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The 1980’s saw the emergence of database marketing, which was simply a catch
phrase to define the practice of setting up customer service groups to speak
individually to all of a company’s customers.
In the case of larger, key clients it was a valuable tool for keeping the lines of
communication open and tailoring service to the clients needs. In the case of smaller
clients, however, it tended to provide repetitive, survey-like information that cluttered
databases and didn’t provide much insight. As companies began tracking database
information, they realized that the bare bones were all that was needed in most cases:
what they buy regularly, what they spend, what they do.
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1.4 Introduction
Customer Relationship Management - CRM
The term CRM is used to describe either the software or the whole business strategy
oriented on customer needs. The second one is the description which is correct. The
main misconception of CRM is that it is only software, instead of whole business
strategy.
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Operational part of CRM typically involves three general areas of business. They are
(according to Gartner Group) a Enterprise marketing automation (EMA), Sales force
automation (SFA) and a Customer service and support (CSS). The marketing
information part provides information about the business environment, including
competitors, industry trends, and macroenviromental variables. The sales force
management part automates some of the company's sales and sales force management
functions. It keeps track of customer preferences, buying habits, and demographics,
and also sales staff performance. The customer service part automates some service
requests, complaints, product returns, and information requests.
Integrated CRM software is often also known as "front office solutions." This is
because they deal directly with the customer.
Many call centers use CRM software to store all of their customer's details. When a
customer calls, the system can be used to retrieve and store information relevant to the
customer. By serving the customer quickly and efficiently, and also keeping all
information on a customer in one place, a company aims to make cost savings, and
also encourage new customers.
CRM solutions can also be used to allow customers to perform their own service via a
variety of communication channels. For example, you might be able to check your
bank balance via your WAP phone without ever having to talk to a person, saving
money for the company, and saving you time.
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Technical functionality
A CRM solution is characterised by the following functionality:
• scalability - the ability to be used on a large scale, and to be reliably expanded
to what ever scale is necessary.
• multiple communication channels - the ability to interface with users via many
different devices (phone, WAP, internet, etc)
• workflow - the ability to automatically route work through the system to
different people based on a set of rules.
• database - the centralised storage (in a data warehouse) of all information
relevant to customer interaction
• customer privacy considerations, e.g. data encryption and the destruction of
records to ensure that they are not stolen or abused
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If your CRM goals fall into more than two of these categories, you'll likely want to
prioritize one over the other and plan a phased deployment. It's also a good idea to
know at this point what your likely budget is, how flexible it is, and what your
procurement officer or CFO will be looking for in terms of business justification. If
you know walking into the project that you'll need to show a six-month payback
period, for example, you can plan accordingly.
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Check Resumes
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Once you've identified the likely vendors to deliver the best solution for you, you'll
want to check their references - and this doesn't mean just reading case studies on
their Web sites. Look to independently developed case studies and your own
interviews with references to learn about their decision process, project successes and
challenges, and whether or not their spending - and benefits - met expectations.
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By and large, there's no such thing as a bad CRM solution. Most solutions deliver
value when they're chosen based on clear business needs and deployed correctly.
Once you've identified your CRM needs and your short list, there are a number of
factors to consider to help you make the right solution decision.
User Adoption
In evaluating the type of CRM solution that will be best for your organization in terms
of user adoption, you'll want to consider two key factors:
• The willingness of users to adopt the application. Adoption can often be as
much about politics and culture as it is about technology. Successful adoption will
also depend on how much users will have to change their normal way of doing work
to use the solution.
• The technology ability of potential users. Many CRM solutions are complex
and difficult to use; others have a more intuitive look and feel. Choose a solution that
fits the abilities of your users.
Once you've determined where your organization fits, you'll want to consider both the
complexity of the solution and ease (or difficulty) involved in adding and evolving
functionality over time as your needs change and your users become more
comfortable with the solution. Here are some red flags you should look out for in
evaluating solutions in terms of user adoption:
• Plans for extensive customization
• Multiple components that will be integrated to meet your needs
• Lack of a track record supporting "your kind" of sales reps
• Functionality planned "for the next release"
• An extensive training program
• Ongoing consulting requirements for any changes or updates
Cost
In CRM, "you get what you pay for" isn't always true. In fact, many companies in the
past have overspent on CRM components and features that never delivered value to
their users - if they even made it out of the box. You'll have the most success with a
measured approach that doesn't have to include a hefty initial license fee.
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Existing Environment
What other solutions and data sources do your sales or customer support
representatives use today, what solutions are they most comfortable using, and what
will need to be integrated in some way into the CRM solution you choose to deliver
value? How you integrate existing resources and applications into a CRM project
should not be an afterthought. In selecting a vendor, you'll want to explore how it can
integrate with your existing environment. Demand to see a track record with reference
customers in a similar situation.
Flexibility
In addition to the initial development, integration, and deployment, when selecting a
solution, you should consider how easy it will be to make changes over time as your
needs change. In all likelihood, the way you use CRM will change over time - and the
flexibility of the application to enable you to support those changes can have a
significant impact on the ongoing cost of the solution.
Best Practices
Once you've determined which solution is right for you and built the business case,
you'll want to make sure you have the key checkpoints in place so that the project
delivers on your ROI expectations.
Pricing and Purchasing
Before you sign on the dotted line, make sure you've done due diligence on your
contract with the vendor. Double-check the following:
• Is the initial license price per user in line with industry benchmarks?
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• Are you paying less, more, or the average annual industry maintenance? If you
decide to stop paying maintenance in the future, does your contact support that?
• If you're purchasing multiple modules at the same time, do you have a clear
view of the cost of each item? Are you sure you should be buying them all now, or
would a phased approach be better?
• What commitment has the vendor made to your deployment time line? If a
third party is involved, how are the deployment risk and responsibility being shared?
Deployment
Piloting a CRM solution can be a great way to judge both whether or not the solution
will work for you and how flexible and agile the solution (and vendor) is in
responding to specific needs. Most hosted solution vendors offer a free or nearly free
pilot option today; depending on the level of customization and integration needed, a
pilot of an internal solution before you buy may or may not be possible.
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3.1 Introduction
In this day and age the use of internet sites and specifically e-mail, in particular, are
touted as less expensive communication methods, compared to traditional methods
like telephone calls. This revolutionary type of service can be very helpful, but it is
completely useless if you are having trouble reaching your customers. It has been
determined by some major companies that the majority of clients trust other means of
communication, like telephone, more than they trust e-mail. Clients, however, are not
the ones to blame because it is often the manner of connecting with consumers on a
personal level making them feel as though they are cherished as customers. It is up to
the companies to focus on reaching every customer and developing a relationship.
CRM software can run your entire business. From prospect and client contact tools to
billing history and bulk email management. The CRM system allows you to maintain
all customer records in one centralized location that is accessible to your entire
organization through password administration. Front office systems are set up to
collect data from the customers for processing into the data warehouse. The data
warehouse is a back office system used to fulfill and support customer orders. All
customer information is stored in the data warehouse. Back office CRM makes it
possible for a company to follow sales, orders, and cancellations. Special regressions
of this data can be very beneficial for the marketing division of a firm.
CRM Software provides added strength to your existing plan. CRM software is
not a "cure-all" for the CRM program in your business. Successful launch of a CRM
software campaign requires a strong CRM plan for your business, with complete
objectives and clear priorities. CRM software can offer incredible accuracy, track-
ability and detailed follow-up capabilities.
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beverage category, the chain did not lose customers even after eliminating 26% of
the category.s SKUs.
Cross-sell the most profitable products and increase the average basket
size
• A leading beverage company, which has been working with over 40 retailers, says
that use of loyalty data does help retailers increase basket size. According to a
senior category manager, .we did a presentation with a small chain in Houston,
Texas, and this company had a 6.5% increase in dollars per basket and a 9.8%
gain in total dollars among their best shoppers.
