Crm

Customer Relationship Management
Chapter # 1. Introduction to CRM
1.1 Evolution of CRM
Customer Relationship Management (CRM) is one of those magnificent concepts that
swept the business world in the 1990’s with the promise of forever changing the way
businesses small and large interacted with their customer bases. In the short term,
however, it proved to be an unwieldy process that was better in theory than in practice
for a variety of reasons. First among these was that it was simply so difficult and
expensive to track and keep the high volume of records needed accurately and
constantly update them.
In the last several years, however, newer software systems and advanced tracking
features have vastly improved CRM capabilities and the real promise of CRM is
becoming a reality. As the price of newer, more customizable Internet solutions have
hit the marketplace; competition has driven the prices down so that even relatively
small businesses are reaping the benefits of some custom CRM programs.
1.2 In the beginning…
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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1.3 Advances in the 1990’s
In the 1990’s companies began to improve on Customer Relationship Management by
making it more of a two-way street. Instead of simply gathering data for their own
use, they began giving back to their customers not only in terms of the obvious goal
of improved customer service, but in incentives, gifts and other perks for customer
loyalty.
This was the beginning of the now familiar frequent flyer programs, bonus points on
credit cards and a host of other resources that are based on CRM tracking of customer
activity and spending patterns. CRM was now being used as a way to increase sales
passively as well as through active improvement of customer service.
1.4Introduction
Customer RelationshipManagement -CRM
The generally accepted purpose of Customer Relationship Management (CRM) is
to enable organizations to better serve its customers through the introduction of
reliable processes and procedures for interacting with those customers.
In today's competitive business environment, a successful CRM strategy cannot be
implemented by only installing and integrating a software package designed to
support CRM processes. A holistic approach to CRM is vital for an effective and
efficient CRM policy. This approach includes training of employees, a modification
of business processes based on customers' needs and an adoption of relevant IT-
systems (including soft- and maybe hardware) and/or usage of IT-Services that enable
the organization or company to follow its CRM strategy. CRM-Services can even
redundantize the acquisition of additional hardware or CRM software-licences.
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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Major areas of CRM focus on service automated processes, personal information
gathering and processing, and self-service. It attempts to integrate and automate the
various customer serving processes within a company.
There are three parts of application architecture of CRM:
• operational - automation to the basic business processes (marketing, sales, service)
• analytical - support to analyse customer behaviour, implements business
intelligence alike technology
• cooperational - ensures the contact with customers (phone, email, fax, web...)
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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Improving customer service
CRMs are claimed to improve customer service. Proponents say they can improve
customer service by facilitating communication in several ways:
• Provide product information, product use information, and technical assistance on
web sites that are accessible 24 / 7
• Help to identify potential problems quickly, before they occur
• Provide a user-friendly mechanism for registering customer complaints
(complaints that are not registered with the company cannot be resolved, and are a
major source of customer dissatisfaction)
• Provide a fast mechanism for handling problems and complaints (complaints that
are resolved quickly can increase customer satisfaction)
• Provide a fast mechanism for correcting service deficiencies (correct the problem
before other customers experience the same dissatisfaction)
• Identify how each individual customer defines quality, and then design a service
strategy for each customer based on these individual requirements and expectations
• use internet cookies to track customer interests and personalize product offerings
accordingly
• use the internet to engage in collaborative customization or real-time
customization
• Provide a fast mechanism for managing and scheduling followup sales calls to
assess post-purchase cognitive dissonance, repurchase probabilities, repurchase times,
and repurchase frequencies
• Provide a fast mechanism for managing and scheduling maintenance, repair, and
on-going support (improve efficiency and effectiveness)
• Provide a mechanism to track all points of contact between a customer and the
company, and do it in an integrated way so that all sources and types of contact are
included, and all users of the system see the same view of the customer (reduces
confusion)
• The CRM can be integrated into other cross-functional systems and thereby
provide accounting and production information to customers when they want it
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Improving customer relationships
CRMs are also claimed to be able to improve customer relationships . Proponents say
this can be done by:
• CRM technology can track customer interests, needs, and buying habits as they
progress through their life cycles, and tailor the marketing effort accordingly. This
way customers get exactly what they want as they change.
• The technology can track customer product use as the product progresses through
its life cycle, and tailor the service strategy accordingly. This way customers get what
they need as the product ages.
• In industrial markets, the technology can be used to micro-segment the buying
centre and help coordinate the conflicting and changing purchase criteria of its
members
• When any of the technology driven improvements in customer service (mentioned
above) contribute to long-term customer satisfaction, they can ensure repeat
purchases, improve customer relationships, increase customer loyalty, decrease
customer turnover, decrease marketing costs (associated with customer acquisition
and customer ?training?), increase sales revenue, and thereby increase profit margins.
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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Privacy and ethical concerns
CRMs are not however considered universally good - some feel it invades customer
privacy and enable coercive sales techniques due to the information companies now
have on customers - see persuasion technology. However, CRM does not necessarily
imply gathering new data, it can be used merely to make "better use" of data the
corporation already has. But in most cases they are used to collect new data.
