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CRM Customer Relationship Management

CRM Customer Relationship Management. Rich DuBose, Arnold Kelly, Mellisa Thom and Ben Wylie. Outline. General elements of CRM Spending and trends CRM ROI Why some company succeed and others fail at CRM Industry uses 12 key applications Top 5 providers of CRM

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CRM Customer Relationship Management

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  1. CRMCustomer Relationship Management Rich DuBose, Arnold Kelly, Mellisa Thom and Ben Wylie

  2. Outline • General elements of CRM • Spending and trends • CRM ROI • Why some company succeed and others fail at CRM • Industry uses • 12 key applications • Top 5 providers of CRM • Mini case studies - Square D and Graybar • Argosy Gaming case study • Don’ts of CRM • Best practices

  3. CRM Defined • “CRM is a technology-enabled business strategy whereby companies leverage increased customer knowledge to build profitable relationships.”(1) • CRM is first and foremost a business strategy, not merely a software package. (1) A Strategic Framework for CRM, by Patrick Sue and Paul Morin. February 2001

  4. Functional Elements of CRM • Customer Service • Customer Inquiry • Customer product support • Customer Information Management • Call Center Effectiveness • Trouble Analysis & Resolution • Billing • Sales • Sales Automation and Management • Customer Profiling • Account Management • Opportunity Management • Product, Price, and Contract Negotiation • Sales Alignment and Incentives • Marketing • Market Research • Product Development • Market Assessment • Market & Customer Segmentation • Product Lifecycle Management • Product Pricing and Profitability Customer Relationship Management Solutions • Data Warehouse Management and Decision Support • Integrated Customer Management Systems

  5. Marketing Functionality • "Half the money I spend on advertising is wasted; the trouble is I don't know which half." John Wanamaker, the department store pioneer, stated in 1886 • A CRM can greatly enhance a company’s marketing efforts in the areas of : • Market research • Price planning • Product development • Market assessment • Customer segmentation • Product lifecycle

  6. Marketing Functionality Cont... • Example: Hewlett-Packard • Previously, HP sent out mass emails to update customers on sales offers, new products, technical support, etc. • After implementing a CRM, these efforts become much more customers specific • 85% of customers said they were satisfied with the content of the emails and additional revenue increase by $15M

  7. Sales Functionality • Common functions implemented: • Provide the sales force with detailed and current information, such as: • Buying preferences • Pricing • Inventory levels • Billing information • Automate the sales processing activities (SFA).

  8. Sales Functionality Cont... • Example: Empire Blue Cross and Blue Shield • Extremely complex and highly manual sales process • 33 redundant audit checks and took approximately 27 days • On-line quote system developed • Sales processing steps streamlined and automated

  9. Service Functionality • CRM can be used to capture such things as: • Customer’s complaint history • Outstanding customer services requests • Billing information • Customer preferences • Tracking unresolved issues • Service representatives are much more prepared to service their customers

  10. Service Functionality Cont... • Example: Marriott International • Collect data on customer preferences and spending • Data shared by all Marriott Hotels nationwide • Once you check in they already know your smoking preference, which floor you prefer, any allergies, complaint history, whether you drink, etc.

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

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

  13. Sales Support Front line Collecting and integrating data from every point in the organization will allow customer relationship, life cycle and event information to be analyzed and driven through the marketing organization to the front-line, enhancing sales and retention. Enable Enterprise-wide Information Integration Phone Customer Branch Mobile Sales Force Internet • Customer Touch Points • Customer relationship data gathering • Delivery of customized service delivery or sales offers • Customer value information available for decisions • Product information and sales process automation enables effective targeted sales efforts • Relationship and contact information allows sales reps “know” each customer

  14. Demonstration

  15. Based on report by Aberdeen Group entitled “Worldwide CRM Spending: Forecast and Analysis 2001 - 2005”.

  16. Forces Driving Spending • “Only 7% of global companies have reached mature CRM deployments, indicating more spending to come.” (1) • According to Gartner Group “CRM remains one of the top three, if not number one, business priorities in 2001.” • “The average company loses 20% of their customers each year and the number is rising.” (2) (1) Data Warehouse Institute survey. CRM is Anything but DeadCRM Industry. June 2001 (2) Maximizing CRM Performance with Strategic Performance Measurement by James Brewton