Financial
CustomerView enables retailers to take existing customer data and use it to drive
revenue, increase market basket size, and build market share with no additional
capital expenses and labor costs. It enables the CFO to show increased margins on
current capital and enables profitable growth.
Merchandisers
CustomerView enables merchandisers to improve the effectiveness of their staff.
Using CustomerView, merchandisers can quickly see how certain products can
increase market basket size. Using CustomerView they can see how merchandise mix
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affects customer loyalty and adjust their assortment accordingly. CustomerView can
help merchandisers measure and build retention. It can show market basket value of
loyal vs. non-loyal customers. CustomerView can quickly help identify the value of a
consumer that shops in critical categories vs. the shopper that does not.
Operators
CustomerView can help Operations Executives make changes in an intelligent way.
Using CustomerView a retailer can keep labor constant while increasing margins.
CustomerView can help increase the depth of category purchases by turning cherry
pickers into buyers, increasing a loyal customers shopping trips to a category and
increasing overall market basket size.
Consultants
Loyalty and POS databases tend to be stand-alone systems not integrated with
category management systems. Most data is uncleansed and hosted in many
locations. This leads to many opportunities for consultants to create systems to clean
the data, aggregate the data, de-duplicate the data, household the data, etc. before the
data enters the CustomerView system. There are also many opportunities for
consultants to use CustomerView to help the retailers interpret, translate, and develop
strategies based on the information and provide business practice recommendations.
Vendors
CustomerView can help CPG manufacturers build category/brand sales by using real
retail data. CustomerView can help them build their share of market by identifying
customers buying a particular category of products, but not their brands.
CustomerView can show the CPG manufacturer how to increase multi-segment sales
by identifying likely purchase behavior across divisions, departments or categories.
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customers find compelling. The most important thing that CRM can do for you today
and tomorrow is help you create effective conversations that are crafted with credible,
holistic intelligence and delivered to the right customer on the right channel at the
right time. Businesses need to create economic value, which requires understanding
customers and then engaging them with value propositions. The single most
important event that happens in business is a customer conversation. The conversation
is where economic value begins – revenues, activity, paychecks, and shareholder
value. Every company should make the composition of those “value props” its highest
priority. But are they doing so? How well do businesses create conversations? How
much do firms optimize opportunities? What are some of the best firms driving new
customer value? This latest management challenge is being addressed by the best of-
breed CRM analytical tools that provide marketers with the intelligence to understand
customers so that value propositions are relevant and arrive at the most opportune
time for the customer. The new analytics provide capabilities for companies that wish
to make it a business priority to create uniquely effective value propositions. The
interesting thing is that customers expect it. Yes, customers expect you to know them
– and to treat them as persons and remember every contact and transaction they’ve
ever made. This idea has been in existence for a decade, since database marketing
began to grow in popularity and use. B2B or B2C or B2B2C buyers now instinctively
believe that their providers should know them.
“Initially flattered by being treated less as a number and more as an individual with
distinct requirements, consumers are now communicating their demands back to their
suppliers. Where once they would not consider the idea of bargaining, they now tell
the managers of brand retail chains what they are prepared to pay and specify how
they want products sourced, designed, styled, combined, assembled, delivered, and
maintained.”
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If they blow it, it could be their last chance. The opportunities for companies that
leverage CRM to interactively communicate with relevance and timeliness are
enormous. Yet intelligence from across the enterprise is required to understand and
predict what customers will want to know about and demand. The potential to
generate dramatic ROI on such an investment is worth five to 10 to 100 times the
investment.
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Although it’s true that value propositions will naturally evolve over time as markets
and competitive conditions change, the competitive advantage belongs to companies
that can proactively and quickly adapt their value propositions for optimal business
results. Professor Ari Ginsberg of New York University’s Stern School of Business
insists that companies can better invent and reinvent value propositions by analytical
means that center on customer behavior, in his words, “analyzing dimensions of
value.” It is specifically in this area – exploring dimensions of value – that customer
analytics can make an enormous difference in understanding customers well enough
to generate more effective value propositions.
For managing value propositions effectively, companies need to first understand what
customers value – by using analytical tools integrated with marketing automation
systems for creating and acting on customer intelligence. And to take this a step
further, the analytics and automation are best supported by an enterprise view of the
business and customers, driven in real-time for capturing, managing, and delivering
data to marketers and analysts for decisioning.
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here to track behavior on a Web site and allow tailoring of the contact experience,
or generation of specific cross-selling opportunities, based on this behavior.
Inbound and outbound e-mail management capabilities are also becoming popular
components of the marketing automation suites.
Let's take a closer look at the marketing automation component because it has been
positioned as the solution for all CRM analytics.
Campaign Management
Segmenting customers, generating targeted marketing campaigns for these segments
and tracking results are important parts of CRM analysis. Integrated MA tools provide
these capabilities and provide campaign offers and results directly to the customer
sales and support processes. Incorporating offers and solicitations into the common
contact repository and prompting contact agents to follow-up on campaigns can yield
dramatic benefits. Some of the features provided are:
• Planning marketing activities and developing campaign hierarchies.
• Outlining marketing campaign objectives.
• Defining campaign success measurements.
• Coordinating multiple channels and event triggers to automate response
actions.
• Building and testing sample campaigns on a subset of customers.
• Storing and reusing content from previous marketing campaigns.
• Measuring campaign effectiveness by linking directly to call center, front-line
employees and sales force.
• Importing third-party target lists.
• Tracking fulfillments supplied to the client via each channel to avoid
duplication and maximize effectiveness.
• Tracking customer inquiries related directly to campaigns.
• Tracking sales force closures related directly to campaigns.
Internet Personalization
Personalization is the ability to track and respond to customers in an individualized
fashion based upon their past contacts and behavior. The true value of personalization
in CRM is when it extends beyond the Internet to encompass all customer contacts
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E-Mail Management
E-mail management capabilities are used in two ways in MA - inbound and outbound.
Inbound e-mail management capabilities assist organizations in handling inbound
inquiries from customers. While on the surface this would seem to be a purely
service-oriented activity, organizations are linking these facilities to their
personalization technologies and thus tuning the resulting communications on the
basis of CRM analytics. Benefits of this can be quite high as it offers a chance to
extend personalization techniques to multiple communication types. Outbound e-mail
management capabilities provide the ability to construct and execute permission-
based marketing campaigns (where the dialog has been started with a customer via e-
mail communications) and are said to be up to 20 percent more successful than
traditional direct marketing at a fraction of the cost. Features include:
• Automation of the targeting and sending of mass e-mails.
• Automation of mass e-mail responses.
• Use of decision engines to parse information from incoming e-mail
correspondence.
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Business Operations are the core operational systems (billing systems, product or
policy systems, call center and sales force automation systems, etc.) that run the day-
to-day business processes in an organization. Information originates in these systems
and flows through a data acquisition process into the rest of the CIF where it is
consolidated and integrated for strategic and tactical decision making. Front-office
solutions generally reside here as they facilitate the day-to-day sales and service
processes.
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Business Intelligence provides the capabilities required for the strategic decision
making in the organization. Business intelligence consists of the data warehouse, data
marts and associated analysis tools, and can provide the technology infrastructure and
information necessary to manage the complex relationships and analytics required to
understand CRM interactions. Properly architected, the MA components of the front-
office applications would reside here.
The primary integration point for the MA components is the data warehouse
contained in the business intelligence environment. The data warehouse is defined as
a subject-oriented, integrated, time-variant, cleansed and non-volatile collection of
data for strategic analysis. You can think of it as a big bucket of generic, detailed,
enterprise-wide, static and historical data. The data warehouse can serve as the source
of data for data marts and for the MA components (which are actually just another set
of souped-up data marts). Unlike the data marts or MA components, the data in the
data warehouse is not set up for a particular application or department.
