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.
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.
1.4 Introduction
Customer Relationship Management - 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.
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.
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
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
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.
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.
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.
Once you've identified the likely vendors to deliver the best solution for you, you'll want to check their references - and this doesn't mean just reading case studies on their Web sites. Look to independently developed case studies and your own interviews with references to learn about their decision process, project successes and challenges, and whether or not their spending - and benefits - met expectations.
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.
By and large, there's no such thing as a bad CRM solution. Most solutions deliver value when they're chosen based on clear business needs and deployed correctly. Once you've identified your CRM needs and your short list, there are a number of factors to consider to help you make the right solution decision.
User Adoption
In evaluating the type of CRM solution that will be best for your organization in terms of user adoption, you'll want to consider two key factors:
• The willingness of users to adopt the application. Adoption can often be as much about politics and culture as it is about technology. Successful adoption will also depend on how much users will have to change their normal way of doing work to use the solution.
• The technology ability of potential users. Many CRM solutions are complex and difficult to use; others have a more intuitive look and feel. Choose a solution that fits the abilities of your users.
Once you've determined where your organization fits, you'll want to consider both the complexity of the solution and ease (or difficulty) involved in adding and evolving functionality over time as your needs change and your users become more comfortable with the solution. Here are some red flags you should look out for in evaluating solutions in terms of user adoption:
• Plans for extensive customization
• Multiple components that will be integrated to meet your needs • Lack of a track record supporting "your kind" of sales reps • Functionality planned "for the next release"
• An extensive training program
• Ongoing consulting requirements for any changes or updates
Cost
In CRM, "you get what you pay for" isn't always true. In fact, many companies in the past have overspent on CRM components and features that never delivered value to their users - if they even made it out of the box. You'll have the most success with a measured approach that doesn't have to include a hefty initial license fee.
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:
• Are you paying less, more, or the average annual industry maintenance? If you decide to stop paying maintenance in the future, does your contact support that? • If you're purchasing multiple modules at the same time, do you have a clear view of the cost of each item? Are you sure you should be buying them all now, or would a phased approach be better?
• What commitment has the vendor made to your deployment time line? If a third party is involved, how are the deployment risk and responsibility being shared?
Deployment
Piloting a CRM solution can be a great way to judge both whether or not the solution will work for you and how flexible and agile the solution (and vendor) is in responding to specific needs. Most hosted solution vendors offer a free or nearly free pilot option today; depending on the level of customization and integration needed, a pilot of an internal solution before you buy may or may not be possible.
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.
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.
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.
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
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.
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:
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.
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.
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 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
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.
• 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 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.
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 offeredhere to track behavior on a Web site and allow tailoring of the contact experience, or generation of specific cross-selling opportunities, based on this behavior. Inbound and outbound e-mail management capabilities are also becoming popular components of the marketing automation suites.
Let's take a closer look at the marketing automation component because it has been positioned as the solution for all CRM analytics.
Campaign Management
Segmenting customers, generating targeted marketing campaigns for these segments and tracking results are important parts of CRM analysis. Integrated MA tools provide these capabilities and provide campaign offers and results directly to the customer sales and support processes. Incorporating offers and solicitations into the common contact repository and prompting contact agents to follow-up on campaigns can yield dramatic benefits. Some of the features provided are:
• Planning marketing activities and developing campaign hierarchies. • Outlining marketing campaign objectives.
• Defining campaign success measurements.
• Coordinating multiple channels and event triggers to automate response actions.
• Building and testing sample campaigns on a subset of customers. • Storing and reusing content from previous marketing campaigns.
• Measuring campaign effectiveness by linking directly to call center, front-line employees and sales force.
• Importing third-party target lists.
• Tracking fulfillments supplied to the client via each channel to avoid duplication and maximize effectiveness.
• Tracking customer inquiries related directly to campaigns. • Tracking sales force closures related directly to campaigns.
Internet Personalization
Personalization is the ability to track and respond to customers in an individualized fashion based upon their past contacts and behavior. The true value of personalization in CRM is when it extends beyond the Internet to encompass all customer contacts
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:
• 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.
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 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
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. • 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 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.
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. 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 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.
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 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.
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.
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.
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.
