Concepts and Tools Concepts and Tools
CUSTOMER RELATIONSHIP MANAGEMENT: CONCEPTS AND TOOLS
CONCEPTS AND TOOLS
Chapter 17
Organizational issues and Organizational issues and Customer Relationship Management
Concepts and Tools Concepts and Tools
Why ‘strategy before structure’?
Structure can both enable and disable Structure can both enable and disable
strategic action
1 difficult to promote creativity in a rule-bound bureaucracy
1 bureaucracy is conducive to obtaining compliance to standardised business processes
standardised business processes
1 struggle to become customer-centric in a functional organization where specialists report upwards within
il b t d t h t i i ht h i t ll silos, but do not share customer insight horizontally across silos.
There is no single correct structure that is There is no single correct structure that is
suitable for all organisations.
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Key strategic goals in CRM-driven organizations
Acquisition of carefully targeted customers or Acquisition of carefully targeted customers or
market segments
The retention and development of strategically The retention and development of strategically
significant customers or market segments The continuous development and delivery of The continuous development and delivery of competitively superior value propositions to the selected customers
the selected customers
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Structures need to cope with extreme turbulence
Until 1970s, the business environment was Until 1970s, the business environment was
relatively stable.
Today: immense volatilityy y
1 Deregulation 1 Global competition
1 New technologies providing new routes to market 1 New national market-economies
1 Highl demanding and ell ed cated c stome s 1 Highly demanding and well-educated customers
Structures need to be invented that allow organisations to sense and respond to change organisations to sense and respond to change with great speed
Conventional management structures
1 Functional organization structure 1. Functional organization structure 2. Geographic organization structure
3 Product brand or category organization 3. Product, brand or category organization
structure
4 M k t t b d i ti
4. Market or customer-based organization structure
5. Matrix organization structure
Functional structure
Sales, marketing and service specialists report to a , g p p functional head
Specialists: market analyst, market researcher,
campaign manager, events manager, account manager, service engineer, and sales support specialist.
Small to medium sized businesses with narrow product Small to medium sized businesses with narrow product
ranges tend to prefer the functional organization. The three core CRM - sales, marketing and service – The three core CRM sales, marketing and service
may or may not co-ordinate their efforts, and share their customer knowledge by depositing it in a common
d b
customer database
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Geographic structure
One or more of marketing, selling and service One or more of marketing, selling and service
functions organized on territorial lines
1 More common with selling and service than marketing
When customers are geographically dispersed and value face to face contact with
and value face-to-face contact with salespeople, there is a clear benefit in salespeople also being geographically salespeople also being geographically dispersed.
Where service needs to be delivered at remote Where service needs to be delivered at remote
locations, service may also be distributed geographically
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
CRM disadvantage of geographic organization
There may be many different customer types There may be many different customer types
in a single geographic area.
1 A salesperson selling industrial chemicals might have 1 A salesperson selling industrial chemicals might have to call on companies from several industries such as textiles, paint, or consumer goods manufacture. 1 The applications of the sold product may be diverse 1 Buying criteria of the customers may be quite
diff t different.
Salesperson develops neither customer-, nor
d t ti
Concepts and Tools Concepts and Tools
EMC delivers remote customer service
EMC sells information storage, systems, networks and services worldwide. EMC
provides proactive and pre-emptive customer service.
EMC systems are configured to identify problems.
1 If an EMC system detects an error or unexpected event, no matter how small, it will automatically call home to the support centre that is available 24/7 home to the support centre that is available 24/7. Staff immediately research the issue by dialling back into the system. y
Over 90% of service calls are resolved remotelyy
Concepts and Tools Concepts and Tools
Product, brand or category structure
This structure common in companies that This structure common in companies that
produce a wide variety of products, especially when they have different marketing, sales or when they have different marketing, sales or service requirements.
1 Examples: Procter and Gamble, Unileverp ,
Product or brand managers responsible for developing marketing strategy for their developing marketing strategy for their products
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Disadvantages of product/brand management
An expensive way to market offerings. An expensive way to market offerings. In a worst-case scenario, different product
managers might be calling on the same g g g
customer on the same day.
