21031949 CRM Project Report

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.

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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 ITsystems (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.

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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)

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analytical - support to analyse customer behaviour, implements business intelligence alike technology

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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.

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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

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Help to identify potential problems quickly, before they occur

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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)

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Provide a fast mechanism for handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction)

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Provide a fast mechanism for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction)

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Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations

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use internet cookies to track customer interests and personalize product offerings accordingly

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use the internet to engage in collaborative customization or real-time customization

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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)

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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)

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The CRM can be integrated into other cross-functional systems and thereby provide accounting and production information to customers when they want it

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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.

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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.

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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

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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.

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multiple communication channels - the ability to interface with users via many different devices (phone, WAP, internet, etc)

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workflow - the ability to automatically route work through the system to different people based on a set of rules.

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database - the centralised storage (in a data warehouse) of all information relevant to customer interaction

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customer privacy considerations, e.g. data encryption and the destruction of records to ensure that they are not stolen or abused

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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.

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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

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Improved management visibility

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Improved customer support

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Improved marketing

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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.

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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.

Check Resumes

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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.

Key Decision Factors

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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

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Multiple components that will be integrated to meet your needs

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Lack of a track record supporting "your kind" of sales reps

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Functionality planned "for the next release"

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An extensive training program

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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.

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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: •

Is the initial license price per user in line with industry benchmarks?

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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.

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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.

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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, trackability and detailed follow-up capabilities.

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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.

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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.

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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

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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

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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

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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

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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

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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.

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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.

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More decision-makers need more access to consistent corporate data about their customers.

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Loyalty program, POS, and demographic databases exist, yet are not integrated within a retail corporation.

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Merchandisers and direct marketers lack expertise in the standard analysis applications sold by business intelligence vendors today.

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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.

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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.

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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

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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

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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

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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 ofbreed 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 propositioning and marketing techniques for the new millennium.

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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.

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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.

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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.

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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 customerspecific events. Sophisticated pricing and product configuration engines and thirdparty channel management capabilities are also available.

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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 offered

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here 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

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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 permissionbased marketing campaigns (where the dialog has been started with a customer via email 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.

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•

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 dayto-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.

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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 frontoffice 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 toward any one kind of analytical processing. For example, if the data

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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.

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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;

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• 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-

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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

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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 33

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.

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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.

7.4 Invest Time In Training

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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 36

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.

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Chapter # 8. CRM Success 8.1 Introduction Seeing CRM initiatives take hold and begin to pay off is often a waiting game. It’s not a “flip-the- switch” product that automatically spits out results or something that will take affect overnight and cause profits to skyrocket while you sleep. The puzzle must be completed and time must play its part before true success will be seen. However, through dedicated and smart planning, businesses should see markedly increased profits, as satisfied customers will continually re-visit them. Gradually, as businesses get to know their customers, their customers get to know them, and a closely aligned partnership is formed. This one-to-one relationship is the catalyst that sparks both lifetime customer loyalty and revenue increase.

In the true spirit of thinking outside of the box, experts at the Gartner Group believe “the most successful organizations will be those who, through innovation and focus on business effectiveness rather than merely efficiency, manage to break the mold of 38

traditional business thinking”. Being effective is paramount. The end goal of better serving customers and enabling a high percentage of customer retention cannot be met with out creative thinking and effective planning and actions. The task of perfecting the relationship between business and customer is always on going and requires special dedication and innovation as the commerce markets continually change and fluctuate. And over time, customers change, as does their behavior and needs, and business must be able to respond to that. Being on the cusp of the industry and always having a hand on the pulse of the customer is key for success. As the CRM initiative begins to take hold, key players will soon see patterns emerge among customers, will discover what a productive strategy is and what is not. This is the essence of a successful CRM project: being able to really know what will work for your customers, what satisfies them, and what keeps them loyal. The ability to get an accurate gut feeling about the marketing campaigns, new products, and the type of policies customers will respond to is invaluable. This kind of customer knowledge only comes from really digging in and being savvy about how you go about understanding the people that you hope will continually call on the services and products of your business. The ROI in this case would be compelling indeed.

8.2 Advice for Breeding CRM Success: 1. Buy the best package you can afford. Choosing a high-end system that allows for growth is key, Monster.com's Liddell says. Monster.com has rolled out Siebel Systems' sales force automation software to 800 users since implementing the software in November 1998. Where low-end packages break down is in their ability to handle complex definitions of customers, he says. Monster.com established formal guidelines for defining customers across divisions and applications so salespeople can access clean, consistent data. 2. Choose wisely. Figure out who you need to reach and then find the software that will help you accomplish that. Before settling on RightNow, USF scrapped a previous CRM project a month into the implementation after concluding the software didn't work the way the university wanted. Too often companies choose software before they have defined the problem, Akin says.

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"I've seen it lots of times - 'Hey, this is a neat application. Let's buy it and then figure out how we can use it here.'" USF tapped Right Now Technologies' e-mail management software to help the IT department, financial aid office and other administrative groups that were bogged down with customer service inquiries from 40,000 students and staff. 3. Build and maintain a relationship with quality consultants. Consultants are important not only in an initial deployment, but also as project parameters change which they will, Liddell says. Monster.com works with CRM consultant Akibia, which lets the company quickly expand its CRM resources when necessary. Each time Monster.com acquires a new company, Liddell's priority is to quickly get those new team members up and running with Siebel sales tools - a process that sometimes requires extra hands. 4. Rely on internal resources. Consultants are helpful, but it's important to maintain ownership of a CRM project. "Nobody's more interested in our success than the team at Monster.com," Liddell says. Plus, somebody has to run the software once the consultants are gone. 5. Make sure everyone is onboard. It's important to have buy-in throughout the organization, Akin says. Financial support is necessary, he says, "but more important is an agreement to use the product universally." It's frustrating for end users if they expect to find a single source of customer service information online and it turns out a key department is missing from the site. 6. Align your project goals and implementation schedule. Berkson and his team at Thomson Financial try to stick to eight- to 12-week projects, rather than rolling out everything to everyone at once. Plus, no department is going to need every function in every application; users would be overwhelmed, Berkson says. Thomson Financial is in the process of upgrading its Vantive applications to PeopleSoft 8 CRM - the new Internet-based suite from PeopleSoft, which acquired Vantive in 1999. "We tend to implement in small, manageable phases," he says. Companies should identify their biggest pain points and greatest opportunities for return on investment, and make those an implementation priority. 7. Start with a low-risk pilot. One project up and running quickly can validate your CRM concepts, Berkson says. Choosing a relatively simple, straightforward project such as outfitting a department that doesn't require integration with other back-end 40

systems - is important. If you start with a complex trial, it can really drain momentum, he says. 8. Aim for configuration, not customization. Take advantage of today's CRM tool sets, Berkson says. Vendors have built more robust configuration flexibility into CRM applications and recommend that users minimize customizations. So if you can break the habit of writing custom code to accommodate unique business processes, it will be well worth the effort when it comes time to upgrade, Berkson says. 9. Don't underestimate data requirements. The time and resources needed for data conversion and cleanup will always be more than you think, Berkson says. 10. Provide adequate training. "If you have the time and the resources, train in advance of rollout," Akin says. The university departments that are least enthusiastic about the RightNow products are the ones that weren't ready for it, he says. 11. Set communications standards. In hindsight, Akin wishes his group had set content standards among departments before going live with the project instead of trying to do it later. At USF, e-mail inquiries are routed to as many as 30 different departments. Setting standards for formatting responses can help maintain consistency of service. 12. Watch the details. CRM requires a team that is willing to take ownership of even the most minute details. Monster.com has team members who maintain the software, team members who constantly handle requests for changes and team members who police data quality.

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Chapter # 9. CRM Products 9.1 What Are Some CRM Products and What Can They Do For You? CRM products are automated applications that support the accomplishment of corporate goals related to customers, such as increased revenue and/or increased sales efficiency (i.e., better results with lower expenditures from sales, customer service, and marketing.) These technologies capture customer data from across the enterprise, then analyze, consolidate and/or distribute it for use across the multiple customer facing departments (or processes) within the company. CRM products can be grouped into 5 general categories:

Customer/Partner Self-Service Systems: enable your customers, suppliers, and/or partners to use the internet to gain information that is directly relevant to them. This may include customized product elections, order status update, on-line order entry, or self-guided query and response. Examples of these systems include email

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response management systems, web personalization systems, web-based order-entry, and web self-help.

Sales Force Automation Systems: provide tools for your sales people to maintain their contacts, track sales prospects, provide sales forecasts, enter and track orders, and provide customized quotes for clients. Examples of these systems include, and on-line sales forecasting and order-tracking.

Call Center Customer Service Systems: provide support for staff that answer client questions or respond to requests for dispatch services. Examples of these systems include web-based customer service, customer service call tracking, improved customer service representative (CSR) access to client information, and automated dispatch and tracking.