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Chapter # 2. CRM Planning
2.1 CRM Planning: Keys for Project Success
Whether you're updating, upgrading, jump-starting, or restarting your CRM efforts,
some basic steps will help keep you on the path to a positive ROI.
Thinking about the potential ROI of your customer relationship management (CRM)
project should start during the selection process. Before you write an RFP or start
talking to vendors, you need to do some homework to ensure that you're on the right
track to maximize ROI.
2.2 Identify the Problem — and the Solution
Before you start thinking about vendors, you should define your problem in clear
business terms. Do you need to improve management visibility into the sales
pipeline? Reduce customer support costs or improve customer support? Reduce
customer-related administrative overhead? Making your CRM challenges specific will
help you determine which technologies or components are most likely to deliver ROI
and how you can prioritize your development and deployment plans. Most companies'
CRM goals fall into a couple of main categories:
• Improved sales performance
• Improved management visibility
• Improved customer support
• Improved marketing
• Reduced costs
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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2.3 Make the Short List
Regardless of your relationship with existing vendors, previous experience, and
technology environment, you should make a short list of potential vendors and give
them a fair evaluation before you make a decision. Your short list should be easy to
define based on these factors:
• Your CRM goals. The vendors whose functionality meets your needs will
depend on whether you're looking for improved sales, improved reporting and
forecasting, improved support, improved marketing, or a combination of different
customer-related technology.
• Your existing environment and IT philosophy. Do you have existing
databases, order systems, or contact lists that will need to be integrated or migrated
into your CRM solution? Do you expect to do your own development or use
consultants or systems integrators? Are you comfortable outsourcing your sales and
marketing data in its entirety - or in part? Answering these questions will help you
determine whether a large-scale CRM infrastructure, a hosted solution, a point
solution, or a broad solution is likely to deliver maximized ROI.
• Your user dynamics. Are the employees you expect to use the solution
technology savvy and open to change, or are they the ones still using pencils and
paper to track leads? The greater the magnitude of the change you expect them to
make, the greater the risk that adoption will slow the ROI of your project.
• Your budget. CRM solutions such as Siebel and SAP can cost millions of
dollars to deploy and require a team for ongoing support and maintenance. On the
other end of the spectrum, Microsoft CRM and FrontRange (for example) can cost
considerably less. You can expect a hosted solution to have a minimal upfront
investment and from $500 to $1,500 per user per year.
Clearly defining your requirements and characteristics in each of these key areas will
prepare you for the next step - evaluating each individual solution's ability to deliver
returns based on the costs and benefits associated with a deployment.
Check Resumes
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
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interviews with references to learn about their decision process, project successes and
challenges, and whether or not their spending - and benefits - met expectations.
Find a Partner (Check Resumes, 2)
In the CRM world, few companies will deploy a solution without some help from
external consultants or systems integrators. Selecting and planning how you work
with consultants is just as important to your project's success as the technology you
choose.
Justify Your Investment
Once you've identified your goals and selected a short list of vendors, you can use a
structured evaluation of costs and benefits to determine the best solution in terms of
ROI and build the business case for moving forward. On the costs side, you'll want to
consider the initial and ongoing software, hardware, consulting, internal personnel,
and training costs associated with the project.
Here are a few guidelines to keep the ROI from your CRM project on track:
• You should spend less on software and consulting than 70 percent of expected
annual direct benefits.
• You should be able to deploy and achieve some returns in fewer than six
months (even if it's only a pilot).
• For a hosted solution, you should see benefits in fewer than 60 days.
• Consulting costs should not be more than twice your initial software
investment.
• Training users should take fewer than four hours.
On the benefits side, you'll want to consider both direct and indirect benefits.
Prioritize your expected benefits from most direct to most indirect, and then work on
your estimates, using internal surveys, case study data, and reliable benchmarking
information as a starting point for quantifying expected benefits for your company.
Key Decision Factors
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.
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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.
Best Practice: Make a Match
One company chose Microsoft CRM because it would easily integrate with back-end
office applications, because the sales force was already familiar with the Microsoft
interface look and feel, and because the design of the application closely matched its
existing business processes. It achieved a payback of five months.
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?
• 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?
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• 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.
Best Practice: Pilot First
One company deploying an ePeople CRM solution used an initial pilot at one location
to evaluate the application and get valuable feedback on how and when the software
should be expanded to other locations.
Even after you've made the commitment, piloting to a select group of users before you
complete customization is a good way to determine whether or not the solution works
- and to gain valuable feedback on how and with what changes the solution should be
rolled out to the broader population.
Best Practice: Phase In Functionality
One company deploying a JD Edwards CRM solution found that while it achieved a
positive ROI, it could have accelerated user adoption and thus shortened its payback
period by introducing functionality to users in phases. A phased approach would have
reduced initial customization costs and the need to train users, who were somewhat
overwhelmed by the features of the solution.