1 gives impression of a lack of coordination, and 1 disregard for the value of the customer’s time.
Customer may also experience varying levels
f i f th diff t b d
of service from the different brand- or product-managers.
Some companies have tried to co ordinate Some companies have tried to co-ordinate
their product-marketing efforts by appointing product group managers to an oversight role product group managers to an oversight role
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Category management
A response to brand and product management A response to brand and product management
disadvantages
Category manager works with customer and Category manager works with customer and
product/brand managers to create a category solution for customer
solution for customer
1 Many also enlist competitors
Objective: improved value for customer and Objective: improved value for customer and
Category management at Kraft Quality R & D Customer Category Managers Process Team Engineering Operations Finance Category Business Category Sales Director Marketing Information Customer Business Supply Chain Specialist Category Planner Team Leader Materials Manager Business Director
Finance ConsumerPromotion
Business Manager Retail Sales Manager Space Management Specialist Plant Manager Brand Manager Sales Information Specialist PROCESS TEAMS (dedicated to each product category) CATEGORY TEAMS (dedicated to each product category) CUSTOMER TEAMS (dedicated to each major customer) p g y) p g y) j )
Source: George, Michael, Anthony Freeling & David Court “Reinventing the Marketing Organization” Source: George, Michael, Anthony Freeling & David Court Reinventing the Marketing Organization
McKinsey Quarterly, No 4, 1994
Market or customer-based organization structures
Common when companies serve different customers or p customer groups with different requirements or buying practices
1 IBM has identified 14 different customer groups Managers:
1 Market managers segment managers account managers 1 Market managers, segment managers, account managers Role and responsibilities:
1 Develop expertise on market and customer requirements 1 Develop expertise on market and customer requirements 1 Ensure organization creates and delivers the right value
proposition
Trend towards national, key or global account management
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Matrix structures
Matrix structure often the preferred when a Matrix structure often the preferred when a company has several different products lines serving several different customer groups. Matrix variations include
1 Market- or customer-based managers on one side,
d d t th th
and product managers on the other
1 Channel managers on one side, and product managers on the other
managers on the other
1 Geography on one side and industry on the other
Cross-functional teams may be prelude to y p
matrix structure
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Virtual and network structures
No longer a simple matter to know where an No longer a simple matter to know where an
organization’s boundary lies.
The role of IT in a stable corporate The role of IT in a stable corporate
environment is to allow senior management to control information and decision-making
control information and decision making
As environments become more turbulent, and as companies attempt to understand and forge as companies attempt to understand and forge network relationships, the role of IT has
changed changed
Concepts and Tools Concepts and Tools
Role of IT in more turbulent environments
IT’s role is to provide information that enables IT s role is to provide information that enables
a company and its network members to:
1 Sense and respond rapidly to changes in the 1 Sense and respond rapidly to changes in the
business environment
1 Collaborate to develop and deliver better customer value propositions
1 Enhance and share their learning about customers 1 Improve their individual and joint cost profiles
IT is a substitute for a more formalized and centralized organization structure linking networked or virtual organizations.
Concepts and Tools Concepts and Tools
IT’s influence on organizational design
IT allows information to be shared right across IT allows information to be shared right across
an organization…..
1 vertically, horizontally and laterally 1 vertically, horizontally and laterally
…. and outside an organization with network members
members.
Structure is therefore no longer tied to traditional vertical reporting relationships traditional vertical reporting relationships IT therefore enables organizations to adopt
decentralized and networked structures decentralized and networked structures
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
What can an IT-enabled organization do?
An IT-enabled organization is able to take any sales or g y service query from any customer in any channel and resolve it immediately.