  17. Forces Driving Spending Cont... • “It costs up to 10 times as much to acquire a new customer as it does to keep an existing one.” • Reasons growth is not higher: • Hard to prove ROI • Expensive customization • High failure rate • Slow economy has force IT budgets to tighten Maximizing CRM Performance with Strategic Performance Measurement by James Brewton

  18. Trends in CRM • Mobile CRM (mCRM) • PalmPilots, web phones, and pagers are becoming less expensive and more widely used • Siebel and Sprint recently signed a join venture selling wireless CRM • Domestic businesses are expected to spend $74B on wireless service by 2005 Wireless CRM: Strings Attached by Marc Songini Computer World, November 2001

  19. Trends in CRM Cont... • Netsourcing - Application Services Providers (ASPs) • ASP work better in smaller organizations - less customization • CRM applications are the second largest segment of hosting sales, led only by E-commerce applications • By 2003, Forrester predicts hosted CRM applications will account for almost $2.5 billion in revenue The Forrester Report by Stacie S. McCullough. December 1999

  20. CRM ROI Source: Swift, “Accelerating Customer Relationships: Using CRM and Relationship Technologies

  21. CRM ROI Cont… • Possible Returns • Up to 10 X’s more costly to generate revenue from new customer than existing customer • 5% Increase in retention rate can increase company profits by 60-100% • 6 X’s more costly to service customer through a call center than via the internet • Loyal customer referrals generate business at little or no cost Source: Swift, “Accelerating Customer Relationships: Using CRM and Relationship Technologies”

  22. CRM ROI Cont… • Investments • Upfront costs • Takes time • Need to create measuring metrics • It is marketing rather than sales • Switching from product focus to customer focus Source: Swift, “Accelerating Customer Relationships: Using CRM and Relationship Technologies”

  23. Succeeding VS Failing • Keys to Success • Managing the data • Managing the customer • Business process before implementation • All levels must buy in • Flexibility on the company’s side • Relationship vs database Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM”

  24. Succeeding VS Failing Cont… • CRM Mistakes • Implementing CRM before creating a customer strategy • Rolling out CRM before changing your organization to match • Assuming that more CRM technology is better • Stalking, not wooing, customers Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM”

  25. BMC “Learning from Failure” • BMC Software • Systems-management software provider • Based in Texas • Failed Two Times Before Succeeding Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM”

  26. BMC’s Failures • No research • No top-management involvement • Software would change culture Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM”

  27. BMC’s Successes • Recreated the strategy • Communicated benefits across the company • Changed the culture not just the process Source: Rigby, Reichheld and Schefter, “Avoid the Four Perils of CRM”

  28. Industry Uses • Airlines • AA • Aadvantage Frequent Flyer Program • Banks • Barclays • Realize profitability of customers • Car Rental Companies • Enterprise • ECARS System Source: Swift, “Accelerating Customer Relationships: Using CRM and Relationship Technologies”

  29. Enterprise Computer Assisted Rental System (Ecars) - introduced in 1992 now supports 1.4 million transactions logged every hour Locates cars, tracks customer preferences, measures customer satisfaction ratings Uses Enterprise Service Quality Index(ESQI)to measure satisfaction - compensation for management is tied to results

  30. Enterprise uses its Automated Rental Management System (ARMS) to allow insurance companies to access rental information Allows agent to book reservations, EFT, and reporting to support claims processing Allows electronic monitoring of repair shop progress (CIO Magazine - Nov 2000)

  31. Gartner’s 12 Key Application Components

  32. Opportunity Management System (OMS) Sales Configuration System (SCS) Partner Relationship Management (PRM) Interactive Selling Systems(ISS) Gartner Nov 2001 Gartner’s 12 Key Application Components

  33. Gartner’s 12 Key Application Components • Incentive Compensation Management • Content Management • E-Service • Call Management Gartner Nov 2001