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Fine-Tuning Your ROI
If you've picked the right vendor, planned a deployment with clear milestones, and
gotten users on board, you've probably received 70 percent of the ROI you can
expect. The trick to really successful CRM is continuing to evaluate and evolve your
solution to deliver greater value. You'll also want to keep track of potential upgrade
opportunities and take a close look at the business case - both the benefits of
upgrading and the time and pain associated with the upgrade - before you make a
change.
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Chapter # 3. CRM in Business
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.
3.2 CRM Software: A key to scalability and efficiency
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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3.3 How do you choose CRM Software?
• Does the emphasis of the CRM software package match the emphasis of your
CRM objectives? Identify your specific objectives and verify your CRM software can
meet those needs.
• Is your software user friendly? If you can't effectively use the software why use
it? CRM software training is usually available by contacting the vendor and asking for
recommended referrals.
• How do other companies feel about the software? Call the provider company and
ask for a number of preferrals, (preferably three or four companies in similar size and
scope).
3.4 What are some key components of CRM software?
History and Trend Management
• History Tracking - get instant perspective into all customer interactions
• Trend Management- see the status of all pending sales and potential revenue of
entire pipeline
CRM Software Automated Processes
• Remote Web Synchronization- automatically follow-up with leads generated from
your site
• Automated Process Management - allows consistent communication with
customer based on user-defined criteria
CRM software Data-base Information
• Centralized Information - centralize, manage and simplify access to critical
business information
• Industry Templates and Form s- allows access to a database of industry specific
CRM forms
CRM Software Sales and Marketing Analysis
• Sales & Quota Analyses - view forecasted sales, closed sales, and comparisons
between sales and quota
• Leads Analysis - track responses to identify effective campaigns
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CRM Software Mobil Technology Capabilities
• Synchronization Wizard - keep calendar and contact information up-to-date on
your PDA or laptop while you travel
• Remote Access Capabilities - access your CRM software through the internet.
Not all CRM software packages are the same. They will greatly range in price and
capabilities. CRM Advisor suggests a thorough evaluation is done comparing multiple
CRM software packages.
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Chapter # 4. Analytic CRM
4.1 Analytic CRM for Retailers: An ROI Perspective
The Retailers Data Challenge
Today’s retail environment includes increased competition among stores, a general
economic downturn, rising interest rates and higher gas and heating oil prices. All of
these factors have reduced the disposable income available to many retailers, core
customers. In this economic environment, retailers must learn to generate more
business from their existing customers. To do this they must first mine the data they
have collected on customer purchases and loyalty programs. Still, retailers are
drowning in customer data.
• Critical customer information is inaccessible and underutilized.
• More decision-makers need more access to consistent corporate data about their
customers.
• Loyalty program, POS, and demographic databases exist, yet are not integrated
within a retail corporation.
• Merchandisers and direct marketers lack expertise in the standard analysis
applications sold by business intelligence vendors today.
• Current retail data analysis systems require heavy IT resources to maintain and
utilize.
According to The Marriage of Category Management & Customer Management,
written by Gary Robins and published in RIS, July 1999, .Category Management and
promotion management need to include analyses of loyal customers. Failure to
consider the effects on loyal customers’ means resources spent on category
management and promotion might be and probably is in some or many cases harming
your business. Combining category and loyalty data analysis has been done before,
but with great difficulty. The biggest hurdle now is getting robust, fast databases to
handle the huge amount of integrated data.
CustomerView was designed to address these retail data challenges. CustomerView
supports the retailers. Top marketing objectives to solve these problems:
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Reward loyal shoppers and get them to buy more
• According to Robert Blattberg, director of the Center for Retail Management at
Northeastern.s Kellogg Graduate School of Business, a study of a chain drug retailer
showed a 30%/70% split, meaning the top 30% of their customers generated 70% of
their revenues. It also revealed which categories were more important to top and
bottom level customers.
• In another example, a small regional chain with seven stores targeted 18,000 of
their best customers based on recency and overall dollar amount spent. Of the 18,000
customers mailed, 921 responded, generating a 5.1% response rate. Total revenue
brought in from this particular promotion was in excess of $227,000 generating more
than $22 for every dollar spent on the promotion. The events average transaction was
$24744 an almost $50 increase from their normal average transaction.
Target top switchers
• If your firm is not the lowest cost producer in the category and your switchers are
price sensitive, the best marketing strategy for addressing price-sensitive purchasers is
to attempt to change their preference structure by raising their awareness of, and
preference for, specific brand/product attributes, whether they are tangible or
intangible. Then try to persuade these Price Sensitive Purchasers that your offering
has the better value, all things considered. The goal is to increase sales and market
baskets of top switchers.
Optimize trade areas and improve assortments store-by-store
• A leading supermarket chain recently used data from loyalty programs to edit
which products to delist in a category. .It is not just sales, it is how it is affecting
loyal customers,. was the mantra from the chain. In a test of the carbonated beverage
category, the chain did not lose customers even after eliminating 26% of the
category.s SKUs.
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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.
