Key Reasons Why CRM Fails – And How to Avoid Them”
 CRM Best Practices
CRM Best Practices consists of the
following:
» Customer Involvement
» Involve the correct sources early to develop CRM Strategy
» Understanding of Information Technologies place
» CRM Organizational Culture
» Incremental Implementation
 CRM Best Practice
Customer Involvement
» Focus Groups
– Prior to, during, and after CRM implementation
» Customer Survey
– If Feedback being passed to Top Management is being acted on,
then change will happen
» Concentrate on your customer Lifecycle value
– Which Customers repay investment?
– Which Customers just take up resources and should be
considered competitors?
» Segmentation Analysis

Source: www.CRM-forum.com
 CRM Best Practices
Involve the “Right” People
» Marketing
– Provide means of determining our customers
» Business Strategists
– What are our organizational goals (i.e. growth)?

Source: www.CRM-forum.com
 CRM Best Practices
Involve the “Right” People
» “Value-Added” IT Suppliers (If required)
– Practical experience in CRM
– CRM experience in same/similar industry
• Can provide knowledge of CRM application(s) to allow
Marketing and Business strategists to evaluate the
opportunities
» To often companies allow technology vendors to
dictate the manner they manage customers
because the vendor has implemented CRM
– CRM is to be customized, not for software but for
strategy

Source: “Avoid the Four Perils of CRM,” Darrell K. Rigby, Frederick F. Reichheld, Phil Schefter; Harvard Business Review, Feb 2002
 CRM Best Practices
Involve the “Right” People
» Involve TOP MANAGEMENT from the start
– For CRM to be successful, Top Management must…
• Clearly communicate a vision for the future of the
organization that indicates the benefits of CRM
• The will power to make CRM work across functional
boundaries
» Without Top Management participation or a
Strong Top Management
– A common result is that a strong-willed committee
member will shape the final implementation that will
address their desires and not the organizations as a
whole

Source: “Avoid the Four Perils of CRM,” Darrell K. Rigby, Frederick F. Reichheld, Phil Schefter; Harvard Business Review, Feb 2002
 CRM Best Practices
Implementation
» Should not expect to be able to implement
CRM in one major undertaking
– Implement CRM in increments
• Each Increment should have…
– Its own business case
– Measures of success
– Evaluation of how customers perceive the results of this
step

Source: www.CRM-forum.com
 CRM Best Practices

» While Top Management successful within ones

organization, employees make CRM successful
with your customers
– Companies serious about CRM tie employee
incentives to customer indicators such as retention
and satisfaction. The more serious a firm is about
CRM, the sooner they will adjust the compensation
plan.
– No less than 100 percent user buy in is acceptable..

Source: www.CRM-forum.com
 Conclusion
What must we understand?
» Expect a continuing evolution of CRM
– As it evolves, customers will become more and more
familiar with what it can do for them
» If we an organization adopts CRM, they must understand
that the strategy will not be delivered by IT alone
» The primary CRM objective is to improve the interface
between an organization and its’ clients. In doing so, for
a CRM initiative to be successful substantial re-
organization of the organization dealing with customers
may occur.

Source: www.CRM-forum.com
QUESTIONS

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