The data warehouse consists of standardized, consistent pieces of data. By
constructing the data warehouse in the most generic and flexible way possible, you
can build just about any data mart for CRM analysis. You are only limited by your
technology and the data that you can acquire from your operational systems.
• The data warehouse reflects the enterprise's view of data in terms of business
rules and strategic requirements. Because the data in the warehouse is to be
used for multiple CRM analytical purposes spanning multiple departments, it
must accommodate and reinforce the enterprise's vision of its CRM initiative.
• It is optimized for flexibility. The data must not display a bias or prejudice
toward any one kind of analytical processing. For example, if the data
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Beware of vendor sales pitches that contain phrases such as "our MA module can
drive your entire marketing process," or "MA provides a direct link between CRM
analytics and your customer contact points." While the capabilities embodied in the
MA modules do provide significant value, they do not provide sufficient sophisticated
analysis capabilities to be your sole vehicle for all CRM analytics. Instead, bypass the
hype, implement MA capabilities that make sense for your organization and ensure
that MA modules use the information feedback mechanism to feed information to and
receive information from the data warehouse or operational systems. Staying true to
an architecture such as the CIF will provide you with the guidelines necessary to build
the integrated customer information environment required to drive your CRM
strategies.
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• Master sophisticated multistep and event-based marketing and know when your
customers are most receptive to offers and messages;
• Intelligently manage the e-channel to drive revenue growth across all channels;
and
• Leverage the full power of a real-time, enterprise-wide data warehouse.
Initializing a CRM campaign and carrying it out for the long haul is a project that
involves hands from throughout a business, from customer support personnel, to IT
professionals, to obvious key individuals like CRM project managers. From the
person taking incoming phone calls and providing accurate service to the caller, to the
database-analyzing software that efficiently and smoothly manages and processes
customer data, to the front-end Web site that is tailored to individual customers
through such things as preferred language and topics of interest, every facet needs to
work in conjunction. Being able to touch all points of customer interaction requires a
comprehensive set of software that is effective and comprehensive. An intelligent
database system that can support and store many users and their information is
critical. This makes customer management very streamlined and easier. Additionally,
the ability to instigate highly specific queries that result in rich, pinpoint demographic
information is also an invaluable part of any CRM implementation. The cost of re-
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the critical needs off your list first before you look at nice to haves. There will
undoubtedly be products that meet a lot of your nice to haves, but are lacking in one
or more critical needs. Critical needs must be met so that the time, money, and ideas
given to the CRM project do not change systems for the sake of change. When you
are making your project plan, allow plenty time for this phase. It is very important not
to rush through your evaluation. Take your time, view lots of demos, and ask lots of
questions.
4. Product configuration: Make the system fit your firm
No matter what product you choose, there will most likely be some configuration that
needs to be done to make the system fit your firm. Treat this as a subproject with its
own project plan that includes timelines and milestones. Many products are highly
customizable at the front end, but far less so when they are implemented. Don't get
poor results because you sped through this step. Customization may not be all at the
software end; you may have to do some process reengineering in your firm, as well.
Remember to document everything. Make a user's manual for the software, and a
process manual with flowcharts for the business processes.
5. Pilot implementation: Roll out a small pilot to marketing first
After you have customized the system to your specifications, roll it out in a small,
pilot environment. Start with your Marketing users; they will use the software heavily
and will be able to provide you with some high-quality feedback. Keep it in a small
group until you have the system customized the way you want it. When you have
reached that point, roll it out to all users.
6. Full implementation: Communicate with users to explain the change
As you roll the system out to all users, this will be a significant change for most of
your users. In addition to learning a new software interface, many users will be faced
with entire new business processes. The biggest factor here is communication. Make
sure your users understand why this change is taking place; don't just mandate the
change. Use training sessions and documentation to assist the users with the new
system.
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of choosing a product that does not meet the firm’s needs or poor communications
between project teams and end-users. Follow these 7 steps to managing your CRM
initiative for a successful CRM implementation experience.
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Although often overlooked or assumed, the first goal is to make sure that the user
group is proficient on the base functionality of the system. Users need to be able to
comfortably duplicate what they have routinely been doing in the new system. For
instance, if inside sales receive incoming phone calls; do they know how will they log
those in the new system? If outside sales make sales visits, how can they eliminate
filling out call reports? How are people going to send email and create letter and
manage their task list? Users who quickly become proficient on this base functionality
will be more apt to want to learn more and reap the potential added benefits of more
proficient use of the new system.
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and to help ensure that standards are being developed and followed. External user
groups are generally coordinated by the solutions provider. Determine whether or not
user groups have been set up and plan to participate in them. These groups provide an
excellent way to see how other similar companies are using the system and learn from
their successes and mistakes.
Advanced and ongoing training opportunities: Investigate what additional training
opportunities are available. Most solutions providers have established programs for
advanced user training. Many have web-based training, on-demand training and other
periodic course offerings that focus on client’s specific needs.
There is not one ‘right’ way to train. A well chosen software provider will have the
tools in place to guide the team through this process based on the needs, goals and
budget of the user organization.
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8.1 Introduction
Seeing CRM initiatives take hold and begin to pay off is often a waiting game. It’s not
a “flip-the- switch” product that automatically spits out results or something that will
take affect overnight and cause profits to skyrocket while you sleep. The puzzle must
be completed and time must play its part before true success will be seen. However,
through dedicated and smart planning, businesses should see markedly increased
profits, as satisfied customers will continually re-visit them. Gradually, as businesses
get to know their customers, their customers get to know them, and a closely aligned
partnership is formed. This one-to-one relationship is the catalyst that sparks both
lifetime customer loyalty and revenue increase.
In the true spirit of thinking outside of the box, experts at the Gartner Group believe
“the most successful organizations will be those who, through innovation and focus
on business effectiveness rather than merely efficiency, manage to break the mold of
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traditional business thinking”. Being effective is paramount. The end goal of better
serving customers and enabling a high percentage of customer retention cannot be met
with out creative thinking and effective planning and actions. The task of perfecting
the relationship between business and customer is always on going and requires
special dedication and innovation as the commerce markets continually change and
fluctuate. And over time, customers change, as does their behavior and needs, and
business must be able to respond to that.
Being on the cusp of the industry and always having a hand on the pulse of the
customer is key for success. As the CRM initiative begins to take hold, key players
will soon see patterns emerge among customers, will discover what a productive
strategy is and what is not. This is the essence of a successful CRM project: being
able to really know what will work for your customers, what satisfies them, and what
keeps them loyal. The ability to get an accurate gut feeling about the marketing
campaigns, new products, and the type of policies customers will respond to is
invaluable. This kind of customer knowledge only comes from really digging in and
being savvy about how you go about understanding the people that you hope will
continually call on the services and products of your business. The ROI in this case
would be compelling indeed.
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"I've seen it lots of times - 'Hey, this is a neat application. Let's buy it and then figure
out how we can use it here.'"
USF tapped Right Now Technologies' e-mail management software to help the IT
department, financial aid office and other administrative groups that were bogged
down with customer service inquiries from 40,000 students and staff.
3. Build and maintain a relationship with quality consultants. Consultants are
important not only in an initial deployment, but also as project parameters change -
which they will, Liddell says. Monster.com works with CRM consultant Akibia,
which lets the company quickly expand its CRM resources when necessary. Each
time Monster.com acquires a new company, Liddell's priority is to quickly get those
new team members up and running with Siebel sales tools - a process that sometimes
requires extra hands.
4. Rely on internal resources. Consultants are helpful, but it's important to maintain
ownership of a CRM project. "Nobody's more interested in our success than the team
at Monster.com," Liddell says. Plus, somebody has to run the software once the
consultants are gone.
5. Make sure everyone is onboard. It's important to have buy-in throughout the
organization, Akin says. Financial support is necessary, he says, "but more important
is an agreement to use the product universally." It's frustrating for end users if they
expect to find a single source of customer service information online and it turns out a
key department is missing from the site.