Maximize ROI for programs funded with manufacturer co-op funds
• A national retailer recently completed a targeted promotion with a leading CPG
company. 350,000 pieces were mailed bringing the retailer an additional $124,000 of
co-op dollars. The piece featured 10 different products, received 16.4% response
rate, and the market basket of the responders was 40% greater than the non-
responders.
4.2 Who can benefit by using CustomerView?
CustomerView is targeted at five key audiences within the retailer’s organization:
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
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.
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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.
4.3 Optimizing Customer Interactions and Marketing Analytics
Customer conversations and new analytical marketing techniques make dynamic
customer relationship optimization a new top priority. Business competence
comes down to a company’s ability to generate value by using meaningful
propositions, relevant interactions, messaging, information, and conversations that
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
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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.”
Accelerating Customer Relationships, Swift As Internet communities of practice have
grown, people have become more vocal about what they expect from providers in
many consumer serving industries. More than two years ago, the book The Cluetrain
Manifesto: The End of Business as Usual discussed the new realities of value
propositioning and marketing techniques for the new millennium.
Here are the pertinent highlights:
• Marketing is really various types of interaction or conversations.
• Technology is enabling conversations among human beings that were not possible
in the era of mass media.
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• These networked conversations are enabling powerful new forms of social
organization and knowledge exchange.
• As a result, markets are getting smarter, more informed, and more organized.
• Already, companies that speak in the language of the pitch are no longer speaking
to anyone.
• Companies can now communicate with their markets directly.
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.
“Focusing on and predicting customer demand and making decisions both
proactively and scientifically is an opportunity worth hundreds of millions, if not
billions, of dollars of incremental revenue… starting with segmentation and improved
forecasting, then shifting to integration and alignment of functions based on demand,
and finally reaching optimization, which is the application of advanced mathematics
to dramatically improve decisions.”
4.4 Manage Your Value Propositions to Better Manage Your Brand
and Your Business
A value proposition may be articulated in text on a Web site, catalog, or direct mail
piece, or in a telephone conversation. This is where brand differentiation first appears:
the proposition is the first impression of the brand and its value to customers. Thus it
is critical in initiating conversations, transactions, and relationships. But a value
proposition is so much more than a message. The value proposition drives the
organization’s core logic for creating value.
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
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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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Chapter # 5. Market Automation
5.1 Marketing Automation - The CRM Vendor Solutions
The components offered in a front- office application suite fall into three general
categories:
• Customer Service and Support: These applications automate the service
and support functions, including analytics, and they provide workflow engines that
facilitate efficient problem and inquiry escalation, tracking and resolution. They
provide customizable, dynamic scripting capabilities for the customer service
representatives as well as the capability to record customer responses in a shared
contact repository. In a call center environment, they also integrate with (or provide)
computer telephony integration (CTI) capabilities that allow automatic call routing
and automatic screen pop-ups containing customer and product information to agents'
workstations as they are answering or initiating calls.
• Sales Force Automation: These are tools that automate the collection and
distribution of all types of sales information. They allow for the design of sales teams
based on defined criteria. Calendar management, activity management, sales reporting
and forecasting, lead distribution, and tracking sales contacts with customers and
prospects are some of the myriad of capabilities offered within these solutions. Many
also provide access to internal and competitive product information as well as the
automated collection and distribution over the Internet of relevant external
information such as breaking industry news and customer-specific events.
Sophisticated pricing and product configuration engines and third-party channel
management capabilities are also available.
• Marketing Automation: These applications provide the ability to create
automated marketing campaigns and track the results. Generating lists of customers to
receive mailings or telemarketing calls, scheduling automatic or manual follow-up
activities and receiving third-party lists for incorporation into the campaigns are all
typical functions. Internet personalization tools are offered 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.
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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
across the organization. By integrating personalization into the front-office
applications, every contact with your customers can be well planned and personalized.
This is a good example of the acceleration of analytics into action. Features of
personalization tools include:
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• Collecting information on Internet site visits.
• Addressing customers who visit the site by name and remembering their
preferences.
• Allowing visitors to customize content to suit their purposes.
• Showing customers specific content based on who they are and past behaviors.
• Offering specific products (on the Internet or over the phone) based on past
behaviors.
• Allowing for the possibility of self-adjusting campaigns and offerings based on
customer behavior.
• Integrating technologies and techniques for optimal customer understanding based
on transaction history, demographic analysis and collected information.
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.
• Crafting responses to incoming e-mail without human intervention.
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5.2 Closing the Loop - Adopting an Architected Solution
Now that we understand the CRM analytic capabilities offered with MA solutions,
what's the catch? When MA modules are implemented as an integrated, open part of
an enterprise business intelligence environment, there may be no catch. The catch is
the temptation to implement these front-office product suites and bypass the
enterprise as a whole and the data warehouse specifically. While this automates
certain types of marketing activities and integrates these activities to the front line, it
lacks the depth, breadth and share ability of an architected data warehouse solution.
The organization is deprived of the more sophisticated forms of CRM analytics,
forming yet another departmental silo of analysis, furthering the very data mart chaos
and inconsistency that the data warehouse is designed to prevent.