Among the preferred characteristics of such a design are:
1 A customer interface that is consistent across channels and 1 A customer interface that is consistent across channels and
easy to use whatever the technology or device 1 A first point of contact that takes responsibility for
resolving the query
1 A back-end architecture that enables the contact point to obtain relevant customer and product information
obtain relevant customer and product information immediately
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Traditional personal contact patterns 1. Controlled contact pattern
1 all contacts channelled through a single point of contact 2. Coordinated contact pattern
1 Departments or individuals have direct personal contacts ith d t t i di id l th th id
with departments or individuals on the other side 1 One department or person co-ordinates contacts 3 Stratified contact pattern
3. Stratified contact pattern
1 individuals and departments on both sides manage their own contacts with their equivalents on the other side 1 Stratified contact pattern, where individuals and
departments on both sides of the dyad manage their own contacts with their equivalents on the other side of the dyad contacts with their equivalents on the other side of the dyad
IT ‘s influence on contact patterns
IT particularly web-technologies enables IT, particularly web technologies, enables many-to-many communications between contacts on the buyer’s and seller’s sides contacts on the buyer s and seller s sides
Key Account Management (KAM) basics
There is a major trend towards key account j y
management, national account management, regional account management and global account management KAM is a structure that facilitates the implementation of KAM is a structure that facilitates the implementation of
CRM at the level of the business unit
A key account is an account that is strategically significant
Are two ways to implement KAM.
1 A single dedicated person is responsible for managing the 1 A single dedicated person is responsible for managing the
relationship, or
1 A key account team is assigned
9 h b hi i h b f ll d di d i l k 9 The team membership might be fully dedicated to a single key
account, or may work on several accounts
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Drivers of KAM
1 Greater concentration of buying power 1. Greater concentration of buying power 2. Globalisation
3 Vendor reduction programs 3. Vendor reduction programs 4. Customer expectations
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Benefits from KAM
1. Doing large amounts of business with a few customers g g offers considerable opportunities to improve efficiency and effectiveness
2. Selling at a relationship level produces
disproportionately high volume, turnover and profit. 3 Repeat business can be considerably cheaper to win 3. Repeat business can be considerably cheaper to win
than new business
4. Long-term relationships enable the use of facilitating 4. Long term relationships enable the use of facilitating
technologies such as extranet-enabled portals, EDI and shared databases
5. Familiarity and trust reduce the need for checking and make it easier to do business
Concepts and Tools Concepts and Tools
Issues in key account management
Identifying Analyzing Selectingsuitable
Building operational bili i Identifying key accounts Analyzing key accounts suitable strategies for key capabilities for managing key accounts accountskey
Concepts and Tools Concepts and Tools
A model of KAM development
m ent ers ex Synergistic - KAM o lve m u stom e C ompl e Partnership - KAM y g o f inv o ith cu C Mid - KAM L evel o w e Early - KAM L S impl e Pre - KAM Transactional Collaborative S
Nature of customer relationship
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Bow-tie structure for Early-KAM
Marketing Marketing
Logistics Key Main Logistics
Operations
Account
Mgr Contact Operations
Finance Finance
Selling
company Buying company
company company
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
Diamond structure for Partnership-KAM R&D R&D
Admin Admin
Operations
Key Operations Main
Outbound Key Act. Mgr Inbound Main contact logistics logistics Board
Virtual organization for Synergistic-KAM Operations Operations focus team Finance Key Main Finance focus team R&D focus team Key Acc. Mgr Main contact Market research focus team Quality focus team Joint board meetings
Selling company Buying company
Team selling
Form of selling associated with KAMg
Key account team might include specialists that can sense and respond to customer concerns over a variety of issues
1 engineers, logistics, research and development, sales. Team selling ma c oss o ganisational bo nda ies Team selling may cross organisational boundaries
1 Representatives from two or more partnering organisations can come together to pitch for new business or service an g p established customer.
Partner Relationship Management systems facilitate
h t b ki t j t d
such arrangements by making customer, project and product information available to all partners
Customer Relationship Management: Customer Relationship Management: Concepts and Tools Concepts and Tools
A matrix organisation Customer managers 1 2 3 4 A Product B managers C D E