6. Align your project goals and implementation schedule. Berkson and his team at
Thomson Financial try to stick to eight- to 12-week projects, rather than rolling out
everything to everyone at once. Plus, no department is going to need every function in
every application; users would be overwhelmed, Berkson says.
Thomson Financial is in the process of upgrading its Vantive applications to
PeopleSoft 8 CRM - the new Internet-based suite from PeopleSoft, which acquired
Vantive in 1999.
"We tend to implement in small, manageable phases," he says. Companies should
identify their biggest pain points and greatest opportunities for return on investment,
and make those an implementation priority.
7. Start with a low-risk pilot. One project up and running quickly can validate your
CRM concepts, Berkson says. Choosing a relatively simple, straightforward project -
such as outfitting a department that doesn't require integration with other back-end
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systems - is important. If you start with a complex trial, it can really drain momentum,
he says.
8. Aim for configuration, not customization. Take advantage of today's CRM tool
sets, Berkson says. Vendors have built more robust configuration flexibility into CRM
applications and recommend that users minimize customizations. So if you can break
the habit of writing custom code to accommodate unique business processes, it will be
well worth the effort when it comes time to upgrade, Berkson says.
9. Don't underestimate data requirements. The time and resources needed for data
conversion and cleanup will always be more than you think, Berkson says.
10. Provide adequate training. "If you have the time and the resources, train in
advance of rollout," Akin says. The university departments that are least enthusiastic
about the RightNow products are the ones that weren't ready for it, he says.
11. Set communications standards. In hindsight, Akin wishes his group had set
content standards among departments before going live with the project instead of
trying to do it later. At USF, e-mail inquiries are routed to as many as 30 different
departments. Setting standards for formatting responses can help maintain consistency
of service.
12. Watch the details. CRM requires a team that is willing to take ownership of even
the most minute details. Monster.com has team members who maintain the software,
team members who constantly handle requests for changes and team members who
police data quality.
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9.1 What Are Some CRM Products and What Can They Do For
You?
CRM products are automated applications that support the accomplishment of
corporate goals related to customers, such as increased revenue and/or increased sales
efficiency (i.e., better results with lower expenditures from sales, customer service,
and marketing.) These technologies capture customer data from across the enterprise,
then analyze, consolidate and/or distribute it for use across the multiple customer
facing departments (or processes) within the company.
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Sales Force Automation Systems: provide tools for your sales people to
maintain their contacts, track sales prospects, provide sales forecasts, enter and track
orders, and provide customized quotes for clients. Examples of these systems include,
and on-line sales forecasting and order-tracking.
Call Center Customer Service Systems: provide support for staff that answer
client questions or respond to requests for dispatch services. Examples of these
systems include web-based customer service, customer service call tracking,
improved customer service representative (CSR) access to client information, and
automated dispatch and tracking.
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• A departmental system (which supports 50 – 300 users and has a more increased
range of functionality and increased ability and need for customization) usually
costs around $1500/user.
• An enterprise system (which supports over 500 users and has a higher range of
functionality and introduces dramatic change management issues and
requirements for customization) costs around $3500/user. Some vendors quote
this functionality for $2000/user.
• Implementation and customization costs will add from 25% (limited system) to
100% (departmental) to 300% (enterprise) for software installation,
implementation, and customization. Some vendors estimate as much as 500% for
implementation and customization. This does not include vendor maintenance and
ongoing customization costs as well as cost of organizational process changes.
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• Rapid time to market, as competitors had established a five to six month lead in site
functionality
Customers like to interact with the same service regarding any transaction with the
organization. i.e.: single view of your organization, while on the other hand,
organizations that adopt a single view of their customers approach envelops the
customers with in the organization mesh.
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Statistical data should not be all that matters, well after all what do they actually tell
you or indicates? The quantitative approach is rather to satisfy internal demands than
customers.
How many repeated customers do you have each year? This is really what matters,
quality of service leads to a greater customer satisfaction and repeat of business which
by its role will be reflected in the balance sheet eventually. Internal slogans are for
internal consumption. For customers, perception equals reality.
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The first question has many possible answers. Indeed, the companies that explore all
possible methods are better positioned to get a better picture of a customer. For my
purposes, I will only focus on a few critical aspects. The first is to uncover patterns of
buying from the customer base. Uncovering these trends is fundamental to any
business. One might argue that an expensive CRM system is not required to do this.
To a certain extent, this is true. However, analysis of buying patterns is different from
that of buying history. A customer’s buying history is only one component of the
pattern. Others include the financial market, demographics, geography, recent
marketing messages, and other parallel actions such as sales, new product
introduction, competitive offerings, positioning tactics, and pricing. In The Clue train
Manifesto: The End of Business as Usual Weinberger and Searls make the following
point.
The first markets were markets, not bulls, bears…not demographics, eyeballs or
seats. Most of all, not consumers. The first markets were filled with people, not
abstractions or statistical aggregates; they were the places where supply met demand
with a firm handshake. Buyers and sellers looked at each other in the eye, met, and
connected….where people came to buy what others had to sell—and to talk.
While Weinberger and Searls were trying to make a bigger point about the Internet
and its role in current market philosophy, the germane point here is the notion of
connection. More than anything, strategic companies are trying to figure out how to
more effectively connect with customers. They believe that will be a sustaining factor
in their survival.
The second question above is equally important. Making customers feel unique
because you understand their likes and dislikes is difficult but critical. CRM systems
allow a vast amount of input about a customer in order to build a comprehensive
profile. The simplest example (and one of the most common) is the contact manager
concept. There are many sales tools for contact management. An integrated CRM tool
can add real-time integration to other systems (e.g., financial, order management, and
quality control). Giving the presales team, customer representatives, and post-sales
team the ability to input information about a customer cycle over time builds a profile
that enables each team member to serve the customer better. Giving sales
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Hospitality industries also use CRM systems to get closer to customers. Customer
loyalty programs like frequent flyer and preferred guest programs can record
recurring customers’ preferences and then target specific services to specific
customers. Grocery chains monitor purchases to effectively market specific products
or offer discounts. Also, if such monitoring identifies that a customer has moved, they
will send a “moving special” coupon book to the customer. Even in the restaurant
industry, companies like Union Station in New York track patterns to record favorite
tables, bottles of wine, and health concerns for patrons. These efforts help businesses
know their customers better in order to better serve them.
The third question, however, requires more complex analysis. How can a business
derive new revenue opportunities from this data? Sometimes customer buying
patterns can offer new streams of revenue. This complex field of analytics is the most
difficult aspect of CRM engines, but it can reveal important data. For example, one
retailer found that if it lowered the price of a can of tennis balls by $.25, the sale of
tennis rackets (a higher margin item) increased. In addition, grocers can track not only
the brands customers like within a given product set, but they can correlate that
information to the shelf position where it is stocked. By measuring trends over time,
grocers can determine the impact of shelf position on customers’ buying habits. Using
this information, they can broker better deals with the suppliers by marketing
“premium” shelf space. To increase customer satisfaction and effectively manage
distribution, many businesses tie their distribution systems into the National Weather
Service because a major weather event could affect operations. To keep customers
satisfied, businesses that supply rock salt and snow shovels must be well stocked for
that first, possibly unexpected snowstorm. Examples abound, but the point is that
knowing your customers today is as important as ever. No so-called “new economy”
will ever change that. However, we have new, complex tools to help us do this; they
collect and analyze information to help us gain closer relationships to customers,
derive new revenue opportunities, and target marketing initiatives for maximum
impact. We must also realize that these customers have more ways to interface with
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organizations today—websites, sales reps, cashiers, and call centers to name a few.