Operational Billing/Order System Integration Systems: provide integration (as well as migration) between customer-facing (front-end) applications and the production (back-end) order-status and financial systems that contain the data that clients and partners may seek. These systems are not only CRM systems, but rather the components of larger software suites that may include CRM. Examples of these systems are packaged accounting and manufacturing systems that have CRM front-ends.

Technology-Enabled Lead Generation Systems: enable targeted marketing based on client needs and/or past business trends. This lead generation could be dynamic (emailing offers or customizing web content) or static (providing targeted databases of clients by type). These systems include customer data mining, automated marketing campaigns, and customer personalization tools.

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9.2 What Kinds of CRM Products Do What?

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9.3 How Much Do CRM Products Cost? According to Erin Kinikin at GigaGroup, CRM (software only) costs vary as follows: •

A limited system (in terms of range of functions or customizability) usually supports less than 50 users and costs around $500/user.

•

A departmental system (which supports 50 – 300 users and has a more increased range of functionality and increased ability and need for customization) usually costs around $1500/user.

•

An enterprise system (which supports over 500 users and has a higher range of functionality

and

introduces

dramatic

change

management

issues

and

requirements for customization) costs around $3500/user. Some vendors quote this functionality for $2000/user. •

Implementation and customization costs will add from 25% (limited system) to 100%

(departmental)

to

300%

(enterprise)

for

software

installation,

implementation, and customization. Some vendors estimate as much as 500% for implementation and customization. This does not include vendor maintenance and ongoing customization costs as well as cost of organizational process changes.

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Chapter # 10. E-CRM 10.1 E-CRM: Delivering a Superior Internet Customer Experience How one Internet retailer delivers the highest quality customer experience, builds customer loyalty, and drives revenue

Retailing Healthcare and Pharmaceuticals on the Internet In 1997, a billion-dollar retailer of pharmaceutical, health, and beauty products decided to expand its business to the Internet, launching a web retail operation as a division of its brick-and-mortar operation—the first in its industry to go online. As with many of the early web-based forays into e-commerce, this site was deployed primarily to establish a web presence for the company. The initial site was not designed, however, to anticipate the high volume, high availability, and competitive functionality required as traffic and content grew and new players entered the market. The site, its applications, and its underlying infrastructure couldn’t scale to accommodate thousands of orders per day, couldn’t be enhanced in web time, had inadequate capability to support applications and was unstable as a whole. In addition, the order fulfillment process was unable to scale to keep pace with growth of the Internet business channel. The company decided to discard the entire “homegrown” site and began again.

EMC and Its Partners Step up to Meet the Challenge In 1999, the company turned to Oracle, EMC, and Cisco to help implement an e-CRM application solution that could deliver: • A highly available, scalable, secure, and manageable technology infrastructure that would keep pace with rapidly changing customer numbers and market conditions

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• Rapid time to market, as competitors had established a five to six month lead in site functionality • An outsourced, hosted site with an EMC Proven™ application service provider (ASP) that could deliver a 24x7x365 service level commitment and technology on demand The resulting solution consisted of a highly functional e-CRM web site using the Oracle CRM eBusiness Suite, built on a modular EMC Storage Area Network hosted at a third party ASP data center location. The company implemented the solution in three phases: • The Implementation Phase—design and development • The Production Phase—solution deployment and stabilization • The Growth Phase—delivering more functionality to more users

Immediate, Significant Business Impacts The company’s E-Infostructure enables the web site to keep pace with multiple simultaneous inquiries from hundreds of concurrent users. The customer view is simple, and the company has been able to increase its level of customer.

10.2 Customer Relationship Management, what really matters? To run a successful customer support business that adopts customer centricity approach demands control, control over process, technology and finally your staff. Consistency and information sharing became on top of the Menu for many organizations. Te core of any CRM initiative is the use of knowledge about customers to either align your process with it or you align them with you. Knowledge must be up to date and would be able to categorize, filter and sort every segment of it. Customers may prefer to use e-mails, others use the telephone. And as we all know that some customers do not feel comfortable with technology and demand a face to face interaction. Customers like to interact with the same service regarding any transaction with the organization. i.e.: single view of your organization, while on the other hand, organizations that adopt a single view of their customers approach envelops the customers with in the organization mesh.

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So, what really matters? … Class A customer support centers characterized by the following: • Customers’ information is up to date and accurately inserted in the data base, and it is accessible to all customer facing points. • Staff has been carrying out customer support training and attaining in house standards. • Calls and e-mails responses are regularly audited and monitored to maintain level standards. • Internal process exceed customers expectations • GAP analyses are carried out on regular basis (quarterly, annually…) for individuals and also for processes. Statistical data should not be all that matters, well after all what do they actually tell you or indicates? The quantitative approach is rather to satisfy internal demands than customers. How many repeated customers do you have each year? This is really what matters, quality of service leads to a greater customer satisfaction and repeat of business which by its role will be reflected in the balance sheet eventually. Internal slogans are for internal consumption. For customers, perception equals reality.

10.3 Customer Relationship Management Customer relationship management (CRM) is the most talked about of the three enterprise applications that are the focus of this paper. As the economy remains sluggish and customers remain cautious, the need and desire to get closer to customers are the primary means of differentiation in the marketplace. Companies seeking this differentiation must ask the questions below. 1. What does getting “close” to customers mean? 2. How do we get close to customers today? 3. How do I drive or extract new revenue using CRM?

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The first question has many possible answers. Indeed, the companies that explore all possible methods are better positioned to get a better picture of a customer. For my purposes, I will only focus on a few critical aspects. The first is to uncover patterns of buying from the customer base. Uncovering these trends is fundamental to any business. One might argue that an expensive CRM system is not required to do this. To a certain extent, this is true. However, analysis of buying patterns is different from that of buying history. A customer’s buying history is only one component of the pattern. Others include the financial market, demographics, geography, recent marketing messages, and other parallel actions such as sales, new product introduction, competitive offerings, positioning tactics, and pricing. In The Clue train Manifesto: The End of Business as Usual Weinberger and Searls make the following point. The first markets were markets, not bulls, bears…not demographics, eyeballs or seats. Most of all, not consumers. The first markets were filled with people, not abstractions or statistical aggregates; they were the places where supply met demand with a firm handshake. Buyers and sellers looked at each other in the eye, met, and connected….where people came to buy what others had to sell—and to talk. While Weinberger and Searls were trying to make a bigger point about the Internet and its role in current market philosophy, the germane point here is the notion of connection. More than anything, strategic companies are trying to figure out how to more effectively connect with customers. They believe that will be a sustaining factor in their survival. The second question above is equally important. Making customers feel unique because you understand their likes and dislikes is difficult but critical. CRM systems allow a vast amount of input about a customer in order to build a comprehensive profile. The simplest example (and one of the most common) is the contact manager concept. There are many sales tools for contact management. An integrated CRM tool can add real-time integration to other systems (e.g., financial, order management, and quality control). Giving the presales team, customer representatives, and post-sales team the ability to input information about a customer cycle over time builds a profile that enables each team member to serve the customer better. Giving sales 49

management “one-click” reporting capability on leads, problems in the pipelines, breakdown of revenue by product, or other metrics can ensure a more successful forecasting and market strategy implementation. Hospitality industries also use CRM systems to get closer to customers. Customer loyalty programs like frequent flyer and preferred guest programs can record recurring customers’ preferences and then target specific services to specific customers. Grocery chains monitor purchases to effectively market specific products or offer discounts. Also, if such monitoring identifies that a customer has moved, they will send a “moving special” coupon book to the customer. Even in the restaurant industry, companies like Union Station in New York track patterns to record favorite tables, bottles of wine, and health concerns for patrons. These efforts help businesses know their customers better in order to better serve them. The third question, however, requires more complex analysis. How can a business derive new revenue opportunities from this data? Sometimes customer buying patterns can offer new streams of revenue. This complex field of analytics is the most difficult aspect of CRM engines, but it can reveal important data. For example, one retailer found that if it lowered the price of a can of tennis balls by $.25, the sale of tennis rackets (a higher margin item) increased. In addition, grocers can track not only the brands customers like within a given product set, but they can correlate that information to the shelf position where it is stocked. By measuring trends over time, grocers can determine the impact of shelf position on customers’ buying habits. Using this information, they can broker better deals with the suppliers by marketing “premium” shelf space. To increase customer satisfaction and effectively manage distribution, many businesses tie their distribution systems into the National Weather Service because a major weather event could affect operations. To keep customers satisfied, businesses that supply rock salt and snow shovels must be well stocked for that first, possibly unexpected snowstorm. Examples abound, but the point is that knowing your customers today is as important as ever. No so-called “new economy” will ever change that. However, we have new, complex tools to help us do this; they collect and analyze information to help us gain closer relationships to customers, derive new revenue opportunities, and target marketing initiatives for maximum impact. We must also realize that these customers have more ways to interface with 50

organizations today—websites, sales reps, cashiers, and call centers to name a few. Using a method (such as CRM) to get a macro view of the customer is invaluable in today’s fragmented communication environments. However, like ERP systems, CRM systems will only be effective if organizations socialize the project goals and actually use the tools. These are a CRM implementation’s biggest challenges today. It is not the software; it is establishing use of the software. Many corporations have failed at this. CIO Magazine reports “one Fortune 500 organization is on its fourth try at CRM because the sales force has rejected all previous attempts at sharing customer information” (Koch). Changing mindsets must be a top priority. CRM systems are evolving. Indeed, out-of-the-box products exist that can marginally increase an organization’s effectiveness. However, the next generation of CRM is trying to integrate more effectively with an organization’s ERP initiatives to see how customer buying patterns affect manufacturing, human resources, finance, and long range planning. In this environment, the data warehouse is key; collecting, storing, and analyzing information effectively is critical to an organization’s success at recreating that market of old where buyers and sellers meet, look at each other in the eye, and connect.

