Exercise questions

1. What factors will you consider when measur-ing the ROI of CRM investments?

2. What are advantages and disadvantages when implementing CRM on an organizational basis versus on a limited functional basis (e.

g., sales force only)?

3. What are the various components of the CRM architecture from an operational perspective?

4. What analysis is involved in assessing the value of a customer?

5. What customer backlashes can be expected when a company introduces CRM practices?

What are the cautionary steps that you would advise companies to take to avoid these?

Minicase 4.1:

Implementing CRM in the Fast-Moving-Consumer-Goods Industry

Henkel is a globally operating group of companies, offering a wide range of con-sumer goods extending from detergents, household cleaners, cosmetics, toiletries and adhesives. In Europe, Henkel has held a leading position for decades in the detergents and household cleaners market

4.7 Exercise questions 83

with brands such as Persil, Dixan, Vernel and Weißer Riese. In the US it is repre-sented with the Dial brand. In the hyper-competitive European retail markets, many of the large manufacturers such as Henkel, P&G, and Unilever have focused on improving and managing supply chain efficiency.

Part of this ongoing activity is the concept of category management, where manufacturers and retailers collaborate to improve the prof-itability of the category at the store level.

However, as an increasing number of firms are mastering the category management pro-cess, manufacturers like Henkel are looking how they can differentiate themselves fur-ther. This is where many of them have started to experiment with customer rela-tionship management practices. The envi-ronment in which these companies operate is characterized by branded products, low absolute margins on a per product basis, and lack of direct consumer contact. In line with the general CRM idea, the goal of a CRM approach would be to identify and target high value customers and to then to devise a retention or growth strategy for them. In practice, this means to allocate dis-proportionate resources to these customers.

Whereas CRM is strongly established in direct to consumer environments such as banking or telecommunications, the exact nature of CRM in the FMCG environment is less clear. Therefore, the challenge that lies in front of firms like Henkel is to define, conceptualize, and implement a suitable CRM approach.

Questions:

1. How would you define and measure customer value to Henkel? Should it define value on the individual level or on the segment level?

2. What is the look and feel of CRM in the FMCG environment?

3. Is there a necessity for manufacturers to part-ner up with retailers in order to implement an effective CRM strategy?

Minicase 4.2:

B-to-B CRM Implementation at Deutsche Post World Net

Deutsche Post World Net (DPWN) is a fast growing international logistics service pro-vider. Its portfolio of companies includes its European B to B parcel service EuroEx-press, its express delivery service across the globe DHL, and its global logistics pro-vider (air, sea, and road transportation) DANZAS. Revenues for the three divisions in 2001 were approximately €15.5bn with an increasing portion (45%) coming from outside its home market Germany. The cen-tral problem of DPWN was that the three companies served in many cases the same customers without knowing this. Each com-pany has its own sales force and was calling simultaneously on many identical clients, for example virtually all of the large compa-nies in Europe. As one would expect, the organizational structures and systems sup-port (IT) was quite different for the three companies. DPWN felt that the group of individual companies could achieve much better results by coordinating their sales efforts, specifically, be being able to system-atically cross-sell its various products and services to the many existing clients. There-fore, the company set out to leverage the entire customer base across the three com-panies and to build an integrated customer management approach. Specifically, DPWN wanted to first create a key account manage-ment system that allows the three companies to coordinate their offerings and sales com-munication to the most important business clients. Given that the three individual com-panies offered complementary services, the objective was to present “one-face to the customer” with the idea to provide complete logistics solutions for these clients regard-less of the type of desired service. The

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challenges that would lie ahead of DPWN were to (a) create transparency across cus-tomer relationships and cuscus-tomer potentials, (b) to design cooperation processes across the three companies, and to (c) develop sales support tools.

Questions:

1. How would one define and measure the poten-tial for cross selling in this context?

2. If DPWN creates an integrated key account management system, which key processes need to be integrated across the three compa-nies?

3. What are the barriers to increased cooperation between the companies?

References

Bush, M. (2008). More Marketers Want to Get to Know You: CRM Surges as Brands Demand Measurable Results. AdAge. http://adage.com/article/news/mar-keters/130497/. Accessed 6 July 2011.

Bohling, T., Bowman, D., LaValle, S., Mittal, V., Nar-yandas, D., Ramani, G., & Varadarajan, R. (2006).

CRM Implementation: Effectiveness Issues and Insights.Journal of Service Research, 9(2), 184–194.

Jayachandran, S., Sharma, S., Kaufman, P., & Raman, P. (2005). The Role of Relational Information Pro-cesses and Technology Use in Customer Relation-ship Management. Journal of Marketing, 69(4), 177–192.

Peppers, D., & Rogers, M. (1997).Enterprise One to One.

New York: Doubleday.

Reitz, B. (2005), Worst to First to Favorite: The Inside Story of Continental Airline’s Business Turnaround.

Customer Management (MSI conference summary).

Cambridge, MA: Marketing Science Institute, 4–5.

Kumar, V., Ramani, G., & Bohling, T. (2004). Customer Lifetime Value Approaches and Best Practice Applica-tions.Journal of Interactive Marketing, 18(3), 60–72.

Churn rate is the number of existing customers who have left by the end of a given period divided by the number of existing customers at the beginning of the respec-tive period.

Rust, R., Lemon, K., & Zeithaml, V. (2004). Return on Marketing: Using Customer Equity to Focus Market-ing Strategy.Journal of Marketing, 68(1), 109–27.

Moskowitz, M. & Levering, R. (2001). The 50 Best Com-panies to Work For.Sunday Times 9.

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Part III