Using a method (such as CRM) to get a macro view of the customer is invaluable in
today’s fragmented communication environments. However, like ERP systems, CRM
systems will only be effective if organizations socialize the project goals and actually
use the tools. These are a CRM implementation’s biggest challenges today. It is not
the software; it is establishing use of the software. Many corporations have failed at
this. CIO Magazine reports “one Fortune 500 organization is on its fourth try at CRM
because the sales force has rejected all previous attempts at sharing customer
information” (Koch). Changing mindsets must be a top priority.
CRM systems are evolving. Indeed, out-of-the-box products exist that can marginally
increase an organization’s effectiveness. However, the next generation of CRM is
trying to integrate more effectively with an organization’s ERP initiatives to see how
customer buying patterns affect manufacturing, human resources, finance, and long
range planning. In this environment, the data warehouse is key; collecting, storing,
and analyzing information effectively is critical to an organization’s success at
recreating that market of old where buyers and sellers meet, look at each other in the
eye, and connect.
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CRM analytics provides the key to those vaults and enables insight into customer
behavior.
Armed with that insight, your organization can now discover the right balance of
promotional effort, cost, and support that will result in improved revenue and
customer loyalty. CRM Analytics is an area that provides significant and rapid return
on investment. Where do you start? At the foundation of CRM analytics are customer-
centric data and approaches. Data must be organized and managed at the customer
level with historical detail covering purchasing and returns behavior, contacts with
customer service, payment behavior, and marketing response behavior. Beyond data,
it is important to think in a customer-centric manner. While it is important to ask,
“Who is likely to buy this new product if we offer a 10% discount?”, you also need to
be asking, “Who are our most profitable customers and how has their behavior
changed over the last three months?” The goal is to maximize the value of your
customers over the entire relationship with the customer, not for a single marketing
campaign.
Whenever the need for “customer-centric” data is established, organizations typically
react by calling for an enterprise data warehouse with data collected from every
possible data source in the organization. Unfortunately, the single enterprise-wide
data warehouse takes too long and costs too much to build before any benefit can be
gained. A more effective approach is to develop an information architecture that
enables you to build smaller, more agile application-centered data marts. Such a
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design is possible today using the much improved capabilities of an ETL (extract,
transform, and load) tool as the central repository of your data definitions and
business rules (metadata). A central repository facilitates a single version of the truth,
even as you build department- or application-level data marts one at a time.
These targeted data marts must contain both atomic and aggregated data that can
support multi-dimensional analysis. It is the ability to quickly view your data along
different dimensions and to intelligently drill down into the data that enables you to
proactively identify and address issues and opportunities.
Your CRM analytics tool must provide you with a complete, customizable reports that
include all the views and the queries available to you. Access to various reports,
views, and queries should be controlled based on user roles and needs. All reports and
informational views must be available for distribution in both electronic and hard
copy formats.
Analysis helps devise strategies that maximize profitability, whether at the promotion
level or at the customer or product level. Your analytical tool must be able to make
your results actionable by integrating with operational CRM systems as well as with
any back-office systems that can influence customer interactions. For example, it is
important to know actual expenses by product or by customer in order to evaluate
how certain products or customers contribute to profit.
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10.7 Asking the Right Questions to Get the Answers That Matter
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Sales
The best way to improve a sales force’s effectiveness is to empower them with
pertinent information on their target market. On-demand analysis of customer data
fuel the ROI for a sales organization by creating a comprehensive view of the
customer base, across all customer touch points. The quantifiable benefits of a sales
analytic application come from improving the sales rep’s effectiveness, reducing the
risk exposure during the sales cycle, and enabling the rep to sell more product. These
key drivers of ROI all lead to increased revenue.
Marketing
The ability to track responses to marketing campaigns and profile target customers
yields significantly greater returns on marketing dollars. ROI is traced through
improved response rates or click-through for marketing campaigns and
advertisements. CRM Analytics fuel improvements in ROI, which can be measured
by more and better customers for your marketing dollar.
Customer Service
The customer support functions in an organization have significant influence over a
company’s recurring revenue stream. By enabling support organizations to track
service levels for top customers, products requiring the most service resources, and
bottlenecks to problem resolution, a company can optimize service levels, focus
support efforts on the most costly problems, and increase customer retention and
satisfaction. CRM Analytics allows us to ensure longer customer relationships,
reduced customer turnover and lower overall support costs.
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Conclusion
Benefits
As companies move from a product-centric to a customer-centric orientation, and as
they add new e-business channels to traditional customer interactions, they need the
tools to analyze and optimize their efforts. Traditionally, performing analysis across
the many different systems and information sources about the customer has been a
difficult task, involving significant data integration, data mart implementation, and
extensive IT support for analysis and reporting.
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Today's decisions get made at all levels within the organization. Cohesive decision-
making is critical to the success of companies. This means more people stand to
benefit from a well-planned CRM strategy as it raises the potential for even greater
contribution from each employee to the top line.
For instance, "To provide our sales and marketing team with fast and efficient
reporting on our sales activity, we've integrated Crystal Reports with our Maximizer
database," said Murray Munro, senior vice president of national sales, marketing, and
government relations at Growth Works Capital Ltd. "Having access to this kind of
information in a user-friendly presentation enables our sales staff to interact with their
contacts at a deeper level and allows our marketing staff to analyze trends and make
plans for the future armed with key information."
Taking your customer relationships to the next level requires commitment from
everyone within the organization. For companies that are considering a reporting,
analytics, and workflow automation strategy, perhaps the best advice is a thorough
evaluation of your strategic sales, marketing, and customer service and support
processes. Then measure how the implementation of reporting, analytics, and
workflow automation can positively impact your company's results. By conducting
this analysis customers will be in a better position to leverage their existing CRM
investment. When a CRM system is used to its highest potential, organizations will
have a much better opportunity to drive more intimate, profitable customer
relationships.
Don't believe it? The proof is in the process. When CRM works, C-level execs make
smarter decisions because they have a 360-degree view of corporate performance;
salespeople increase their proficiency and close more deals; marketers create more
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targeted campaigns with better insight into their effectiveness; and employees--
especially CSRs--become more productive and efficient.
Consider the 50 ideas list here a guide to proven strategies for starting or resuscitating
your CRM efforts. The sales, marketing, customer service, and company-wide ideas
are color coded to show where they best fit in the organization. Companies following
these strategies are the ones truly committed to long-term CRM success.
1| Break down those silos. Having an integrated customer service solution is critical to
maintaining customer service. Disparate databases of customer information prevent
companies from gaining a holistic view of the customer throughout the organization.
2| Make a business case. Prior to selecting the CRM system, monitor employee
behavior and performance to identify which business processes can benefit the most.
Determine how the CRM system might help share information and resources, cut
clutter, administrative duties, and duplicated tasks.
3| Keep customers in mind. While the technology that enables successful CRM is
important, at its heart CRM is a business strategy. Finding out how technology can
enable all of your company's touch points to facilitate its corporate strategy is key.
"The software is only there to enable your implementation of a CRM strategy, not the
other way around," says Izzy Franco, CRM leader for North America at Cap Gemini.
4| Ask and ye shall receive. Farm Credit Services of America wanted to become more
vital to its customers and the overall rural agricultural credit business, where customer
interactions are largely face-to-face. To evaluate possible new retail locations,
employees asked their customers and discovered they wanted to carry out banking and
financial dealings at their own place of business. So that's what they're doing. Ask
customers how they want to interact with your company.
5| Build a team. Before selecting your CRM software, form a CRM team with reps
from each department to make sure their colleagues' needs and concerns are
addressed. Too often companies neglect to include the correct stakeholders, and the
initiative fails to meet the needs of those tied to its results. Pick your CRM team
wisely, as it should evangelize the new system when it arrives.
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6| Consider people, process, and technology. One of the most common reasons why
CRM initiatives fail is that executives tend to think of CRM as an IT project. In fact,
it is an organizational and business-process change that requires companies to think
about people, process, and technology to succeed.