10.4 CRM Analytics: Visualize Business Intelligence A Slower Economy Demands Aggressive Business Intelligence Methodology Gone are the boom years of the 90’s when growth seemed unstoppable, no matter what you did — or didn’t do. But now, more than ever, your business needs to be more agile, more productive, and more profitable. You need to wring every iota of useful information from the valuable business data gathered throughout your enterprise, and use it to give yourself a competitive advantage. How can you accomplish that? By implementing business intelligence (BI) software that gives you deeper insight into your organization through greater understanding of the operations of your company. In today’s competitive landscape, it is imperative that you thoroughly understand and proactively manage your operations and your customers. The slowdown in the economy has put pressure on IT information technology) departments to demonstrate real ROI (return on investment) on any investments made

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in new technologies. So where do you invest? In BI software. This investment provides a direct positive impact on your profitability by allowing you to harness the power within the most important untapped asset you already have — your data. Your peers agree. According to a recent Business Week article (June 24, 2002), the BI software industry grew by 9% while the software industry as a whole grew only 7.7%. BI software allows an organization to access, to analyze, and to share information across the enterprise using tools and analytic applications. It is the key to bridging the information gap in decision makers’ minds. It is the difference between experiential, anecdotal knowledge and actual data. BI can provide visibility into data about your operations that can generate quick payback engendering better decisions when and where they are needed. BI software takes advantage of the investments you may already have made in systems such as CRM and ERP by extracting value from the data collected within them. CRM analytics is a specialized area of BI software that focuses on analyzing and maximizing the lifetime value of customers. Most importantly, CRM analytics can help you improve your bottom line by providing better insight into your customers. When budgets are tightest, organizations need to understand their existing customers in order to retain them and to maximize lifetime value. This minimizes the significant costs of attracting new customers. Cultivating relationships with your high-value customers can have a direct and immediate effect on your profitability.

10.5 Using CRM Analytics to Unlock Customer Data Operational CRM has delivered benefits to many organizations over the last several years. By automating customer-facing processes such as sales, support, and campaign management, organizations have gained efficiencies in their customer operations. Tremendous amounts of data have been collected about customers and how they interact with your organization at these touch points. But the holistic understanding of a customer’s behavior over time – the ability to identify, analyze and predict changes in behavior – has been locked inside the vast vaults of CRM and ERP data storage systems.

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CRM analytics provides the key to those vaults and enables insight into customer behavior. Armed with that insight, your organization can now discover the right balance of promotional effort, cost, and support that will result in improved revenue and customer loyalty. CRM Analytics is an area that provides significant and rapid return on investment. Where do you start? At the foundation of CRM analytics are customercentric data and approaches. Data must be organized and managed at the customer level with historical detail covering purchasing and returns behavior, contacts with customer service, payment behavior, and marketing response behavior. Beyond data, it is important to think in a customer-centric manner. While it is important to ask, “Who is likely to buy this new product if we offer a 10% discount?”, you also need to be asking, “Who are our most profitable customers and how has their behavior changed over the last three months?” The goal is to maximize the value of your customers over the entire relationship with the customer, not for a single marketing campaign. Whenever the need for “customer-centric” data is established, organizations typically react by calling for an enterprise data warehouse with data collected from every possible data source in the organization. Unfortunately, the single enterprise-wide data warehouse takes too long and costs too much to build before any benefit can be gained. A more effective approach is to develop an information architecture that enables you to build smaller, more agile application-centered data marts. Such a

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design is possible today using the much improved capabilities of an ETL (extract, transform, and load) tool as the central repository of your data definitions and business rules (metadata). A central repository facilitates a single version of the truth, even as you build department- or application-level data marts one at a time. These targeted data marts must contain both atomic and aggregated data that can support multi-dimensional analysis. It is the ability to quickly view your data along different dimensions and to intelligently drill down into the data that enables you to proactively identify and address issues and opportunities.

10.6 Accessible, Flexible, Graphical Analytic Tools are a Prerequisite Useful analytical tools must deliver simple, robust functionality. The tool should provide visual techniques that enable any user to easily identify trends, opportunities, and problems without digging through pages of tabular numbers. Modern requirements should include Web-based queries, with the delivery of HTML pages that have hot spots for further rill down. A CRM analytics portal should provide easy access to key business and customer metrics. These capabilities allow you to democratize knowledge of the customer, putting it in the hands of the front-line managers tasked with making decisions that affect customer relationships. Your CRM analytics tool must provide you with a complete, customizable reports that include all the views and the queries available to you. Access to various reports, views, and queries should be controlled based on user roles and needs. All reports and informational views must be available for distribution in both electronic and hard copy formats. Analysis helps devise strategies that maximize profitability, whether at the promotion level or at the customer or product level. Your analytical tool must be able to make your results actionable by integrating with operational CRM systems as well as with any back-office systems that can influence customer interactions. For example, it is important to know actual expenses by product or by customer in order to evaluate how certain products or customers contribute to profit.

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10.7 Asking the Right Questions to Get the Answers That Matter AS

E-BUSINESS

IS

EVOLVING

TO

WHERE

ANALYTICS

IS

A

REQUIREMENT Not only does e-business present enterprises with growing volumes of data, it demands increasingly greater analysis. This presents a major challenge: integrating these new and frequently disparate data sources into coherent analytical formats. During the Web’s early days (of just a few years ago!) most marketing activities were relatively static, involving publishing data sheets, product manuals, and other generalized marketing materials. This model is quickly evolving to include more dynamic applications. We are moving toward innovative personalization technologies that combine rule-based processing, telephony, intelligent content distribution, and other techniques to give Web company’s powerful new abilities to create highly targeted, customized commerce experiences for their customers and partners. For these techniques to succeed, however, businesses will demand greater sophistication in analytical tools. Put another way, these companies will require on-demand detail on who their customers are; what they want; how they want it; and where and when they want it. Such knowledge can only come from business intelligence.

E-Businesses might ask:  What are sales margins, product by product?  Which forms of advertising are most effective, and for what audiences?  Which products sold best for calendar event XXX?  Where is online advertising working? Where should it be scaled back?  Which customers should we target with direct email? With E-promotions?  Which suppliers have excelled in ship-to-customer time? For which products?

Business-to-business vendors might ask:  Which of our suppliers are consistently on time?  Which of our partners are most fully automated?  Which of our products are most time-critical?

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 Who among our customers demand the greatest service levels?  How should we adjust our supply chain to enter new markets?

Integrated Data Provides the Most Complete Information Clearly, the challenge for business intelligence extends to integrating data among sales,

marketing, and support automation applications, in addition to integrating

disparate backend data sources. Integrating and analyzing customer transactions and data from across the enterprise creates a customer–centric view for businesses. In today’s business environment, customers send real-time clues to their needs and purchasing behavior via their interactions with e-business systems. Understanding and optimizing the entire customer lifecycle — from prospect to lead to customer — requires integrating data from front and back office systems and across all customer touch points, both traditional and online.

Specific Analysis for E-business & Best Practice Metrics Analytic applications improve front office business performance by using packaged analysis and key metrics to drive best practices across the enterprise. CRM analytic solutions help companies use valuable front office resources most effectively by identifying bottlenecks, measuring performance against industry- or business-specific metrics, and pinpointing problems and opportunities. With e-business-ready analysis integrated with the traditional customer data sources, companies can:  Remove process bottlenecks in sales funnels by analyzing deal velocity and revenue attainment.  Analyze “abandoned shopping cart” behavior to understand barriers to online purchase.  Identify and leverage the most popular Web site content and advertising.  Fine-tune online promotions and personalization by profiling behavior based on customer segmentation.  Share information and best practices in sales and marketing by analyzing successful marketing campaigns, product promotions, vertical markets, or win/loss trends.  Improve support by analyzing backlogs, case volumes, and scheduling.

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 Improve support quality control by measuring performance against key metrics, such as first call closures and time to close.  Measure marketing campaign effectiveness in terms of leads generated, click through or online purchase, deals, revenue generation, and resulting customer profitability.  Increase and accelerate sales revenue with deal analysis, funnel optimization, and cross-sell/ up-sell analysis.