Let's examine the Corporate Information Factory (CIF) architecture to determine
where the MA integration points should be. Figure 1 illustrates the CIF. As stated
earlier, the CIF provides a high-level technology road map for organizations wishing
to develop CRM initiatives. The CIF is a logical architecture whose purpose is to
provide a framework for implementing integrated technology across all areas, all
departments and all functions of an organization. Building a framework such as the
CIF enables organizations to share customer information freely and distribute
analytical results to all individuals in the organization that need them. The CIF
consists of three primary types of CRM systems
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.
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
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understand CRM interactions. Properly architected, the MA components of the front-
office applications would reside here.
Business Management enables organizations to act on the analytical results
generated within business intelligence. Business management consists of the
operational data store (ODS) and its associated transaction interfaces as well as the
associated oper marts. Business management systems are subject-oriented, integrated,
current-valued and supply a single point of access for information across the
enterprise. An enterprise customer profiling system is a good example of a CRM
business management function.
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 warehouse is designed
using a data model that is prejudiced toward known data relationships or certain
business processes, then analytical activities that search for unknown relationships are
compromised or, in effect, eliminated.
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• It provides detailed data for subsequent use by the data marts. Because the data
warehouse must be the source for data marts containing aggregated and summarized
data, exploration warehouses containing detailed data, data mining warehouses
containing statistical samples of data and MA components which fall somewhere in
between in terms of detail and history required, it must contain the proper level of
detailed data to satisfy these very diverse requirements. The goal is for the data
warehouse to have the "least common denominator" level of data for the data marts
and the MA components. It must serve star schemas, cubes and flat files for statistical
analyses, and subsets of data for ad hoc querying.
The Information Feedback loop, running across the top of Figure 1, is the other key
component of the CIF for integrating MA components. This is the set of processes
that transmit the intelligence gained through usage of the strategic CIF components to
appropriate data stores. This is the mechanism by which we push BI "out to the
masses." It is also the mechanism by which we allow the MA components to receive
information from the data warehouse and to feed information back into the data
warehouse or on to the operational systems or ODS.
Examples abound of storing the results of BI analyses in operational systems such as
the front-line applications. One such example is to store the results of a customer
lifetime value (LTV) analysis - that is, the actual score given to each customer based
on their calculated LTV to the enterprise. The numerical values generated from such
an analysis can be stored in the front-office system and accessed by the MA
components during the generation of campaigns or scripts for call center agents.
Behavior toward each customer is altered based on the knowledge of the customer's
LTV score. Higher valued customers may receive different campaign solicitations
than those with a lower score.
Conversely, the solicitations generated by the MA components should also be
transported via Information Feedback into the data warehouse. This allows all analytic
applications in the organization to take advantage of the valuable information
generated by MA components.
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
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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.
5.3 New Customer Management Tools For Higher IQ and Peak
Business Results
To create a sustainable competitive advantage through CRM or customer management
and marketing processes, a business must master leading-edge intelligence tools that
raise its organizational IQ (intelligence quality) to peak levels. Fully-informed
business decisions, fully-informed tactics, and relevant, right-time value propositions
to individual customers – require an integrated infrastructure that can capture,
analyze, and optimize information from across the extended enterprise including all
customer channels – with increasing speed and synchronicity. The best value
propositions will be created when a business has the CRM tools to do the following:
• Understand the economics of your customer relationships both today and in
terms of individual lifetime value – to better anticipate the migration of customer
assets over time;
• Improve your ability to evaluate and use every customer interaction as
actionable marketing opportunities with rules driven lead management tools;
• Cultivate highly relevant and profitable dialogues with customers across all
channels, including the e-channel, for better strategic brand and customer equity
management;
• Align business resources and customer communications for effective tactical
process execution that balances customer expectations and company objectives;
• 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.
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Chapter # 6. CRM Initiative
6.1 Implementing a CRM Initiative
According to the surveys, through the year 2004 only 35% of businesses will
accurately forecast the implementation cost and ROI projections before initializing a
CRM strategy, and less than 20% will stick to the guidelines and initiative plans
they’ve established without veering off the designated course to an unsuccessful
destination. This is an avoidable situation that mainly illustrates the infant growing
pains many companies have when trying to wrap their arms around any new business
strategy. Inexperience with such an important, yet often difficult, strategy comes from
it being a young and untested initiative. If a business has done their homework and
intelligently forecasted the resources needed to fulfill a CRM initiative, the pains and
pitfalls currently being experienced will lessen and the benefits will increase.
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-
gearing a business to be customer-centric depends on each case and can only be
calculated with that in mind. There is no universal equation in which to plug numbers
or “general” projection figures that can be applied across the board. Fact is, CRM
initiatives are company-wide endeavors and become more elastic and abstract because
of this. Consequently, assessing costs is not as simple as checking the price tags on
CRM software. Predicting costs must be done through a unique look at every case.