7| Create a project checklist. Companies need to consider the following six steps when
implementing their CRM initiatives: creating a clear strategy, addressing
organizational issues, enabling processes, implementing the appropriate technologies,
recording and tracking the data that drives the insight, and measuring the appropriate
metrics, according to Jeff Schumacher, an associate partner at McKinsey & Company.
8| Experience counts. "I can't emphasize enough the value of an expert consulting
organization that understands our business [and] a vendor that has a track record,"
says Jean Marc Pigeon, president of Inortech. To that end, ask the consultant and
vendor for customer references.
9| Take the Goldilocks approach. Some CRM tools are too big; others are too small.
Find what's just right for your business. Just because other companies like yours use
one approach doesn't mean you have to do the same thing.
10| Benefits come in many flavors. Cost justifications are critical, but look deep
enough to see the indirect effect of changes to your CRM policy. Look past the dollar
signs of implementation and consider things like employee efficiency, productivity,
and customer satisfaction.
11| Calculate short- and long-term costs over time. CRM is not a one-time expense.
Total cost of ownership (TCO) and return on investment (ROI) need to be used
together when evaluating a CRM project. Expectations should be managed over time.
Consider costs over monthly, quarterly, yearly, and three-year periods. Costs don't
end with technology, so consider services as well, which can easily cost twice as
much as the technology.
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12| Emulate best practices. Nothing turns employees off like being forced to do their
jobs differently for no obvious reason. Study your top sales and service people, then
design or invest in technology that enables your firm's best practices--their best
practices--to be emulated company-wide.
13| Get support from the top brass. If management doesn't believe in the new system,
why should the employees? Many times the difference between a successful CRM
strategy and a huge waste of money is a leader who motivates the rest. Once they're
hot on the idea, you need to keep them committed, so communicate with them
regularly.
14| Go with a CCO. Yes, another acronym to add to your mile-long scroll of industry
terms, but this one's got potential, we promise. If you're lacking accountability across
all departments, the chief customer officer is the person to bring it to your
organization. Still not sure what a CCO really does? It's her job to keep an eye on
everything we put on this list.
15| Get a champion of change. Don't have a CCO handy? Choose a manager who's
behind the implementation, understands the problems, realizes the benefits, and
understands the importance of the implementation from the company's side, says
Lorie Goudie, director of customer support for Tarantella. After all, there's nothing
more motivating than somebody who always has that can-do attitude. Want proof?
Just watch a Richard Simmons video.
16| Deputize wisely. A strong second-in-command, the person "who makes all your
glossy words actually happen," is critical, says Sadie Baron, marketing project
manager at Eversheds.
17| Set goals. Setting predefined and mutually agreed upon goals with your CRM
team prior to selecting the CRM vendor will give an organization an idea of how well
the CRM solution performs once it is installed. How can a company succeed if
success cannot be measured?
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18| Set attainable goals. Simply because one salesperson has an 80 percent close rate
does not mean all salespeople can come anywhere near that. "Not all customers write
business cases. Not all business cases have metrics. Not all metrics are reasonable,"
says Barton Goldenberg, president of ISM. Determine a department's average
performance levels and aim for 5 percent to 10 percent increases in areas like sales,
customer retention, or lead generation.
19| Cleanse preemptively. Identify your key client data set before you flip the switch
and make sure it's accurate and up-to-date. Do the data audit from day one.
20| Keep it simple. Don't buy what you don't need. The fewer bells and whistles, the
less time and money you'll need to devote to training. People don't like change as it is;
keeping things simple only makes the switchover that much easier.
21| Success can be contagious. In baseball they say that hitting can be contagious.
Implementing CRM is no different. With a full-suite product in particular, starting an
implementation with a department you know will find success can make other
departments start asking, "Hey, why can't we do that?" If one department finds
success with CRM, others will want to as well.
22| Train early, train often. Give your employees as much time as possible to learn the
new application. They don't like change any more than other people do, but the sooner
you begin, the sooner they realize they're a part of the process and the quicker they
will realize the benefits. Repeat and augment training as necessary to keep those skills
fresh.
23| Identify quick wins. Tackle the smallest, easiest task straight away and save the
hard stuff for later. Success early on gets the ball rolling and motivates employees.
24| Take baby steps. Sales teams, like cats, can be finicky. When automating the sales
force, roll out the CRM system in small steps. With many sales teams, the number one
concern is, what's in it for me? Dump or force a strategy on them and they'll get
cranky.
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25| Focus on ROI. "CRM should provide salespeople with better pipeline reporting,
rather than only make it easier to sell more. The latest CRM solutions are forcing
salespeople to enter more administrative numbers than before. As a result, firms find
they spend millions in sales automation only to learn that sales reps are still using
ACT!" says Scott Nelson, Gartner vice president and distinguished analyst.
26| Slow down, Speedy. Don't get too far ahead of your customers in introducing
CRM technologies--changing human behavior is tough, and takes time. Recognize
that customers and employees may be struggling to keep up with the pace of
technological change. New applications are best served up in small, measured doses,
says Jim Johnson, director of information services at Master Lock Company.
27| Find super users. Why fight uphill all the time? Get the most enthusiastic people
to use the system first.
28| Keep your eye on the prize. Measure the results and soothe the inevitable hiccups
by showing people the benefits of the new CRM system, says Stephanie Ledoux,
assistant vice president of customer and provider service at Blue Cross Blue Shield--
Rhode Island.
29| Test the waters. Make sure your email and other communications are actually
being delivered to the right people at the right time. Troubleshoot with test customers
before making your services generally available.
30| See your customer through the same glasses. Various departments in your
organization may see your customer as diversely as they would walking past a fun
house mirror--attractive and valuable from one angle, unappealing from another.
Using one integrated set of analytical data throughout the company can help
executives to make key decisions about how much to invest in a particular customer.
31| Keep things uniform. Unify your message across all communication channels,
including television, radio, newspaper, email, regular mail, Web site, and the
telephone. Try to have the same look and feel throughout the company. Don't send
mixed or conflicting messages--you will confuse the customer.
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32| Walk a mile in your customers' shoes. Getting complaints from customers about
how horrific it is to do business with you? Put yourself in their shoes by role-playing
the typical customer experience. Once you suffer through what you dish out, you'll be
shocked into a more customer-centric mindset.
33| Keep your promises. Just like relationships with your friends and loved ones,
relationships with your customers should be based on trust. Reminding customers of
promises kept--and taking responsibility for promises unfulfilled--simply requires
openness.
34| Clean your data regularly. Your CRM system is only as good as your data, so keep
it clean and avoid duplication. "According to the U.S. Census, about one in seven
people change addresses within a year," says Denis Pombriant, managing principal of
Beagle Research Group. That's why, he adds, "Having old data is like having no
data."
35| Big names don't mean big money. While big clients may look impressive on a
customer list, they may be costing your organization more money than they bring in.
These clients may have special needs, such as customized packaging, special
distribution needs, more hand-holding, which take extra time and expenses. Look at
overall customer profitability, not just sales, and send unprofitable clients to the
competition.
36| Consider life stages. According to the U.S. Census Bureau, there are roughly 75
million baby boomers (born between 1946 and 1964), more than 49 million gen Xers
(born between 1965 and 1976), more than 72 million gen Yers (born between 1977
and 1994), and 40 million millennial (born between 1995 and now).
37| Know thy customer. Don't assume that an ethnic cohort comprises one monolithic
group of consumers. Some consumers are more tied to their culture than others.
Within each culture exists subcultures that include a wide range of people who are
fully assimilated to those who don't speak English. What's more, country of origin
may also play a significant role in buying behavior.
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38| Mass marketing or one-to-one? Actually, it should be a mix that mostly meets
somewhere in the middle. Your most valuable customers require one-to-one
communication. Just below this requires a one-to-some model, in which your
marketing messages are somewhat customized and sent to the bulk of your customer
base. The bottom level is your lowest 10 percent, which requires little customization.