Analytics Tools Help Business Focus on the Most Valuable Customers Small movements in percentages of customers represent large percentages of profits. For example, a Seybold study of the Fleet Bank in New England identified that up to 40% of its customers and products are unprofitable at any time. Accordingly, successful companies not only aim to acquire and retain more customers, they also focus on their most profitable ones. CRM analytics help companies prioritize, grow, and satisfy high-value customers in many ways:  Rank and profile customers by critical dimensions, such as revenue, lifetime customer value, and profitability.  Segment and profile customers based on demographics, online session behavior, and propensity to respond to marketing campaigns.  Grow existing customers with up-sell and repeat business, online personalization and cross-promotion offerings.

Accelerated Decision-Making with Web-based Applications Analytic applications targeted at business users can increase the responsiveness and agility of organizations by making them alert to changing customer or market patterns. Using traditional decision support products, this information is often delayed, for a number of reasons, such as:  Business users are isolated from complex business intelligence solutions, and must request reports or analysis from resource-constrained IT or MIS departments, delaying timely access to information.  Information in client-server applications is incomplete or inaccessible.

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By packaging analysis, accelerating deployment, and putting information in the hands of the business users, analytic applications have the potential of delivering significant “time- to-market” value. The “time value” associated with decision-making may be the most important, although difficult to quantify, factor in figuring the ROI for an analytic application.

Sales The best way to improve a sales force’s effectiveness is to empower them with pertinent information on their target market. On-demand analysis of customer data fuel the ROI for a sales organization by creating a comprehensive view of the customer base, across all customer touch points. The quantifiable benefits of a sales analytic application come from improving the sales rep’s effectiveness, reducing the risk exposure during the sales cycle, and enabling the rep to sell more product. These key drivers of ROI all lead to increased revenue.

Marketing The ability to track responses to marketing campaigns and profile target customers yields significantly greater returns on marketing dollars. ROI is traced through improved

response

rates

or

click-through

for

marketing

campaigns

and

advertisements. CRM Analytics fuel improvements in ROI, which can be measured by more and better customers for your marketing dollar.

Customer Service The customer support functions in an organization have significant influence over a company’s recurring revenue stream. By enabling support organizations to track service levels for top customers, products requiring the most service resources, and bottlenecks to problem resolution, a company can optimize service levels, focus support efforts on the most costly problems, and increase customer retention and satisfaction. CRM Analytics allows us to ensure longer customer relationships, reduced customer turnover and lower overall support costs.

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Conclusion Benefits As companies move from a product-centric to a customer-centric orientation, and as they add new e-business channels to traditional customer interactions, they need the tools to analyze and optimize their efforts. Traditionally, performing analysis across the many different systems and information sources about the customer has been a difficult task, involving significant data integration, data mart implementation, and extensive IT support for analysis and reporting. Packaged analytic applications such as Synergy VisualSmart™, with pre-packaged key performance indicators, analytic views, and an easy-to-use interface, deliver the competitive advantage of better business performance information without the expense and time of traditional decision support solutions. As a small- to mid-sized business (SMB), you face even more pressure to maximize every investment dollar. All the steps required to implement world-class CRM analytics may seem daunting. As an SMB, your focus is on maximizing value and minimizing your costs for deployment and maintenance of a CRM analytics system. Hosted application services, where a software provider provides access through a browser, provide the functionality that can accommodate your needs, minimize upfront investments, shorten deployment times and provide the functionality to get you deriving value quickly. With today’s business environment putting increased pressure on you to make better decisions faster than ever, VisualSmart provides you with a quick and cost-effective way to make an immediate positive impact on your business.

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Chapter # 11. Ideas for CRM Success 11.1 Revealing Customers' Needs And Preferences Is Key To CRM Success Many organizations have made significant investments in their CRM systems over past five years. The perceived success or failure of these initiatives has, in large part, depended on the organizations' ability to clearly define appropriate success metrics at the start of the CRM implementation. When a company fails to clearly define its goals, there is no way to accurately measure the return on its CRM investment, and thus, no way to determine if the program was a success or failure. Many CRM implementations are challenged from this perspective. However, there is hope for those struggling with this problem: reporting applications, analytics tools, and workflow automation engines are now available at a fraction of what they cost only five years ago. These applications, tools, and engines are helping businesses discover the hidden jewels stored within their CRM databases. As CRM implementations move beyond just collecting customer information and reporting on it, a fundamental driver for many organizations is the desire to better understand their customers' needs and preferences. Companies want to transform the large amounts of data collected in their CRM databases into meaningful reports that different types of employees can use to do their jobs better. This desire is driving businesses to make better use of the reporting applications, analytics tools, and workflow engines that a few CRM applications now offer. To be useful these new applications, tools, and engines must also be easy-to-use, built-in or fully integrated, and reasonably priced. These business intelligence capabilities--once only included in the most expensive, high-end systems--are now more widely available, but few CRM vendors offer them for an affordable price. Because of the new, low price point, more businesses, and the users within these businesses, have the opportunity to implement these capabilities at a reasonable cost.

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Today's decisions get made at all levels within the organization. Cohesive decisionmaking is critical to the success of companies. This means more people stand to benefit from a well-planned CRM strategy as it raises the potential for even greater contribution from each employee to the top line. For instance, "To provide our sales and marketing team with fast and efficient reporting on our sales activity, we've integrated Crystal Reports with our Maximizer database," said Murray Munro, senior vice president of national sales, marketing, and government relations at Growth Works Capital Ltd. "Having access to this kind of information in a user-friendly presentation enables our sales staff to interact with their contacts at a deeper level and allows our marketing staff to analyze trends and make plans for the future armed with key information." Taking your customer relationships to the next level requires commitment from everyone within the organization. For companies that are considering a reporting, analytics, and workflow automation strategy, perhaps the best advice is a thorough evaluation of your strategic sales, marketing, and customer service and support processes. Then measure how the implementation of reporting, analytics, and workflow automation can positively impact your company's results. By conducting this analysis customers will be in a better position to leverage their existing CRM investment. When a CRM system is used to its highest potential, organizations will have a much better opportunity to drive more intimate, profitable customer relationships.

11.2 Top 50 Proven Ideas For CRM Success CRM projects fail--and succeed--for many reasons. When they fail it's often because they lack guidance. It takes a customer-centric vision across all departments and employee levels to be successful. It's a daunting task, but don't reach for the antacid yet. While the formulas for CRM success may differ. Don't believe it? The proof is in the process. When CRM works, C-level execs make smarter decisions because they have a 360-degree view of corporate performance; salespeople increase their proficiency and close more deals; marketers create more

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targeted campaigns with better insight into their effectiveness; and employees-especially CSRs--become more productive and efficient. Consider the 50 ideas list here a guide to proven strategies for starting or resuscitating your CRM efforts. The sales, marketing, customer service, and company-wide ideas are color coded to show where they best fit in the organization. Companies following these strategies are the ones truly committed to long-term CRM success. 1| Break down those silos. Having an integrated customer service solution is critical to maintaining customer service. Disparate databases of customer information prevent companies from gaining a holistic view of the customer throughout the organization. 2| Make a business case. Prior to selecting the CRM system, monitor employee behavior and performance to identify which business processes can benefit the most. Determine how the CRM system might help share information and resources, cut clutter, administrative duties, and duplicated tasks. 3| Keep customers in mind. While the technology that enables successful CRM is important, at its heart CRM is a business strategy. Finding out how technology can enable all of your company's touch points to facilitate its corporate strategy is key. "The software is only there to enable your implementation of a CRM strategy, not the other way around," says Izzy Franco, CRM leader for North America at Cap Gemini. 4| Ask and ye shall receive. Farm Credit Services of America wanted to become more vital to its customers and the overall rural agricultural credit business, where customer interactions are largely face-to-face. To evaluate possible new retail locations, employees asked their customers and discovered they wanted to carry out banking and financial dealings at their own place of business. So that's what they're doing. Ask customers how they want to interact with your company. 5| Build a team. Before selecting your CRM software, form a CRM team with reps from each department to make sure their colleagues' needs and concerns are addressed. Too often companies neglect to include the correct stakeholders, and the initiative fails to meet the needs of those tied to its results. Pick your CRM team wisely, as it should evangelize the new system when it arrives. 62

6| Consider people, process, and technology. One of the most common reasons why CRM initiatives fail is that executives tend to think of CRM as an IT project. In fact, it is an organizational and business-process change that requires companies to think about people, process, and technology to succeed. 7| Create a project checklist. Companies need to consider the following six steps when implementing their CRM initiatives: creating a clear strategy, addressing organizational issues, enabling processes, implementing the appropriate technologies, recording and tracking the data that drives the insight, and measuring the appropriate metrics, according to Jeff Schumacher, an associate partner at McKinsey & Company. 8| Experience counts. "I can't emphasize enough the value of an expert consulting organization that understands our business [and] a vendor that has a track record," says Jean Marc Pigeon, president of Inortech. To that end, ask the consultant and vendor for customer references. 9| Take the Goldilocks approach. Some CRM tools are too big; others are too small. Find what's just right for your business. Just because other companies like yours use one approach doesn't mean you have to do the same thing. 10| Benefits come in many flavors. Cost justifications are critical, but look deep enough to see the indirect effect of changes to your CRM policy. Look past the dollar signs of implementation and consider things like employee efficiency, productivity, and customer satisfaction. 11| Calculate short- and long-term costs over time. CRM is not a one-time expense. Total cost of ownership (TCO) and return on investment (ROI) need to be used together when evaluating a CRM project. Expectations should be managed over time. Consider costs over monthly, quarterly, yearly, and three-year periods. Costs don't end with technology, so consider services as well, which can easily cost twice as much as the technology.

