customer relationship management prepared by: larry eisenberg ron fogarty doug marren

CCustomer ustomer RRelationship elationship MManagementanagement

Prepared by: Larry EisenbergRon FogartyDoug Marren

Greenberg, Paul, CRM at the Speed of Light, McGraw Hill 2001

Objective of Customer Objective of Customer Relationship Management Relationship Management

(CRM) Presentation(CRM) Presentation

Why topic is important to GM’s Define CRM Present a real world CRM case Learn about best practices to

implement CRM

What Makes CRM What Makes CRM Important to GM’s?Important to GM’s?

Worldwide CRM Spending, in 2002, is estimated to be $14 billion and $20 billion for 2005 (1).

Why is spending increasing? Because being “customer centric” through technology increases revenues, cuts costs, and offers strategic competitive advantages.

Your company may have or will implement some CRM applications. As a result of change, or potential change, let there be understanding.

(1) Source: Aberdeen Group, July 2002

What is CRM?What is CRM?

2 Part Answer:2 Part Answer:

1. CRM Is a Business Strategy: Focus on profitability, revenue and customer satisfaction by:

– Organizing your customers.– Fostering customer-satisfying behaviors and

implementing customer centric processes.

2. And Also A Technology: Should enable greater customer insight, produce more effective customer interactions and should integrate of all customer channels and back-office functions.

Ed Thompson, Gartner Group, CRM: The Past, Present and Future: YEA Presentation 03/2002

CRM GoalsCRM Goals

Cut Internal Costs– Improve your Processes

Ex: Remove customer hold times. Centralize data from every department

Increase sales– Automate the sales process– Perform more lucrative marketing campaigns

Gain A Competitive Advantage– Ex: Amazon.com Data Mining

Traditional Customer Facing Traditional Customer Facing SystemsSystems

Data centerData center

DataCenterData

CenterData

CenterData

Center

SalesContact Center Service

CustomerCustomer

Marketing/AdvertisingMarketing/Advertising

ContactCenter

ServiceSalesCustomer

DataWarehouse

DataWarehouse

DataWarehouse

Data

Warehouse

Patricia Seybold, An Executive’s Guide to CRM: How to EvaluateCRM Alternatives by Functionality, Architecture & Analytics, March 2002, pp 7-10.

Marketing

With This Strategy:With This Strategy:

From a Customer-Viewpoint:– We present One Face to the Customer

From a Knowledge-Viewpoint:– We become more efficient.

If HP knew what HP knows, we would be three times as profitable.

From a Campaign Management-Viewpoint:– We target advertise based on demographics

Charles Despres and Daniele Chauvel, “How to Map KnowledgeManagement” Mastering Information Management, Prentice Hall 2000, pg 170

Sales Force AutomationSales Force Automation

Contact Management Name, address, titles, etc.

Account Management Corporate Information

Sales Process Management A map that shows every step of sales process

Communication Tools generate quotations, proposals, trip reports, expense

reports, etc.

SFA SFA continued…continued…

Store competitive information. Track customer and territory performance.Customer Interfacing Information

– When your customer called in for: help, orders, asked for on-site assistance, checked

order status.

Can see data from web access– e-Purchases, e-troubleshooting, etc.

Contact CenterContact Center

Contact Center Applications:– Telephony Applications for service, sales and

marketing. Automated prompting software that helps the agent

solve the customer’s problems.

Centralized Database contains outside sales’ quotations, proposals, trip report, etc.

Ex: Soffront SFAEx: Soffront SFA

www.soffront.com/ppdemos, viewed 27 September 2002

Campaign Management with Campaign Management with CRMCRM

Creating Personalized Marketing Efforts – Helps retain good customers.

And reduces costs of new acquiring new customers.

– Identifies customers that are about to take their business elsewhere.

Plan and monitor all marketing activity from beginning to end.

Greenberg, Paul, CRM at the Speed of Light, McGraw Hill 2001

Ex: Campaign ManagementEx: Campaign Management

Ex: Annual Marketing Budget is $12,000,000/year

10 Million customers in database:

Option 1: mail everyone: $.30/mailing = $3,000,000 * 4 mailings per yr.

campaign cost: $12,000,000 campaign results: $50M in revenue

Ex: Campaign Management Ex: Campaign Management cont…cont…

Option 2: Make educated guess of who to mail to:

Deduce 6 M of 10M people should receive:6,000,000 * $.30 = $1.8M * 4 = $7.2 MCampaign Results: $50M in revenue

Ex: Campaign Management Ex: Campaign Management cont…cont…

Option 3: Data Mine and Build a Model:Deduce only 3M of 10 M should receive3,000,000 *$.30 = $900,000 * 4 = $3.6M

Comparing Option 1 to Option 3: $8.4M savings to generate same revenue.– You are the company hero.