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In the end, the result of a successful CRM campaign will eventually minimize costs,
such as the high price of luring and enticing new customers, and won’t break the bank
of any company. In fact, businesses will see an extremely healthy increase in profits
while their costs will level off to a very manageable point if they’ve succeeded in
their CRM goal.
6.2 Seven Steps to Managing Your CRM Initiative
1. Business analysis: Focus on your customer data-collection process
The first step in your CRM project should be business analysis. Take a step back and
look at the areas of your firm that deal with customer data (most of your firm,
probably). How well are you handling data right now? Are you collecting all the data
you want from your clients or would you like to collect more? Is this information
accessible by all those who need it? Do you ever have to reenter information as the
client moves from Marketing & Sales through to Time & Billing?
2. Needs analysis: Make a list of your customers' needs
As you ask yourself these and other questions, make a list of your customers' needs.
Start with the absolute essentials at the top. Examples of these needs may include
collecting certain types of information, a centralized database, scalability, and
capability to access the system remotely. An important note to remember—this list
should include all your essential needs, even the needs met by your current system. As
you work through your list of essentials, begin to add nice to haves. These are needs
that you would like to meet but are not critical to the success of your CRM system.
Make sure your whole project team contributes to this list—you won't think of
everything on your own.
3. Product evaluation: Compare vendors and products
After you have your list of needs compiled, you can start comparing vendors and
products. As you are looking at features offered by the different products, try to cross
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
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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.
7. Evaluation: Follow-through for a successful implementation
As more and more firms are implementing CRM systems, plenty of success stories are
emerging. The firms that experience successful implementations have a plan from the
beginning and follow it through to the end. Failed implementations often are the result
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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Chapter # 7. CRM Implementation
7.1 The Implementation Process
Know the required commitment for CRM implementation success
Many companies think that choosing a solution is the hard part. In reality, choosing a
system is relatively easy. Implementing a system is the hard part of the process. In
choosing a solution it is common for a team to be brought together to develop a needs
analysis document. It is not uncommon for teams to spend months developing
selection criteria and subsequently choosing a vendor. Typically, however, less
thought is put into how the solution is going to be implemented which is one of the
reasons for the well documented, high failure rate. Unlike back end systems (ERP,
SCM, etc) the use of which is required for day-to-day operation of a organization,
companies and employees have lived without CRM and may be able to continue
doing so. Each person has their own way of doing things and those habits are difficult
to change. To overcome all of the possible obstacles, CRM must become part of the
culture of an organization and people must recognize that by using the system they are
helping the team become more effective as a whole.
7.2 Implement And Learn The Basics First
It is no surprise that once companies select a solution they race to implement that
solution. Customers have been sold on the return on investment (ROI) of the solution,
and know that ROI will not come until the team is effectively using the solution. The
common mistake here is trying to do too much at one time. The reality is that users
who are overwhelmed by a tool end up not using it. It is important that you establish
and focus on short, medium and long-term goals.
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
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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.
7.3 Outline An Implementation Strategy
The first step of implementing a new CRM system is to determine a strategy. The
implementation strategy should be developed with the software provider to determine
and document the process to roll the solution out to the user group. Questions like
“What is the timeline?” “Should everyone be brought on at once or do a pilot?”
“Where are the strengths and weaknesses in of the company and the individual
users?” all need to be answered.
User champions and administrative champions need to be selected. Look within the
organization to determine whom the power users will be and solicit their support on
the project. Identify those users who will be the most reluctant to change and help
them understand how this will benefit them (One of the most effective ways to
overcome reluctance is to help each reluctant user to find one or two things that will
make their job easier so that they begin to see the power of the system for
themselves).
Short, medium and long-term goals need to be established and monitored for each
department and for the organization as a whole. Companies may find that they want to
track one metric for inside sales, another for outside sales, and a third for marketing.
Some companies have chosen to motivate users by offering incentive compensation
related directly to system utilization. Each organization is unique and goals and
incentives need to be thought through on a case-by-case, department-by-department,
and possibly user-by-user basis.
7.4 Invest Time In Training
Training is a major component of long-term success and should be budgeted for
sufficiently. Having the software provider spend one day training users is not enough
to be successful. Training should be divided into multiple stages designed to fit the
particular user group needs. Those stages may include beginner user training,
advanced training, trainer training, goal-specific training, utilization reviews, and
users groups to name a few.
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Beginner User Training: Most users’ first experience with their new CRM tool will
be during beginner user training which is intended to get users comfortable with all of
the basic functionality of a system and should be mandatory for all users. Users will
not become an expert in one day. Use this time to ensure that everyone is comfortable
enough with the system that, once the trainer has gone, they can do all of their routine
tasks in the new system. Breaking up beginner user training into multiple groups over
multiple days will allow users to use the system while the trainer is still available, and
to work through real life situations.
Trainer Training: Some organizations opt for training a core group of user
champions who will then be responsible for training the entire team. This allows
companies to rely more heavily on internal resources. This may require an additional
upfront expense but should allow minimization of future training costs, especially for
larger user groups.