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12| Emulate best practices. Nothing turns employees off like being forced to do their jobs differently for no obvious reason. Study your top sales and service people, then design or invest in technology that enables your firm's best practices--their best practices--to be emulated company-wide. 13| Get support from the top brass. If management doesn't believe in the new system, why should the employees? Many times the difference between a successful CRM strategy and a huge waste of money is a leader who motivates the rest. Once they're hot on the idea, you need to keep them committed, so communicate with them regularly. 14| Go with a CCO. Yes, another acronym to add to your mile-long scroll of industry terms, but this one's got potential, we promise. If you're lacking accountability across all departments, the chief customer officer is the person to bring it to your organization. Still not sure what a CCO really does? It's her job to keep an eye on everything we put on this list. 15| Get a champion of change. Don't have a CCO handy? Choose a manager who's behind the implementation, understands the problems, realizes the benefits, and understands the importance of the implementation from the company's side, says Lorie Goudie, director of customer support for Tarantella. After all, there's nothing more motivating than somebody who always has that can-do attitude. Want proof? Just watch a Richard Simmons video. 16| Deputize wisely. A strong second-in-command, the person "who makes all your glossy words actually happen," is critical, says Sadie Baron, marketing project manager at Eversheds. 17| Set goals. Setting predefined and mutually agreed upon goals with your CRM team prior to selecting the CRM vendor will give an organization an idea of how well the CRM solution performs once it is installed. How can a company succeed if success cannot be measured?

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18| Set attainable goals. Simply because one salesperson has an 80 percent close rate does not mean all salespeople can come anywhere near that. "Not all customers write business cases. Not all business cases have metrics. Not all metrics are reasonable," says Barton Goldenberg, president of ISM. Determine a department's average performance levels and aim for 5 percent to 10 percent increases in areas like sales, customer retention, or lead generation. 19| Cleanse preemptively. Identify your key client data set before you flip the switch and make sure it's accurate and up-to-date. Do the data audit from day one. 20| Keep it simple. Don't buy what you don't need. The fewer bells and whistles, the less time and money you'll need to devote to training. People don't like change as it is; keeping things simple only makes the switchover that much easier. 21| Success can be contagious. In baseball they say that hitting can be contagious. Implementing CRM is no different. With a full-suite product in particular, starting an implementation with a department you know will find success can make other departments start asking, "Hey, why can't we do that?" If one department finds success with CRM, others will want to as well. 22| Train early, train often. Give your employees as much time as possible to learn the new application. They don't like change any more than other people do, but the sooner you begin, the sooner they realize they're a part of the process and the quicker they will realize the benefits. Repeat and augment training as necessary to keep those skills fresh. 23| Identify quick wins. Tackle the smallest, easiest task straight away and save the hard stuff for later. Success early on gets the ball rolling and motivates employees. 24| Take baby steps. Sales teams, like cats, can be finicky. When automating the sales force, roll out the CRM system in small steps. With many sales teams, the number one concern is, what's in it for me? Dump or force a strategy on them and they'll get cranky.

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25| Focus on ROI. "CRM should provide salespeople with better pipeline reporting, rather than only make it easier to sell more. The latest CRM solutions are forcing salespeople to enter more administrative numbers than before. As a result, firms find they spend millions in sales automation only to learn that sales reps are still using ACT!" says Scott Nelson, Gartner vice president and distinguished analyst. 26| Slow down, Speedy. Don't get too far ahead of your customers in introducing CRM technologies--changing human behavior is tough, and takes time. Recognize that customers and employees may be struggling to keep up with the pace of technological change. New applications are best served up in small, measured doses, says Jim Johnson, director of information services at Master Lock Company. 27| Find super users. Why fight uphill all the time? Get the most enthusiastic people to use the system first. 28| Keep your eye on the prize. Measure the results and soothe the inevitable hiccups by showing people the benefits of the new CRM system, says Stephanie Ledoux, assistant vice president of customer and provider service at Blue Cross Blue Shield-Rhode Island. 29| Test the waters. Make sure your email and other communications are actually being delivered to the right people at the right time. Troubleshoot with test customers before making your services generally available. 30| See your customer through the same glasses. Various departments in your organization may see your customer as diversely as they would walking past a fun house mirror--attractive and valuable from one angle, unappealing from another. Using one integrated set of analytical data throughout the company can help executives to make key decisions about how much to invest in a particular customer. 31| Keep things uniform. Unify your message across all communication channels, including television, radio, newspaper, email, regular mail, Web site, and the telephone. Try to have the same look and feel throughout the company. Don't send mixed or conflicting messages--you will confuse the customer. 66

32| Walk a mile in your customers' shoes. Getting complaints from customers about how horrific it is to do business with you? Put yourself in their shoes by role-playing the typical customer experience. Once you suffer through what you dish out, you'll be shocked into a more customer-centric mindset. 33| Keep your promises. Just like relationships with your friends and loved ones, relationships with your customers should be based on trust. Reminding customers of promises kept--and taking responsibility for promises unfulfilled--simply requires openness. 34| Clean your data regularly. Your CRM system is only as good as your data, so keep it clean and avoid duplication. "According to the U.S. Census, about one in seven people change addresses within a year," says Denis Pombriant, managing principal of Beagle Research Group. That's why, he adds, "Having old data is like having no data." 35| Big names don't mean big money. While big clients may look impressive on a customer list, they may be costing your organization more money than they bring in. These clients may have special needs, such as customized packaging, special distribution needs, more hand-holding, which take extra time and expenses. Look at overall customer profitability, not just sales, and send unprofitable clients to the competition. 36| Consider life stages. According to the U.S. Census Bureau, there are roughly 75 million baby boomers (born between 1946 and 1964), more than 49 million gen Xers (born between 1965 and 1976), more than 72 million gen Yers (born between 1977 and 1994), and 40 million millennial (born between 1995 and now). 37| Know thy customer. Don't assume that an ethnic cohort comprises one monolithic group of consumers. Some consumers are more tied to their culture than others. Within each culture exists subcultures that include a wide range of people who are fully assimilated to those who don't speak English. What's more, country of origin may also play a significant role in buying behavior. 67

38| Mass marketing or one-to-one? Actually, it should be a mix that mostly meets somewhere in the middle. Your most valuable customers require one-to-one communication. Just below this requires a one-to-some model, in which your marketing messages are somewhat customized and sent to the bulk of your customer base. The bottom level is your lowest 10 percent, which requires little customization. 39| Experiment with marketing. Marketing is just as much of an art as it is a science. Recent technological developments are enabling marketers to challenge their segmented marketing campaigns with just a few keystrokes. Consider different data sets like attitudinal, demographic, and behavioral data when reevaluating your marketing campaigns. 40| Sell what's priceless. The affluent are no longer as interested in material things as they were leading up to the Internet boom. Instead, they'd rather purchase products and service that enhance their experiences. Take heed from Citibank's "Live Richly" and MasterCard’s "Priceless" campaigns. 41| Choose your customers. Find some commonality among your best customers in your database and cross reference that with prospects from external databases to pick the most profitable customers. 42| "Don't reinvent your relationships," says Joshua Yuster, CEO of BranchIT Corp. Relationship management software from companies like BranchIT, Spoke Software, and Leverage Software can search digital records of customers and potential customers who have preexisting relationships with other members of your team. 43| Reward team players. In the big picture a happy customer is more important than one salesperson's commission. Provide bonuses or team player rewards for referring customers to the right internal sales agent or business partner who's closer to the customer and can add more value. 44| Think, partners = customers. "Treat [partners] like they're customers," says Catherine Smith, COO of ING U.S. Financial Services. Partners, like customers, want 68

what they want when and how they want it. So just like you do with customers, identify your partners' needs and wants, and implement processes that keep them smiling. 45| Bundle up. To really reward those loyal customers who turn to you for multiple products and services, cut them some slack with a discounted pricing plan to show your appreciation. You may not pull in as much in the short term, but you'll score lifelong customers--and long-term profits. 46| They're not lost, just misplaced. Almost every business goes through rough periods, either individually or when the economy sags, and so lose customers as a result. When business picks up again, be sure to attempt to restart your relationships with lapsed customers--they're easier to sell to than brand-new ones. 47| Automate contract renewals. When focusing on customer acquisition efforts, don't let existing customers slip away. Look to contract renewal applications that will remind sales professionals when clients' contracts are nearing expiration and can also automate contract renewal efforts with customers. 48| Streamline your checkout process. You wouldn't give your family (except maybe your in-laws) a roundabout route to get to your home if there was an easier set of directions. The same idea applies to your online checkout process. Make it less of a maze and more of an express lane. For example, Overstock.com condensed its checkout procedure from seven pages to three, and retooled its product pages to make it easier to complete the checkout process, bolstering conversion rates and reducing online-checkout customer calls. 49| Get personal. Customers hate to feel like the sales agent is reading to them from a script. Learn your customers' personal needs and profiles and target your service to each individual. It will make them feel important and that you value the relationship. 50| Get cozy. When people come to your retail store, financial institution, or garage, make them feel comfortable. Many kinds of companies provide coffee and cake in the mornings for customers who must come in before work. Others provide free Internet 69

access to people while they wait. Retail stores increasingly are adding in-store cafes to keep hungry shoppers around longer.