  34. Gartner’s 12 Key Application Components • Field Service and Dispatch(FS/D) • Personalization • Data Mart/Analytical • Campaign Management System Gartner Nov 2001

  35. Today, for a B2B CRM application suite, three vendors can deliver features across all 12 key functionality components: Siebel, Oracle and SAP • Gartner Nov 2001

  36. Feature ratings are based on the current shipping versions of the following vendors' CRM suite offerings: • Clarify eFrontOffice v.10 by Amdocs (i.e., an agreement for Amdocs to purchase Clarify CRM products from Nortel E-Business is expected to close by February 2002.) • E.5, release 5.5 by E.piphany • Kana iCARE by Kana • Oracle CRM 11i v.5 by Oracle • PeopleSoft 8 CRM by PeopleSoft • SAP CRM 3.0 by SAP • Siebel 2000 by Siebel Systems The scores in Figure 1 are based on vendors scoring 1 point for a 1/4 circle rating, 2 points for a 1/2 circle, 3 points for a 3/4 circle and 4 points for a full circle with 48 points equal to 100 percent. In the past year, SAP's scores improved the most, followed by Amdocs/Clarify, Siebel, PeopleSoft then Oracle (see Figure 2). Today, Gartner estimates that Siebel still provides almost twice as many features as the next closest competitors; and Siebel remains the only vendor to meet more than 50 percent of the horizontal functionality requirements for a B2B large enterprise CRM application suite. • Gartner Nov 2001

  37. North American CRO Magic Quadrant - Gartner March 1, 2002 CRO stands for customer relationship optimization, and it is the alleged potential new direction for customer relationship management (CRM). "It's no longer about managing your customers," the NRF session description stated. "It's about strategically investing in customer segments that will make the most money." http://www.computerworld.com/itresources/rcstory/0,4167,STO67518_KEY51,00.html http://www.gartner.com/reprints/ncr/104847.html

  38. Key CRM Providers • PeopleSoft • Siebel • SAP • Oracle • Convergys

  39. Leading provider of enterprise applications that tie together customers' back-office operations Software addresses such tasks as accounting, human resources, manufacturing, and supply chain management Services such as consulting, maintenance, and training account for about two-thirds of sales Customer relationship management software has rekindled licensing sales growth and helped offset a slowdown in the broader enterprise software market, but it has also exposed PeopleSoft to more direct competition with companies such as Oracle and Siebel Systems. (www.hoovers.com) Headquarters: Pleasanton, CA 2000 revenue: $1.7 billion Customers: 4,600 Employees: 8,000 Worldwide

  40. World's leading provider of eBusiness applications software Provides an integrated family of eBusiness applications software, enabling multichannel sales, marketing, and customer service systems to be deployed over the Web, in call centers, in the field, through reseller channels, and across retail and dealer networks Sales and service facilities are located in more than 32 countries. Founded: 1993 2001 revenue: $2.05 billion 2001 net income: $255 million Employees: 7,400+

  41. 29 Years in the Business of E-Business 10 Million Users, 44,500 Installations, 1,000 Partners, and 21 Industry Solutions. Founded in 1972 - recognized leader in providing collaborative e-business solutions Headquartered in Walldorf, Germany World's largest inter-enterprise software company, and the world's third-largest independent software supplier overall Employs over 27,800 people in more than 50 countries 2000 Sales (mil.): $5,881 1-Yr. Sales Growth: 14.3% 2000 Net Inc. (mil.): $596 1-Yr. Net Inc. Growth: (1.6%) 2000 Employees: 24,480 1-Yr. Employee Growth: 12.8%

  42. World's leading supplier of software for information management, and the world's second largest independent software company Headquartered in Redwood Shores, California First software company to develop and deploy 100 percent Internet-enabled enterprise software across its entire product line: database, server, enterprise business applications, and application development, and decision support tools. 2001 Sales (mil.): $10,860 1-Yr. Sales Growth: 7.2% 2001 Net Inc. (mil.): $2,561 1-Yr. Net Inc. Growth: (59.3%) 2001 Employees: 42,927 1-Yr. Employee Growth: 3.9%

  43. (CVG) is a provider of outsourced billing and customer management solutions, which encompass activities such as targeting, acquiring, serving and retaining customers on behalf of its clients. Employees: 46,000 Market Cap (Mil) $ : 5,155.226 Complete Financials: Dec 2001Updated: 04/05/2002 Revenues For the FY ended 12/31/01, increased 6% to $2.32B. Net incomedecreased 27% to $138.8M.