Utilization Reviews: After beginner user training plan to set up utilization reviews,
both internally and with the solutions provider, to track usage and to uncover issues
before they become real problems. Most systems have built in tools to monitor
successful usage of the system. Typical questions that need to be answered are “Who
is using the system?” “Who is not using the system?” “What are they using it to do
and are they following the established standards?” “Are we achieving the goals we set
for ourselves and if not why?” “What additional assistance (training or consulting) do
we need from our solutions provider?” “What else should we be doing in the system?”
“Who else should be on the system that is not currently on the system?” By working
internally and with the software provider to track usage and monitor success and
failure throughout the user group, the Company will be able to maximize the benefits
of improved sales process management.
User Groups: Another component of success will be internal and external user group
forums. On some set interval (daily, weekly, biweekly), especially in the beginning,
internal user groups can be very useful to help team members learn from each other
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.
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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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Chapter # 8. CRM Success
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
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
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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.
8.2 Advice for Breeding CRM Success:
1. Buy the best package you can afford. Choosing a high-end system that allows for
growth is key, Monster.com's Liddell says. Monster.com has rolled out Siebel
Systems' sales force automation software to 800 users since implementing the
software in November 1998.
Where low-end packages break down is in their ability to handle complex definitions
of customers, he says. Monster.com established formal guidelines for defining
customers across divisions and applications so salespeople can access clean,
consistent data.
2. Choose wisely. Figure out who you need to reach and then find the software that
will help you accomplish that. Before settling on RightNow, USF scrapped a previous
CRM project a month into the implementation after concluding the software didn't
work the way the university wanted. Too often companies choose software before
they have defined the problem, Akin says.
"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.
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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
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
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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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Chapter # 9. CRM Products
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.
CRM products can be grouped into 5 general categories:
Customer/Partner Self-Service Systems: enable your customers, suppliers,
and/or partners to use the internet to gain information that is directly relevant to them.
This may include customized product elections, order status update, on-line order
entry, or self-guided query and response. Examples of these systems include email
response management systems, web personalization systems, web-based order-entry,
and web self-help.
Sales Force Automation Systems: provide tools for your sales people to
maintain their contacts, track sales prospects, provide sales forecasts, enter and track
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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.
Operational Billing/Order System Integration Systems: provide
integration (as well as migration) between customer-facing (front-end) applications
and the production (back-end) order-status and financial systems that contain the data
that clients and partners may seek. These systems are not only CRM systems, but
rather the components of larger software suites that may include CRM. Examples of
these systems are packaged accounting and manufacturing systems that have CRM
front-ends.
Technology-Enabled Lead Generation Systems: enable targeted marketing
based on client needs and/or past business trends. This lead generation could be
dynamic (emailing offers or customizing web content) or static (providing targeted
databases of clients by type). These systems include customer data mining, automated
marketing campaigns, and customer personalization tools.
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9.2 What Kinds of CRM Products Do What?
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9.3 How Much Do CRM Products Cost?
According to Erin Kinikin at GigaGroup, CRM (software only) costs vary as follows:
• A limited system (in terms of range of functions or customizability) usually
supports less than 50 users and costs around $500/user.
• 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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Chapter # 10. E-CRM
10.1 E-CRM: Delivering a Superior Internet Customer Experience
How one Internet retailer delivers the highest quality customer experience, builds
customer loyalty, and drives revenue
Retailing Healthcare and Pharmaceuticals on the Internet
In 1997, a billion-dollar retailer of pharmaceutical, health, and beauty products
decided to expand its business to the Internet, launching a web retail operation as a
division of its brick-and-mortar operation—the first in its industry to go online. As
with many of the early web-based forays into e-commerce, this site was deployed
primarily to establish a web presence for the company. The initial site was not
designed, however, to anticipate the high volume, high availability, and competitive
functionality required as traffic and content grew and new players entered the market.
The site, its applications, and its underlying infrastructure couldn’t scale to
accommodate thousands of orders per day, couldn’t be enhanced in web time, had
inadequate capability to support applications and was unstable as a whole. In addition,
the order fulfillment process was unable to scale to keep pace with growth of the
Internet business channel. The company decided to discard the entire “homegrown”
site and began again.
EMC and Its Partners Step up to Meet the Challenge
In 1999, the company turned to Oracle, EMC, and Cisco to help implement an e-CRM
application solution that could deliver:
• A highly available, scalable, secure, and manageable technology infrastructure that
would keep pace with rapidly changing customer numbers and market conditions
• Rapid time to market, as competitors had established a five to six month lead in site
functionality
• An outsourced, hosted site with an EMC Proven™ application service provider
(ASP) that could deliver a 24x7x365 service level commitment and technology on
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demand The resulting solution consisted of a highly functional e-CRM web site using
the Oracle CRM eBusiness Suite, built on a modular EMC Storage Area Network
hosted at a third party ASP data center location. The company implemented the
solution in three phases:
• The Implementation Phase—design and development
• The Production Phase—solution deployment and stabilization
• The Growth Phase—delivering more functionality to more users
Immediate, Significant Business Impacts
The company’s E-Infostructure enables the web site to keep pace with multiple
simultaneous inquiries from hundreds of concurrent users. The customer view is
simple, and the company has been able to increase its level of customer.