11.3 Six Benefits Of Moving Pricing Into Your CRM Application There are six key benefits to moving your pricing functions to the front office: 1) Reduces sales cycles and improves cash flow Moving pricing to the front office reduces sales cycles and improves cash flow by giving sales agents the information they need to quickly and accurately quote an order from a single, consistent source. When customers are ready to buy, the sales agent needs to have the tools to quickly provide an accurate quote for valid products to be delivered by a reliable promise date. Sales agents spend too much time on administrative tasks like reviewing catalogs, consulting with sales support, searching spreadsheets, and duplicating order entry. This time could be better spent on getting the product to the customer faster, or selling the product to more customers. 2) Provides sales agents with the ability to configure and quote an order in realtime via a single CRM application, which enables a whole new set of capabilities. Customer-focused product configuration rules can be enforced and dynamic pricing can be applied, shipping charges and taxes can be calculated, and a specific promise date can be confirmed and guaranteed; all this without having to travel back to the office or requiring dual entry ("swivel-chair" integration) to other systems. Sales agents that spend time handling complex orders using multiple systems have less time to spend on new orders and generating new business. A single system gives them more time for these activities, as well as other customer service-related activities like order management and issue resolution. This reduces the amount of time between when an order is placed and when it is delivered, thus improving cash flow. 3)Improves margins Front-office pricing improves margins by enabling dynamic pricing based on various CRM components, including customer profiles, product attributes, and market segments.

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Simply knowing who your best and most profitable customers are does not guarantee a successful CRM strategy. Companies should implement programs and policies that target highly desirable customers and provide incentives for them to increase their sales volumes. For example, account profile information like membership in a buying club, being a competitor's top customer, or belonging to a target industry may trigger discounts or promotional benefits that encourage a prospect to become a long-lasting customer. On the other hand, belonging to a low-volume, high-cost customer segment group may trigger price premiums that encourage the customer to either purchase more high-margin products or migrate to a competitor. Establishing pricing rules dependent upon product attributes may also help raise margins. For example, if sales of a product in the color red are outpacing sales of the same product in blue, price premiums may be added for the red product while price discounts could be added for the blue product. This would ensure that the optimal price is charged for each to balance margin targets with inventory goals. Knowing your customer's previous purchasing history or comparing a purchaser's profile to similar customers allows you to use upsell and cross-sell techniques that steer them toward products with higher margins and those that encourage a more long-term buying pattern. 4) Lowers administration costs Using one system to deliver consistent pricing across all channels (Internet, field sales, telesales/call center, and channel sales partners) lowers administration costs. Using multiple pricing and order management systems for each selling channel increases implementation, administrative, maintenance, and upgrade costs. By distributing pricing logic through one repository, these costs can be significantly reduced while ensuring that your prices are applied consistently throughout your organization. However, this approach doesn't just reduce costs and ensure consistency. By deploying a single pricing engine, changes only need to be made once. This allows an organization to adapt quickly to changing market conditions by making them more flexible and nimble. 5) Reduces accounts receivables 71

Pricing in the front office reduces accounts receivables problems upfront by enforcing pricing rules during order entry, which reduces invoicing errors and disputes. Customers are demanding more product options to allow them to customize purchases to their exact requirements. This has led to more complex product offerings that require sophisticated product configuration and pricing models. Without the appropriate tools sales agents may promise products with options that cannot be delivered, provide inaccurate quotes, or configure a product that doesn't meet the customer's expectations. This can result in cancelled orders or significant order reconfiguration. Delays due to missed deadlines, reorders caused by incomplete sales forms, or lost sales because of cancellations are costly and can damage a once-solid customer relationship. Resolving product configuration and pricing abnormalities at the time the quote is provided improves order entry compliance and reduces the likelihood of invalid orders reaching the order fulfillment system. 6) Reduces integration costs Moving pricing to the front office reduces integration costs between a firm's CRM and back-office systems. By joining marketing, customer, and product information together with product configuration and pricing rules, a company can reduce the number of its cross-application integration points. Other pricing components that are tied into the back office can be integrated with the CRM pricing engine. These include those systems that calculate delivery charges and taxes, and provide credit card authorization. Moving pricing processes from the back office into a CRM system also decreases the frequency of round-trips data must take to fulfill an order, since less back-and-forth communication is required among the various systems before the order is approved. CRM isn't just about sales force automation, customer loyalty, or 360-degree customer views. It's also about the processes that support those ideas. Pricing is a frequently overlooked and underappreciated component of CRM strategies. However, pricing provides the framework to build and sustain healthy and satisfying customer relationships by enabling smooth, consistent, and effective business transactions that are mutually beneficial. Joining CRM and pricing can positively affect your bottom line by improving cash flow, increasing margins, lowering administrative and integration costs, and reducing aged receivables. 72

Chapter # 12. Reasons for CRM Failure 12.1 The Top 10 Reasons CRM Projects Fail Depending on which survey you read, you will see comments and statistics such as “over 50% of CRM (Customer

Relationship Management) projects fail.” On the

other hand, you will also see published results that show double-digit percentage growth in revenue, improved productivity, and increased customer satisfaction from new CRM projects. What drives companies to have such different results from the same initiatives? Before we look at reasons, let’s define the scope of CRM. CRM has been one of the most confusing terms established in eBusiness. In many cases, it has been defined, as what the user of the term is promoting. In the context of this article, we want to look at CRM as the following. CRM is a strategic approach that combines the business processes, technology, employees, and information across an enterprise to attract and retain profitable customers. CRM projects are launched to realize the plans and achieve the objectives defined in the CRM strategic plan. Let’s look at why many CRM projects fail and many others achieve great success. Here is CGI’s top-ten list of reasons CRM projects fail. 1. CRM initiatives launched without a strategy. Simply stating “We’re going to do CRM this year” is not a strategy. A CRM strategy needs to clearly define how you will be viewed by and manage all touch points with your customers. It should also define how you plan achieve this result. 2. The CRM strategy is not integral to the business strategy. CRM cannot be viewed as a project or solution separate from your overall business plan. How you develop and grow customer relationships is the lifeblood of your company. Customers must be a core part of your overall business strategy.

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3. The CRM toolset is based on someone else’s success. There are many CRM tool offerings in the market place. Typically, these started around a particular process and product offering that was very effective. This offering has since been expanded to offer broader functions through acquisition or system development. Be sure to evaluate tools against your business requirements to get the best product for your highest priority needs. Not everyone serves customers the same way, has the same business processes, or has the same priorities as your business. 4. CRM is launched with no regard for enterprise or customer interfaces. Can you afford to invest in making one part of the customer experience excellent only to destroy it at another step in the lifecycle? Make sure every touch point you have with the customer provides consistent, knowledgeable, and high-quality service. 5. CRM is launched without customer input. It is so easy to get caught up in the rush to implement CRM solutions that you forget those people on the outside of your business. Talk with your customers. Find out how they want to be serviced. How can you better meet their needs? How can you collaborate for a true win/win initiative? What are other suppliers doing for them that they like? 6. CRM is considered an IT project – not business initiatives leveraging technology. Customers interact with your company through people, processes, electronic media, transactions and indirect relationships. They typically will not know what language your tools are written in or what platform they run on. The capability, quality, function and reliability of the systems are critical. But design them to support the best customer processes you can provide. The greatest success will come from the coordinated efforts of business users and technologists in the company. 7. CRM is launched without defined metrics and objectives. An important part of any rollout of new processes is the expectation of improvement. If you don’t expect performance to improve, don’t measure it, or manage it. Consequently, you won’t see improvement. Even if you achieve it. Set expectations. 74

Measure performance improvement. Provide feedback. Reinforce successes. Look for ways to continue the improving trends.