In SummaryIn Summary

At the end of the day, it’s about being customer-centric.– Improve business deficiencies– Get a sales lift from existing customers– Find new customers

Why Retain Customers? Why Retain Customers?

source: Intermedia Interactive Solutions, www.intermediainc.com, viewed 11/2/02

Why Retain Customers?Why Retain Customers?

A 5% increase in customer retention can improve business profitability by 50%.

It costs 7 to 10 times as much to get a new customer as keep a current one.

A 2% loyalty increase can translate into a 10% across-the-board cost saving.

source: Larstan Business Reports, www.larsten.net, viewed 11/2/02


Recession Survival– In a down economy, repeat business is the most

secure and profitable source of revenue

source: www.marketingprofs.com, viewed 10/23/02


Repeat Customers Buy More– Research shows that the longer customers stay

with a firm, the more they spend per transaction



Company Reputation– High retention rates enhance the firm’s

reputation within the industry and among potential customers

– Word of mouth marketing

source: Susan Keaveney, Denver Business Journal, 4/8/02


Repeat Customers are Forgiving– Loyal customers tend to be more understanding

when problems develop.



Improved Morale and Productivity– Employees will be more satisfied, and in turn

more productive.

CRM SpendingCRM Spending

CRM Spending: Current / FutureCRM Spending: Current / Future


The CRM Market (2001 - 2005)

13,500 13,750 15,40017,500 19,600

05,000

10,00015,00020,00025,000

2001 2002 2003 2004 2005

US

$M

illio

n

CRM Spending by IndustryCRM Spending by Industry

2002 Spending• Manufacturing $ 1.7 billion• Financial Services $ 1.4 billion• Retail and Distribution $ .95 billion• Business Services $ .78 billion• Government and Education $ .58 billion


Source:Patricia Seybold Group, An Executive's Guide to CRM, 3/2002, p. 11

Suppliers of CRMSuppliers of CRM

Leading CRM Suite Suppliers– Oracle– PeopleSoft– SAP– Siebel

Small to Medium Enterprise Supplier– Front Range Solutions

Source: Giga Information Group, YEA presentation, 3/02

Giga slideGiga slide

Source: 2002 CRM Solutions Guide, June, 2002, www.crmguru.com, viewed November 1, 2002

OracleOracle

Over $9.4 billion annual revenue

World’s largest information software provider

Strong in ERP market

Source: 2002 CRM Solutions Guide, June, 2002, www.crmguru.com, viewed November 1, 2002

PeopleSoftPeopleSoft

$2 billion annual revenue

ERP and CRM provider

CRM suite of over 22 products

SAPSAP

$2 billion annual revenue

International business software provider

ERP and CRM provider

SiebelSiebel

$1.7 billion annual revenue

Leader in High-end CRM market

Leads industry in specific application suites

--

Small-Medium Enterprise CRM solution– Pioneered Sales Force Automation

Goldmine Front Office– Sales Force Automation

Heat– Customer Service

CustomerIQ– Web-based CRM

Case Study - MotomanCase Study - Motoman

CRM Solution – Clarify CRM Suite

General PurposeGeneral PurposeWorld SolutionsWorld Solutions

Clean Room Clean Room

Motoman

Motoman, Inc.Motoman, Inc.

Headquartered in West Carrollton, OH.420 EmployeesAnnual Sales of $115M in North America30-40 different types of RobotsCustomers – Concentration on integrators

with specific market capabilities.

Gary Pope – Director of IT; Motoman, Inc. phone interview 23 Oct 2002

Motoman Motoman continued…continued…

Gary Pope – Director of IS– Responsible for IS, telecommunications,

security systems.– Reports to the CFO– CFO Reports to the CEO– No IT outsourcing whatsoever.

Annual BudgetAnnual Budget

IT Annual Budget– Expenses: $2.4M

Of that $1M of that is capital depreciation $700k: Manpower related – salaries, insurance, etc.