  44. Mini-Case Studies

  45. Began in 1902 , is a market-leading supplier of electrical distribution, industrial control and automation products • A new safety switch with the company's new logo, a "D" (for Detroit) inside a square became the industry standard and many customers began asking for "the square D switches." The trademark was developed in 1915 and the name Square D Company was formally adopted in 1917. To this day, Square D is one of the few companies ever named by its customers. • On May 24, 1991, Square D Company merged with Schneider Electric of Paris, France the world's leading manufacturer of electrical distribution and industrial control and automation products and systems, and the only manufacturer dedicated to the distribution and control of electricity. (www.squared.com)

  46. Web server-enabled equipment for the plant floor Equipment, including power monitors and PLCs, can automatically alert plant officials to emerging problems by audible alarm or e-mail Built-in server technology allows plant personnel to remotely monitor, diagnose and correct equipment problems and remotely change set points E-Way Online quote and order management system for distributor network Check pricing, stock availability, and obtain shipping information Digest Plus Selector Online product selection with more than 66,000 part numbers Search an electronic version of Square D's catalog based on the electrical characteristics of the application Generates a bill of materials to send to the distributor of choice for pricing and ordering (http://www.controleng.com/archives/news/2000/july/gm0720a.htm) Information Technology

  47. An employee Intranet Powered by an Infoseek Corp. search engine. The site includes everything from employee telephone directories to spec-writing tools and news on customer-segment marketing activities. Employees can access the site remotely Customer Information Center Uses sophisticated customer relationship management (CRM) technology to give technicians instant access to a complete customer history, and knowledge management and case management tools to access a database of technical solutions to almost any question Links customer service representatives and technical experts around the country in a virtual technical support center through Soft Phone technology from Lucent. Extended nationwide in late 1999, the CIC now answers more than 13,000 calls each week from customers, distributors and employees. (http://www.controleng.com/archives/news/2000/july/gm0720a.htm) Information Technology

  48. Began in 1993, after Schneider Electric acquisition Reorganized the company’s three basic business units around customer segments - Industrial, Residential, Construction, and OEM Only after internal systems were refocused on the customer did Square D start using high-tech applications to upgrade its customer-facing processes According to Chris Curtis, VP of US marketing, managers were taken out of their line jobs for months at a time to understand issues involved in implementing the software In 1996, $75 million was invested in an order-management system that let sales engineers create proposals for customers based on what the factory floor could deliver (Harvard Business Review - Feb 2002) Successful CRM Implementation

  49. World leader in collaborative (CRM) solutions that increase customer revenue, profitability, and customer loyalty • Transformed how organizations support their customers, partners and associates at more than 500 organizations representing over 100,000 users. • Relavis eBusinessStreams - CRM automation that allows an organization to efficiently and effectively interact with their customers, prospects, partners and internal associates • Received the 2001 IBM Beacon award for "Greatest Business Impact," and the 2001 Lotus Beacon Award for "Best eBusiness CRM Solution." Relavis is honored to have won the Beacon Award seven times • (www.relavis.com) "A tremendous benefit from using OverQuota is that we are able to use existing infrastructure for workflow communications. We have been using Lotus Notes in our worldwide operations since 1998," said Lee Chong Leong, telecommunications manager, Asia Pacific, Schneider-Electric.

  50. In 2001 Graybar selected the mySAP.com(R) e-business platform to run its business systems applications One of the largest ERP projects in U.S. industry Will deploy the entire suite of mySAP.com solutions including mySAP(TM) Customer Relationship Management mySAP(TM) Supply Chain Management mySAP(TM) Human Resources mySAP(TM)Enterprise Portals mySAP(TM) Business Intelligence Graybar’s new platform will run on IBM hardware DeLoitte Consulting is assisting in implementation

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