8. CRM is considered a one-time event. Once your initiative is launched, you’re just getting started. Look at it as an evolutionary development of your organization that will require multiple iterations to implement. You will have some employees who resist the change. There will be bumps in the road. Solicit feedback. Learn from the new data at your disposal. Refine your strategy. Set new goals. Develop plans to achieve these new goals. 9. Assume you have a customer-centric culture because you have customers. The global economy has broken down consumer barriers, reducing geographic constraints and revealing little difference between the products and prices of one competitor to the next. As a result, quality and service have become driving forces behind brand preference, loyalty and bottom line results. Be sure to look at your company as your customers do. Consider how they want to do business with you. Develop your strategy, design processes, and make decisions looking from the outside in. Measure, analyze and track customer service performance. Solicit input and feedback from your customers. Benchmark with other organizations. Drive this “customer first” culture throughout the organization. Reinforce it with every employee. 10. No top down leadership and employee buy-in for CRM. Every employee will be affected by fundamental changes in CRM. Appoint an executive sponsor. Communicate vertically and horizontally through the organization. Get employees on board. Get them excited about doing a better job for your customers and making your company more successful. Create momentum toward a competitive customer focus. Provide training so employees know their role and the rationale for change. 11. Altering the CRM solution to accommodate current business process and behavior.

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Benefits will accrue from the adoption of new processes that leverage the information, speed, integration, lower operating costs and improved service resulting from new CRM tools. Be sure to take advantage of these revenue, service and productivity enhancements. 12. CRM is regarded without urgency. Your customer’s expectations are increasing. Maybe not from your direct competitors but from other service providers. Will your competitors announce a quantum leap tomorrow? If they do, what will it take to get customers back after you have lost them? How much is it worth to pre-empt your competitors and lock in new customers? 13. Try to implement “everything CRM” at one time. What about the sense of urgency you ask? It is difficult to change the entire organization overnight and keep it running. Organizations have personalities and need to learn new and adaptive behaviors. Go after your highest leverage, or highest priority areas first. Show successes to bring the rest of the organization along. Move forward in manageable steps.

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Chapter # 13. Case study 13.1 Case Study: Travelocity.com Leading the Way in E-Commerce to Optimize Customer Relationships Let’s look at what online travel agency Travelocity recently did with integrated analytics and marketing automation on an enterprise data warehouse. A major airline offered a special fare from Los Angeles to San Juan, Puerto Rico. At 8 a.m. EST, the airline sent this offer out to all travel agencies, including Travelocity. Travelocity’s marketing department created a customer campaign with the right value propositions and then started booking tickets. It was executed within hours, not days, leveraging an integrated enterprise data warehouse (EDW) environment. By mid-afternoon, Travelocity had analyzed the browsing behavior of its 30 million registered users, pulled the email addresses for 30,000 people living in the Los Angeles area who had browsed but not bought tickets to the Caribbean, crafted value propositions in the form of email messages, and sent them out. The take rate? Over the following month, a whopping 25 percent of the recipients of that value proposition had booked tickets. This illustrates the kind of speed, intelligence, and integration required to create and deliver effective value propositions (measured by the take rate) as well as highly efficient ones (measured by the ROI from the profit of those extra tickets, compared to Travelocity’s cost for developing and launching the communication campaign). However, the power of analytical CRM on an enterprise data warehouse can extend well beyond marketing; the greater opportunity is in improving customer management processes across the business, so that insights and intelligence created by and for marketing can be leveraged in all departments. Gartner recognizes this with a forward-looking view of what CRM is really about:

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“Customer relationship management refers to the concept of moving ownership of the customer up to the enterprise level and away from individual departments and channels. These departments are responsible for customer interactions, but the enterprise is responsible for the customer.” — Gartner Research Note, Ferrara and Nelson Even the best business minds often assume that customer management is the concern of the marketing department, however, the customer-centric enterprise of tomorrow knows better. Customer conversations take place across the whole organization, not just in marketing. Conversations with customers occur in the service department, the financial department, fulfillment, shipping, and other functional areas. It is critical to make sure that every customer’s ongoing conversation with your company is consistent – wherever they touch your company. An analytical solution that truly drives a higher quality of intelligence must also provide communications capabilities that support relevant, consistent conversations with individual customers – anywhere, anytime. And then tracking and managing detail data on each customer over time – measured in years, not merely days or months. Companies won’t often share the details of their own intelligence- generating tools with the world. However, we know that those that have focused their resources on creating more effective customer communications are getting great results.

Solution: Peak Returns by Integration, Synchronization, and Customer Relationship Optimization These firms have experienced a transition to an analytical information infrastructure that focuses on customers, resources, and abilities to drive new decisions every day. This is the real-time approach to meeting business needs. Each of them has implemented a form of optimization for meeting these business needs. NAB, in fact, was one of the inventors of relationship optimization and of integrating it with marketing and services. CRO begins with the integration of analytical CRM and marketing communication tools to give marketers multiple views from which to discover, plan, communicate, and optimize ever-changing relationships. This must be formed from a data warehouse that synchronizes for quick access and leverages of all

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data when and where needed. Marketers will create complex analytic workloads to develop new intelligence from this holistic view of your customers and drive dynamic communication across all channels for highly profitable returns. CRO will utilize customer profiles that are automatically refreshed in real-time in the data warehouse. This ensures that customer analyses are always fresh for more accurate intelligence and more refined value propositions. Event triggers are used to monitor customer behaviors and interests in real-time. Optimization tools ensure right-time; right-channel offers and messages are delivered in ways that make sense for the customer as well as the business. The result is an optimized multichannel, multistep, event-based customer-driven dialogue and relationship. Moving From Vision to Reality: Start Getting The Most From Your CRM and IT Investments To make all of this a reality, companies must align technology tools and customer processes to interact with individual customers in meaningful and relevant ways. Firms must become masters of the customer conversation – and instinctively learn how to appeal to customers. Specifically, marketers can get this alignment underway by developing their knowledge base, skill sets, and technology tools to leverage the power of advanced CRM analytics and marketing automation tools. Marketers also need to focus on being innovative in their application of customer intelligence through making the science and practice of CRM a total learning environment. Learning is a critical part of the CRM process, as pointed out in the forthcoming book The Value Factor by Mark Hurd and Lars Nyberg. These executives know that: “A company needs to understand its customers better, not only so it can market to them more effectively, but also so it can learn from the information in an iterative feedback process. By closing the loop on understanding their customers, companies can design products and services that anticipate customers’ needs, enhance contact, and predict the next best interaction.” The New Top Priority: Improve Customer Conversations and Relationships

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To move from where your company is today, you need to consider tactics that allow you to better understand the value and interests of your customers. Here are a few practical suggestions: •

See and segment your customers by business value.

Next, model them to predict their migration into a spectrum of value segments. Then, simulate and predict customer buying behavior based on the potential effectiveness of different potential value propositions you devise. •

Perform a marketing-influencers analysis to identify which customers can be

influenced in their value migration. Then communicate to them with value propositions that will have the effect of moving them in the right direction. •

Make accurate assessments of each customer’s affinity to a value proposition

and its timing. Learn from the customers’ positive and negative responses. •

Learn to optimize channels and frequency of customer contact. Learn and

relearn which channel you should use for specific messages as times and offers change and decide how often to contact each customer. •

Perform detailed customer value analysis, including market basket analysis,

product affinity analysis, cross-product correlation analysis, multiple campaign response models, customer growth models, churn and attrition models, and customer lifetime value models to spot opportunities to more effectively communicate your value propositions.

Conclusion When a company can continually identify those opportunities that hold the greatest long-term value potential, finite resources can be directed at exploiting these opportunities and maximizing profits. This means establishing an environment where a company can continuously assess and act upon value-generating or value-retaining opportunities as they occur. With a complete, integrated view of the customer in an environment designed for optimized dynamic customer interactions, customer processes across the business will consistently create and deliver messages that customers find compelling and the positive and profitable results will follow.

13.2 Case Study: Westpac's Strategy For CRM Success

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A Teradata platform for data management and analytics is key to the company's winning ways. More than two years into a five-year CRM program, Fernando Ricardo has good reason to feel happy. Westpac Banking Corporation's Program Reach, of which Ricardo is director, is ahead of schedule, ahead on anticipated benefits and right on budget. In fact, Ricardo believes the program has exceeded expectations, which he attributes to state-of-the-art technology, personnel experienced in CRM and, most importantly perhaps, the right corporate culture and buy-in across the organization. "It's been a very good first two years. We don't have any particular issues. Everything that we have done to date is working fine. I can't see any scenario where things could have gone better," he reflects. Founded in 1817 as the Bank of New South Wales, Westpac is Australia's oldest bank. It provides banking and financial services for nearly 8 million personal, business and institutional customers in Australia, New Zealand and the Pacific region. It operates more than 1,000 branches and agencies, has offices in key financial centers around the world and employs more than 26,700 people. Launched in 2002, Program Reach's principal business driver was to provide Westpac's staff with better information about customers. Such information would allow staff to proactively approach customers as well as reactively satisfy their needs. As Ricardo puts it, Westpac wanted "to provide the right tools for our staff to better service customers and have relevant conversations with them." The program gives bankers concrete information about what customers need, enabling them to offer to customers the right kinds of products and services rather than blindly suggesting something. "You don't want to be offering credit cards to young teenagers or to someone who already has two or three of your credit cards," Ricardo explains. "But if you have a home loan with us and you don't have insurance, it makes sense to talk to you about insurance." The ability to know the difference is a key advantage in a highly competitive industry. "Systems in banks worldwide are still very much product-centric. Most banks don't have a single view of the customer and cannot determine and act upon what needs (their customers) may have," Ricardo says.