40| Sell what's priceless. The affluent are no longer as interested in material things as
they were leading up to the Internet boom. Instead, they'd rather purchase products
and service that enhance their experiences. Take heed from Citibank's "Live Richly"
and MasterCard’s "Priceless" campaigns.
41| Choose your customers. Find some commonality among your best customers in
your database and cross reference that with prospects from external databases to pick
the most profitable customers.
42| "Don't reinvent your relationships," says Joshua Yuster, CEO of BranchIT Corp.
Relationship management software from companies like BranchIT, Spoke Software,
and Leverage Software can search digital records of customers and potential
customers who have preexisting relationships with other members of your team.
43| Reward team players. In the big picture a happy customer is more important than
one salesperson's commission. Provide bonuses or team player rewards for referring
customers to the right internal sales agent or business partner who's closer to the
customer and can add more value.
44| Think, partners = customers. "Treat [partners] like they're customers," says
Catherine Smith, COO of ING U.S. Financial Services. Partners, like customers, want
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what they want when and how they want it. So just like you do with customers,
identify your partners' needs and wants, and implement processes that keep them
smiling.
45| Bundle up. To really reward those loyal customers who turn to you for multiple
products and services, cut them some slack with a discounted pricing plan to show
your appreciation. You may not pull in as much in the short term, but you'll score
lifelong customers--and long-term profits.
46| They're not lost, just misplaced. Almost every business goes through rough
periods, either individually or when the economy sags, and so lose customers as a
result. When business picks up again, be sure to attempt to restart your relationships
with lapsed customers--they're easier to sell to than brand-new ones.
47| Automate contract renewals. When focusing on customer acquisition efforts, don't
let existing customers slip away. Look to contract renewal applications that will
remind sales professionals when clients' contracts are nearing expiration and can also
automate contract renewal efforts with customers.
48| Streamline your checkout process. You wouldn't give your family (except maybe
your in-laws) a roundabout route to get to your home if there was an easier set of
directions. The same idea applies to your online checkout process. Make it less of a
maze and more of an express lane. For example, Overstock.com condensed its
checkout procedure from seven pages to three, and retooled its product pages to make
it easier to complete the checkout process, bolstering conversion rates and reducing
online-checkout customer calls.
49| Get personal. Customers hate to feel like the sales agent is reading to them from a
script. Learn your customers' personal needs and profiles and target your service to
each individual. It will make them feel important and that you value the relationship.
50| Get cozy. When people come to your retail store, financial institution, or garage,
make them feel comfortable. Many kinds of companies provide coffee and cake in the
mornings for customers who must come in before work. Others provide free Internet
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access to people while they wait. Retail stores increasingly are adding in-store cafes to
keep hungry shoppers around longer.
2) Provides sales agents with the ability to configure and quote an order in real-
time via a single CRM application, which enables a whole new set of capabilities.
Customer-focused product configuration rules can be enforced and dynamic pricing
can be applied, shipping charges and taxes can be calculated, and a specific promise
date can be confirmed and guaranteed; all this without having to travel back to the
office or requiring dual entry ("swivel-chair" integration) to other systems.
Sales agents that spend time handling complex orders using multiple systems have
less time to spend on new orders and generating new business. A single system gives
them more time for these activities, as well as other customer service-related activities
like order management and issue resolution. This reduces the amount of time between
when an order is placed and when it is delivered, thus improving cash flow.
3)Improves margins
Front-office pricing improves margins by enabling dynamic pricing based on various
CRM components, including customer profiles, product attributes, and market
segments.
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Simply knowing who your best and most profitable customers are does not guarantee
a successful CRM strategy. Companies should implement programs and policies that
target highly desirable customers and provide incentives for them to increase their
sales volumes. For example, account profile information like membership in a buying
club, being a competitor's top customer, or belonging to a target industry may trigger
discounts or promotional benefits that encourage a prospect to become a long-lasting
customer.
On the other hand, belonging to a low-volume, high-cost customer segment group
may trigger price premiums that encourage the customer to either purchase more
high-margin products or migrate to a competitor.
Establishing pricing rules dependent upon product attributes may also help raise
margins. For example, if sales of a product in the color red are outpacing sales of the
same product in blue, price premiums may be added for the red product while price
discounts could be added for the blue product. This would ensure that the optimal
price is charged for each to balance margin targets with inventory goals.
Knowing your customer's previous purchasing history or comparing a purchaser's
profile to similar customers allows you to use upsell and cross-sell techniques that
steer them toward products with higher margins and those that encourage a more
long-term buying pattern.
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Pricing in the front office reduces accounts receivables problems upfront by enforcing
pricing rules during order entry, which reduces invoicing errors and disputes.
Customers are demanding more product options to allow them to customize purchases
to their exact requirements. This has led to more complex product offerings that
require sophisticated product configuration and pricing models. Without the
appropriate tools sales agents may promise products with options that cannot be
delivered, provide inaccurate quotes, or configure a product that doesn't meet the
customer's expectations. This can result in cancelled orders or significant order
reconfiguration.
Delays due to missed deadlines, reorders caused by incomplete sales forms, or lost
sales because of cancellations are costly and can damage a once-solid customer
relationship. Resolving product configuration and pricing abnormalities at the time
the quote is provided improves order entry compliance and reduces the likelihood of
invalid orders reaching the order fulfillment system.
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11. Altering the CRM solution to accommodate current business process and
behavior.
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Benefits will accrue from the adoption of new processes that leverage the information,
speed, integration, lower operating costs and improved service resulting from new
CRM tools. Be sure to take advantage of these revenue, service and productivity
enhancements.
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However, the power of analytical CRM on an enterprise data warehouse can extend
well beyond marketing; the greater opportunity is in improving customer management
processes across the business, so that insights and intelligence created by and for
marketing can be leveraged in all departments. Gartner recognizes this with a
forward-looking view of what CRM is really about:
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Even the best business minds often assume that customer management is the concern
of the marketing department, however, the customer-centric enterprise of tomorrow
knows better. Customer conversations take place across the whole organization, not
just in marketing. Conversations with customers occur in the service department, the
financial department, fulfillment, shipping, and other functional areas. It is critical to
make sure that every customer’s ongoing conversation with your company is
consistent – wherever they touch your company. An analytical solution that truly
drives a higher quality of intelligence must also provide communications capabilities
that support relevant, consistent conversations with individual customers – anywhere,
anytime. And then tracking and managing detail data on each customer over time –
measured in years, not merely days or months. Companies won’t often share the
details of their own intelligence- generating tools with the world. However, we know
that those that have focused their resources on creating more effective customer
communications are getting great results.
Solution:
Peak Returns by Integration, Synchronization, and Customer Relationship
Optimization
These firms have experienced a transition to an analytical information infrastructure
that focuses on customers, resources, and abilities to drive new decisions every day.
This is the real-time approach to meeting business needs. Each of them has
implemented a form of optimization for meeting these business needs. NAB, in fact,
was one of the inventors of relationship optimization and of integrating it with
marketing and services. CRO begins with the integration of analytical CRM and
marketing communication tools to give marketers multiple views from which to
discover, plan, communicate, and optimize ever-changing relationships. This must be
formed from a data warehouse that synchronizes for quick access and leverages of all
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data when and where needed. Marketers will create complex analytic workloads to
develop new intelligence from this holistic view of your customers and drive dynamic
communication across all channels for highly profitable returns.
CRO will utilize customer profiles that are automatically refreshed in real-time in the
data warehouse. This ensures that customer analyses are always fresh for more
accurate intelligence and more refined value propositions. Event triggers are used to
monitor customer behaviors and interests in real-time. Optimization tools ensure
right-time; right-channel offers and messages are delivered in ways that make sense
for the customer as well as the business. The result is an optimized multichannel,
multistep, event-based customer-driven dialogue and relationship.