– Capital: $500k

Case Study: Motoman

IT StaffIT Staff

10 people– Including Gary Pope, the Director of IS– 3 Programmers (at time of installation)– 6 individuals to provide desktop support,

telecommunications, network.

Case Study: Motoman

Reasons for CRMReasons for CRMData securityWanted to more effectively communicate

with customerIncrease in Productivity/Efficiency

Case Study: Motoman

IT’s Role In CRMIT’s Role In CRM

IT Assisted during evaluation and took lead during implementation.

CRM Evaluation Program Leader– Determined who Motoman should use, to what

extent it should be implemented.

Case Study: Motoman

Prospective VendorsProspective Vendors

After a year of evaluation, it came down to:– Siebel, Clarify, PeopleSoft/Vantive, SAP

Toss-up between Clarify and PeopleSoft Finally selected Clarify’s CRM Package. Motoman evaluation team made the final decision.

Case Study: Motoman

CRM CostCRM Cost

Clarify - $343,000– Includes: Software, license for 100 users,

Maintenance

External Consulting – $250,000, – 312 man days, 4 month schedule

Plus additional $80,000 from Clarify– Training for Integrator

Case Study: Motoman

Clarify CRM ComponentsClarify CRM Components

Customer Service:– Helpdesk – ClearSupport: tracks cases – ClearLogistics: Field Operations, Depot Repair, Order

Operations.

Sales Force Automation Tools– ClearSales – Trip Reports – Traveler

Case Study: Motoman

TimelineTimeline Timeline:

– Selection process – approx. 1 year.– Internal Audit – 6 months– February 2001

Purchased software, hardware and put out contract for the integration

9 July 2001 – Customer Service Group go-live date.

1 August 2001– Sales Force go-live date.

Case Study: Motoman

ImplementationImplementation

Hired an integrator to help installTried to keep customization low

Wanted future software releases to still function. Quicker, cheaper.

– Some minor items had to be modified within the program.

Pull-down menus, options, etc.

Case Study: Motoman

Implementation Implementation cont…cont…

This integrator had never implemented Clarify before.– This was known ahead of time.– Wanted to have opportunity to learn Clarify.– $330k cost incurred to use them.

Would have cost an additional $200k-$300k to go with a consultant that had the experience.

Case Study: Motoman

Where The Program Falls Where The Program Falls ShortShort

Poor Ongoing Support from Clarify– Lack of support due to change of ownership that

occurred twice during Motoman’s implementation process.

– Clarify’s lack of focus on Motoman as a Customer Motoman paid for the system before the first sale of the

company occurred.

Field Sales force is not synchronizing reliably due to software bug.– Lack of development effort to correct synchronization

process.Case Study: Motoman

Satisfaction LevelSatisfaction Level

From Customer Service view: Very satisfied.

Sales Force view: Not satisfied due to synchronization problems.

Upper-management: Not satisfied due to fragmented report content.

Case Study: Motoman

8 Critical Success8 Critical SuccessFactors for Successful Factors for Successful CRM Implementation….CRM Implementation….

According to the Gartner Group, 60% of companies implementing CRM in 2002 will fail—and that’s

expected to rise next year.

8 Critical Success Factors…

1. Get Executive support up front◊ Any strategic initiative will need top down support

◊ Considerable financial investment

2. Establish measurable business goals◊ Sounds easy but often overlooked

◊ Goals should be measurable◊ Will better define needs

Steve Mankoff, Senior VP, Seibel Systems “10 Critical Success Factors for CRM” (8/01)


3. Align Business & IT Operations◊ Requires the partnership of business sponsors and technical personnel.

4. Let Business Goals Drive Your Functionality

◊ All configuration decisions need to be based on business goals. If a feature doesn’t directly help your business goal, you probably don’t need it.



5. Minimize customization◊ Number one reason for budget overruns and missed deadlines. ◊ Seek out-of-box functionality that fits your needs.

6. Actively involve end users in design



7. Use a phased rollout schedule◊ Quicker ROI—get that first win.◊ Apply what you learn to subsequent phases ◊ Easier on resources (capital, training, personnel)

8. Measure, monitor, and track◊ Hard to measure without clear objectives◊ Survey customers◊ Share feedback with stakeholders


CRM is about being customer centric, using technology to enable that strategy, with the goals of growing your business, cutting costs, and/or gaining a business

advantage

customer relationship management prepared by: larry eisenberg ron fogarty doug marren

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