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Ricardo gained oversight of Program Reach in September 2002, bringing nine years experience in analytics and strategic marketing for National Australia Bank, which used Teradata. In December 2002, after extensive investigation, Westpac selected Teradata CRM technology for its Westpac Leads engine—which is the heart of its cross-channel, integrated customer management and event-based customer contact system.

Building a system Through its data warehouse, Westpac Leads draws data from Westpac's source systems. At the front-end, or presentation layer, are Relationship Builder (Siebel 7.5) and the Reach Dashboard (Siebel Analytics). Modeling is performed using SAS Enterprise Miner. Relationship Builder provides a fast, browser-based, holistic view of customers, enabling a continuous conversation with customers through multiple channels. It is a powerful sales management tool that records referrals, service requests and opportunities, and it allows bankers to manage this information. The Reach Dashboard provides sales management information about activities spanning from the call center to the executive level. Through real-time visual reporting, a manager can monitor the sales pipeline and focus on coaching or other sales activities as indicated by the Dashboard. Sales leads, referred to as Westpac Leads because they are generated in that system, are delivered from Teradata CRM to Relationship Builder as opportunities for bankers to make proactive customer contact. Profile information and future opportunities recorded in Relationship Builder can be used to trigger a future Westpac Lead. For example, an outbound caller employed by Westpac who is targeting potential customers via Relationship Builder is sent a Westpac Lead regarding a specific campaign and a specific customer. This can trigger discussion about other future needs. During the conversation, the caller might discover that the customer has a term deposit with another institution that will expire in four months. When the banker records this as part of the customer's profile, a Westpac Lead will be triggered in time for the banker to contact the customer with an appropriate Westpac offer. Ricardo says that prior to Teradata and Program Reach, Westpac could not deliver consistent or "next best" offers, which enable a relevant, timely lead to be attached to 82

the customer's record within Relationship Builder. Without that information, bankers had a hard time targeting customers' needs with appropriate product or service offers. Now, in addition to outbound callers being sent leads, customer service staff can see relevant sales or service offers against a customer's record. With the scripting capabilities of Relationship Builder, any banker can easily introduce a relevant offer to the customer, and thanks to Westpac Leads' modeling capabilities, the likelihood of the offer being accepted is high. The right offer at the right time While there are a number of platforms available on which to do data management and analytics, Ricardo believes Teradata is one of the most potent. It is also the only platform optimized to run a campaign-management system on top of it. One of the biggest benefits Westpac reaps from Teradata is the ability to analyze billions of rows of data in a very short period and gain quick access to the most recent information in order to leverage it across millions of customers. "In terms of performance and speed of data analytics, Teradata has no real competition. It has the ability to trawl through billions of rows in a table very quickly and do it thousands of times in a few seconds," Ricardo says. Westpac has successfully deployed Program Reach to its small and medium enterprise (SME) customer base. Around 5,000 staff members use Program Reach in Westpac's business call centers and branch network. According to Ricardo, the feedback and impact on customer and staff satisfaction have been extremely positive. Westpac has made significant gains in SME market share over the last few years, although Ricardo does not attribute this solely to Program Reach. The bank is progressively rolling out the solution to its consumer and wealth management customer segments. Five full-time Teradata Professional Services associates will remain on-site as the deployment continues. After that phase, Westpac plans to integrate the system with ATMs, the Internet, short message service (SMS) and interactive voice response (IVR) systems. While Program Reach's aim is to deliver the right offer to the right customer via the right channel at the right time, every time, Ricardo admits such things do not happen in two years. However, if progress continues, irrelevant offers should be a thing of the past by the program's fifth year.

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Smartly planned moves According to Ricardo, the principal challenge in the project has been to avoid the mistakes that others have made with CRM. "CRM is a bit like chess. The players who win are those who execute better by making fewer mistakes. Normally in chess it is not the great moves that win games; it's the bad moves that lose games," he says. He has sought to make careful and thoughtful moves along the way. For example, Ricardo believes most CRM projects fail because the organizations did not spend enough time on people issues. In Program Reach, however, 20% to 30% of the total program effort has been focused on training staff, which he thinks is unique in Australia. "Ten years ago, all of my peers were spending 1% to 2% on people; the rest was on technology. Everybody thought that the technology was the silver bullet (that) would fix everything and is so easy to use. A decade on, we all know that the most important piece in the puzzle is not the technology. It's what people feel about the technology and how they use it," he says. Another potential barrier for other organizations is lack of senior support for the project. Program Reach has been well sponsored, initially by Westpac's group executive for business and technology because the first 12 months or so essentially involved technology and building the necessary infrastructure. Now that the SME pilot is up and running, the sponsor is the group executive of the retail bank for Westpac in Australia. Another reason Ricardo thinks IT-related projects fail is that they are overly ambitious. Westpac's approach, however, has been to undertake small pieces of the program at a time, starting with defining and addressing the bank's top 20 types of customer interactions. A large proportion of executives around the world believe that CRM doesn't work because they are not made an integral part of the process. Ricardo advocates clear communication about what is taking place, when it will happen, what value CRM will add in terms of profitability and customer and staff satisfaction, and when there will be a visible return. "I spend a lot of time articulating to the frontline staff, the marketing staff, the technology staff and the executives exactly what we are doing, so there are never any surprises for anybody," he says. 84

The Westpac way Ricardo believes three qualities differentiate Westpac's CRM strategy and focus from that of its competitors. First, he says the bank is deploying current technology that is much more mature than it was 10 or 15 years ago. Ricardo thinks that many of the companies that first attempted CRM in the early 1990s found themselves dealing with highly customized applications and are now struggling to upgrade to browser-based applications. He also believes that these days there is much less need to customize CRM solutions and consequently lock oneself out of an upgrade path. "We are deploying existing browser-based technology and setting up an infrastructure that will survive the next decade or so because it's geared up for the future while I think a lot of our competitors in Australia will incur significant expenditure in migrating to existing and future technologies," he says. The second differentiator is that Westpac's sales and corporate culture is unrivaled in Australia, according to Ricardo. The bank has been recognized with global and national awards for social responsibility and customer focus. Having this environment as well as a balance between the interests of shareholders, staff and customers puts Westpac in a unique position. "That cultural fabric of the company provides a fertile ground for these things to work," Ricardo explains. "The lack of cultural alignment between the various stakeholders has been one of the causes of the many failures of CRM projects." He continues, "This is also a place where the focus on the customer exists as a natural part of the company's fiber. We're not using technology to help our staff to focus on customers; they are already focused on customers. This is really not as hard as it would have been in other companies where customer service, customer satisfaction and doing the right thing for the customer are not core business (directives) like they are here." Finally, Ricardo and others on the project have been able to bring their prior experience with CRM to bear so that Westpac will not have to start from scratch. This accelerates the speed of execution and the quality of the outcome while reducing the number of failures in technology, training and process reengineering.

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"Combined, these three things provide us with a unique opportunity to do well. I think the big difference for Westpac is that Westpac is going straight to the nuggets without spending a lot of time mining in areas where there is no gold," Ricardo says.

Chapter # 14. Conclusion In the past, CRM was mostly about the technology, not about the customer. There is a change in the way the organizations do business. At a technology level, CRM is increasingly about conjoined best-of-breed applications delivered via portal technologies. At a business level, it is beginning to invade traditional territories occupied by brand management or customer support. Peel shows companies how to make the shift to the new paradigm. The CRM vendors look like they have got their act together in terms of coupling their wares to the needs of the business. The market now distinguishes between CRM and eCRM. One would be forgiven for thinking that this differentiation was contrived to allow the vendors to retreat back to pre ecommerce CRM. But the opposite is true. eCRM is the new game and the vendors are being bullish about it. It may well be worth creating a CRM vendor index, as I think that it will be a good indicator of confidence in business in general and technology in particular.

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Annexure-I Bibliography  Magazines o

Business World

o

Business Today

o

Business India

Newspapers

 o

Times Of India

o

Financial Express

o

Economic Times

 Websites o www.crm2day.com o www.salesforce.com o www.bitpipe.com o www.customerservicemanager.com o www.serachcrm.com o www.darwinmag.com o www.crmassist.com o www.google.co.in 87

o www.yahoo.com

Reference Books CRM: Redefining Customer Relationship Management Why CRM Doesn’t Work? CRM: Getting It Right

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