Moving From Vision to Reality: Start Getting The Most From Your CRM and
IT Investments
To make all of this a reality, companies must align technology tools and customer
processes to interact with individual customers in meaningful and relevant ways.
Firms must become masters of the customer conversation – and instinctively learn
how to appeal to customers. Specifically, marketers can get this alignment underway
by developing their knowledge base, skill sets, and technology tools to leverage the
power of advanced CRM analytics and marketing automation tools. Marketers also
need to focus on being innovative in their application of customer intelligence through
making the science and practice of CRM a total learning environment. Learning is a
critical part of the CRM process, as pointed out in the forthcoming book The Value
Factor by Mark Hurd and Lars Nyberg. These executives know that:
“A company needs to understand its customers better, not only so it can market to
them more effectively, but also so it can learn from the information in an iterative
feedback process. By closing the loop on understanding their customers, companies
can design products and services that anticipate customers’ needs, enhance contact,
and predict the next best interaction.”
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To move from where your company is today, you need to consider tactics that allow
you to better understand the value and interests of your customers. Here are a few
practical suggestions:
• See and segment your customers by business value.
Next, model them to predict their migration into a spectrum of value segments. Then,
simulate and predict customer buying behavior based on the potential effectiveness of
different potential value propositions you devise.
• Perform a marketing-influencers analysis to identify which customers can be
influenced in their value migration. Then communicate to them with value
propositions that will have the effect of moving them in the right direction.
• Make accurate assessments of each customer’s affinity to a value proposition
and its timing. Learn from the customers’ positive and negative responses.
• Learn to optimize channels and frequency of customer contact. Learn and
relearn which channel you should use for specific messages as times and offers
change and decide how often to contact each customer.
• Perform detailed customer value analysis, including market basket analysis,
product affinity analysis, cross-product correlation analysis, multiple campaign
response models, customer growth models, churn and attrition models, and customer
lifetime value models to spot opportunities to more effectively communicate your
value propositions.
Conclusion
When a company can continually identify those opportunities that hold the greatest
long-term value potential, finite resources can be directed at exploiting these
opportunities and maximizing profits. This means establishing an environment where
a company can continuously assess and act upon value-generating or value-retaining
opportunities as they occur. With a complete, integrated view of the customer in an
environment designed for optimized dynamic customer interactions, customer
processes across the business will consistently create and deliver messages that
customers find compelling and the positive and profitable results will follow.
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A Teradata platform for data management and analytics is key to the company's
winning ways.
More than two years into a five-year CRM program, Fernando Ricardo has good
reason to feel happy. Westpac Banking Corporation's Program Reach, of which
Ricardo is director, is ahead of schedule, ahead on anticipated benefits and right on
budget. In fact, Ricardo believes the program has exceeded expectations, which he
attributes to state-of-the-art technology, personnel experienced in CRM and, most
importantly perhaps, the right corporate culture and buy-in across the organization.
"It's been a very good first two years. We don't have any particular issues. Everything
that we have done to date is working fine. I can't see any scenario where things could
have gone better," he reflects.
Founded in 1817 as the Bank of New South Wales, Westpac is Australia's oldest
bank. It provides banking and financial services for nearly 8 million personal,
business and institutional customers in Australia, New Zealand and the Pacific region.
It operates more than 1,000 branches and agencies, has offices in key financial centers
around the world and employs more than 26,700 people.
Launched in 2002, Program Reach's principal business driver was to provide
Westpac's staff with better information about customers. Such information would
allow staff to proactively approach customers as well as reactively satisfy their needs.
As Ricardo puts it, Westpac wanted "to provide the right tools for our staff to better
service customers and have relevant conversations with them."
The program gives bankers concrete information about what customers need, enabling
them to offer to customers the right kinds of products and services rather than blindly
suggesting something.
"You don't want to be offering credit cards to young teenagers or to someone who
already has two or three of your credit cards," Ricardo explains. "But if you have a
home loan with us and you don't have insurance, it makes sense to talk to you about
insurance."
The ability to know the difference is a key advantage in a highly competitive industry.
"Systems in banks worldwide are still very much product-centric. Most banks don't
have a single view of the customer and cannot determine and act upon what needs
(their customers) may have," Ricardo says.
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Ricardo gained oversight of Program Reach in September 2002, bringing nine years
experience in analytics and strategic marketing for National Australia Bank, which
used Teradata. In December 2002, after extensive investigation, Westpac selected
Teradata CRM technology for its Westpac Leads engine—which is the heart of its
cross-channel, integrated customer management and event-based customer contact
system.
Building a system
Through its data warehouse, Westpac Leads draws data from Westpac's source
systems. At the front-end, or presentation layer, are Relationship Builder (Siebel 7.5)
and the Reach Dashboard (Siebel Analytics). Modeling is performed using SAS
Enterprise Miner.
Relationship Builder provides a fast, browser-based, holistic view of customers,
enabling a continuous conversation with customers through multiple channels. It is a
powerful sales management tool that records referrals, service requests and
opportunities, and it allows bankers to manage this information.
The Reach Dashboard provides sales management information about activities
spanning from the call center to the executive level. Through real-time visual
reporting, a manager can monitor the sales pipeline and focus on coaching or other
sales activities as indicated by the Dashboard.
Sales leads, referred to as Westpac Leads because they are generated in that system,
are delivered from Teradata CRM to Relationship Builder as opportunities for bankers
to make proactive customer contact. Profile information and future opportunities
recorded in Relationship Builder can be used to trigger a future Westpac Lead.
For example, an outbound caller employed by Westpac who is targeting potential
customers via Relationship Builder is sent a Westpac Lead regarding a specific
campaign and a specific customer. This can trigger discussion about other future
needs. During the conversation, the caller might discover that the customer has a term
deposit with another institution that will expire in four months. When the banker
records this as part of the customer's profile, a Westpac Lead will be triggered in time
for the banker to contact the customer with an appropriate Westpac offer.
Ricardo says that prior to Teradata and Program Reach, Westpac could not deliver
consistent or "next best" offers, which enable a relevant, timely lead to be attached to
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the customer's record within Relationship Builder. Without that information, bankers
had a hard time targeting customers' needs with appropriate product or service offers.
Now, in addition to outbound callers being sent leads, customer service staff can see
relevant sales or service offers against a customer's record. With the scripting
capabilities of Relationship Builder, any banker can easily introduce a relevant offer
to the customer, and thanks to Westpac Leads' modeling capabilities, the likelihood of
the offer being accepted is high.
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"Combined, these three things provide us with a unique opportunity to do well. I think
the big difference for Westpac is that Westpac is going straight to the nuggets without
spending a lot of time mining in areas where there is no gold," Ricardo says.
In the past, CRM was mostly about the technology, not about the customer. There is a
change in the way the organizations do business. At a technology level, CRM is
increasingly about conjoined best-of-breed applications delivered via portal
technologies. At a business level, it is beginning to invade traditional territories
occupied by brand management or customer support. Peel shows companies how to
make the shift to the new paradigm.
The CRM vendors look like they have got their act together in terms of coupling their
wares to the needs of the business. The market now distinguishes between CRM and
eCRM. One would be forgiven for thinking that this differentiation was contrived to
allow the vendors to retreat back to pre ecommerce CRM. But the opposite is true.
eCRM is the new game and the vendors are being bullish about it. It may well be
worth creating a CRM vendor index, as I think that it will be a good indicator of
confidence in business in general and technology in particular.
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Annexure-I
Bibliography
Magazines
o Business World
o Business Today
o Business India
Newspapers
o Times Of India
o Financial Express
o Economic Times
Websites
o www.crm2day.com
o www.salesforce.com
o www.bitpipe.com
o www.customerservicemanager.com
o www.serachcrm.com
o www.darwinmag.com
o www.crmassist.com
o www.google.co.in
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o www.yahoo.com
Reference Books
CRM: Redefining Customer Relationship Management
Why CRM Doesn’t Work?
CRM: Getting It Right
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