10.2 Customer Relationship Management, what really matters?
To run a successful customer support business that adopts customer centricity
approach demands control, control over process, technology and finally your staff.
Consistency and information sharing became on top of the Menu for many
organizations. Te core of any CRM initiative is the use of knowledge about customers
to either align your process with it or you align them with you. Knowledge must be up
to date and would be able to categorize, filter and sort every segment of it. Customers
may prefer to use e-mails, others use the telephone. And as we all know that some
customers do not feel comfortable with technology and demand a face to face
interaction.
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.
So, what really matters? …
Class A customer support centers characterized by the following:
• Customers’ information is up to date and accurately inserted in the data base, and it
is accessible to all customer facing points.
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• Staff has been carrying out customer support training and attaining in house
standards.
• Calls and e-mails responses are regularly audited and monitored to maintain level
standards.
• Internal process exceed customers expectations
• GAP analyses are carried out on regular basis (quarterly, annually…) for individuals
and also for processes.
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.
10.3 Customer Relationship Management
Customer relationship management (CRM) is the most talked about of the three
enterprise applications that are the focus of this paper. As the economy remains
sluggish and customers remain cautious, the need and desire to get closer to customers
are the primary means of differentiation in the marketplace. Companies seeking this
differentiation must ask the questions below.
1. What does getting “close” to customers mean?
2. How do we get close to customers today?
3. How do I drive or extract new revenue using CRM?
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
48

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
management “one-click” reporting capability on leads, problems in the pipelines,
breakdown of revenue by product, or other metrics can ensure a more successful
forecasting and market strategy implementation.
Hospitality industries also use CRM systems to get closer to customers. Customer
loyalty programs like frequent flyer and preferred guest programs can record
49

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
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
50

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.
10.4 CRM Analytics: Visualize Business Intelligence
A Slower Economy Demands Aggressive Business Intelligence
Methodology
Gone are the boom years of the 90’s when growth seemed unstoppable, no matter
what you did — or didn’t do. But now, more than ever, your business needs to be
more agile, more productive, and more profitable. You need to wring every iota of
useful information from the valuable business data gathered throughout your
enterprise, and use it to give yourself a competitive advantage. How can you
accomplish that? By implementing business intelligence (BI) software that gives you
deeper insight into your organization through greater understanding of the operations
of your company. In today’s competitive landscape, it is imperative that you
thoroughly understand and proactively manage your operations and your customers.
The slowdown in the economy has put pressure on IT information technology)
departments to demonstrate real ROI (return on investment) on any investments made
in new technologies. So where do you invest? In BI software. This investment
provides a direct positive impact on your profitability by allowing you to harness the
power within the most important untapped asset you already have — your data. Your
peers agree. According to a recent Business Week article (June 24, 2002), the BI
software industry grew by 9% while the software industry as a whole grew only 7.7%.
BI software allows an organization to access, to analyze, and to share information
51

across the enterprise using tools and analytic applications. It is the key to bridging the
information gap in decision makers’ minds. It is the difference between experiential,
anecdotal knowledge and actual data. BI can provide visibility into data about your
operations that can generate quick payback engendering better decisions when and
where they are needed. BI software takes advantage of the investments you may
already have made in systems such as CRM and ERP by extracting value from the
data collected within them. CRM analytics is a specialized area of BI software that
focuses on analyzing and maximizing the lifetime value of customers. Most
importantly, CRM analytics can help you improve your bottom line by providing
better insight into your customers. When budgets are tightest, organizations need to
understand their existing customers in order to retain them and to maximize lifetime
value. This minimizes the significant costs of attracting new customers. Cultivating
relationships with your high-value customers can have a direct and immediate effect
on your profitability.
10.5 Using CRM Analytics to Unlock Customer Data
Operational CRM has delivered benefits to many organizations over the last several
years. By automating customer-facing processes such as sales, support, and campaign
management, organizations have gained efficiencies in their customer operations.
Tremendous amounts of data have been collected about customers and how they
interact with your organization at these touch points. But the holistic understanding of
a customer’s behavior over time – the ability to identify, analyze and predict changes
in behavior – has been locked inside the vast vaults of CRM and ERP data storage
systems.
52

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.
10.6 Accessible, Flexible, Graphical Analytic Tools are a Pre-
requisite
Useful analytical tools must deliver simple, robust functionality. The tool should
provide visual techniques that enable any user to easily identify trends, opportunities,
and problems without digging through pages of tabular numbers. Modern
requirements should include Web-based queries, with the delivery of HTML pages
that have hot spots for further rill down. A CRM analytics portal should provide easy
access to key business and customer metrics. These capabilities allow you to
democratize knowledge of the customer, putting it in the hands of the front-line
managers tasked with making decisions that affect customer relationships.
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.
54

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