1. Selling Chain Management and Customer Relationship Management (CRM)
Marquette University – MBA Program
E-Business and Supply Chain Management
Selling Chain Management and Customer Relationship Management (CRM)

2. Discussion and Learning Points
What are key issues in selling chain management?
Architecture
What is customer relationship management (CRM)?
Is CRM a fad or what firms should pursue?
Benefits and costs
Implementation issues

3. Selling Chain Management
Enterprise
with
Multiple
Sales
Channels
Customers
Distributor
OEM
Reseller
Self Service
Sales Force
Selling Chain Structures
Selling Chain Management
- An integrated multi-channel order acquisition strategy, focusing on the buying process
Drivers
- Business Forces
Mass customization/personalization, Costs of presale support and order errors, Multi-channels, Product complexity, Deregulation and M&A’s
- Technology Forces
Limited SFA functionality, Limited process functionality, Limited sales effectiveness
(Kalakota & Robinson 2001)

4. Selling Chain Management Architecture
Inquiry/
Prospect
Customize
Commit
Sales Lead
Order
Life Cycle
Core
Process &
Technology
Integrated Selling Chain Applications
Integrated
Solution
Product Catalog
Configurator
ATP
Contract Pricing
Proposal/Quote
Order Entry
Commission
(Kalakota & Robinson 2001)

5. Sales Configuration Vendors
Sales Configuration Magic Quadrant
Saqqara ResolutionEBS
JD Edwards Access Commerce
Completeness of Vision
Ability to
Execute
Niche Players
Visionaries
Leaders
Challengers
To Be a Leader
Cross-vertical-industry experience
Functionally complete multiple configuration capabilities
Proven tools for knowledge workers to maintain configuration models
20 product references demonstrating multiple configuration capabilities and support for multiple sales channels
Strong distribution channels and financial position
Configuration technology deployed to multiple interenterprise user types
Many ESPs or internal consultants trained in customization and maintenance tools
Architecture support for multiple sales channels
Ability to generate multiple customized outputs
GUI for salespeople or customers
Interact Commerce
Clarify
SAP
Cincom
Noochee
Solutions
Cybrant
Cerepoint
Primus
OnLink
i Baan
Pivotal
Siebel
Calico
Firepond
Selectica
Trilogy
As of 7/2000
Oracle
(Source: DeSisto, Gartner Research, 7/2000)

6. Customer Relationship Management (CRM)
An integrated marketing, sales, and service strategy of attracting and retaining customers, using integrated information and consistent channel processes
Require coordinated enterprise-wide actions for managing relationships
Combine business process and technology
Focus on customer lifetime value creation and optimization
Customer Lifetime Value = Average transaction value x Purchase frequency x Customer life expectancy
Customer Profitability = f(acquisition, enhancement, retention, loyalty)
C-CAM (Customer Capital Asset Management)
Finding a way to quantify, track and analyze the value of a customer to a company over time and how to ascertain the impact of future decisions on that value (Mei Lin Fung,
Why CRM?
It costs 7-10 times more to sell to a new customer than to an existing one.
The odds of selling to a new (existing) customer are 15% (50%).
A 5% increase in the retention of your best customers can result in 25-75% increase in profit
A typical distributor loses about one half of its customers within five years.
90% of dissatisfied customers never return.
The average business only hears from 4% of their customers who are dissatisfied with their products or services. Of the 96% who do not bother to complain, 25% of them have serious problems.
The 4% complainers are more likely to stay with the supplier than are the 96% non-complainers.
A typical dissatisfied customer tells 8-20 people about the experience, mostly related to poor customer service.
About 60% (70-95%) of the complainers would stay as customers if their problem was resolved (quickly).
A customer who has had a problem resolved by a company will tell about 5 people about their situation.
( manufacturing.net, Fitzsimmons & Fitzsimmons 2001)

7. Integrated CRM Focus and Architecture
Acquire
(new customers)
Enhance
(purchase value)
Retain
(existing customers)
Direct Marketing
Cross-/Up-Selling
Proactive Service
Sales Force Automation
Customer Support, Call Center
Telephone, Fax, , Web, VRU (Voice Response Unit)
Legacy Systems + Computer/Internet Telephony Integration (CTI/ITI) + Data Warehousing + Decision Support Technology (data model analysis)
Customer
Life Cycle
Core
Process
Enabling
Technology
Differentiation
Innovation
Convenience
Bundling
Reduce cost
Customer service
Repeatable process
Adaptability
Listening
New product
Loyalty program
CRM
Key Focus
Integrated CRM Applications
(Customer content, Customer contact info., End-to-end business processes, Inter-enterprise customer care (partnership relationship mgmt), System/tech integration
Integrated
Solution
(Modified from Kalakota & Robinson 2001)

8. Role of CRM IT Applications6
Prospect or
Customer
Web
Phone
VRU
EDI
Fax
Marketing
service and
billing
Loyalty and retention
Field sales and service
Sales
EFT
Qualify prospects
Track contacts
Event triggers
Call scheduling
Track order status
Cross-sell synergistic products
Advertising
Fulfilling customer requests (information, samples)
Product design & improvement
Quote and proposal generation
Personalized invitations and letters
Field service dispatch management
Remote troubleshooting
Provide and track detailed information about customers
Provide a comprehensive view of customer behavior
Service request management
Account management
Customer surveys
Return-material authorizations
Detailed service agreements
Maintain incident histories
Electronic bills
Electronic bill payment
Real-time balances
Inquiry management
Source: Kalakota & Robinson 2001

9. Customer Service Customer Service
Manufacturing: “The activity of providing desired goods, quality, and total support to benefit every aspect of product use at a competitive price and in a timely manner” (Gopal & Cahill, 1992)
Service: “A task, other than proactive selling, that involves customer interactions” (Lovelock, 1992)
Customer Service Elements (LaLonde & Zinszer, 1976)
Pre-transaction: Corporate customer policy or program; Accessibility, point of contact; Service management structure, control; System flexibility, information
Transaction: Those directly involved in performing physical distribution functions; Order placement, cycle time, fill rate; Order status info; Product delivery reliability, Stock availability
Post-transaction: Those supporting the product while in use; Shipment delivery; Product installation; Spare availability, Parts/repair service, Call-out time, first call fix rate; Product tracing/warranty/return, Customer complaint/claim
Impact of Web-enabled Technologies
Customers demand information on product, order transactions and inventory on a 24 x 7 basis.
Customers demand new methods of communications with their suppliers.
New channels for order placement and delivery are being created.
Information on products, price, and services are available on a global basis.
Creation of new barriers to entry has to be implemented in order to maintain brand differentiation.
Customers want a consistent service level creating a low acceptance of virtual stock-outs.

10. Customer Value and Order Winning Criteria
The market power is in the services - total experience relationship.
The customer value is not just the means to some desired end customers expect to accomplish, but the results, the end itself, associated with the overall performance of the whole system.
Order Winning Criteria Today
Conformance to Performance & Ease of Use
Repair to Prevention
Responsiveness to Responsiveness & Speed, Presence, & Joint development
Quality & Cost-of-Product to Quality & Cost-of-Use (TCO)
Customer Activity Service Paradigm Shift (till 80’s to 90’s & on)
Concept: Product-loaded to Service-loaded
Strategy: Product-based to Customer-based
Focus: Market share to Share of market activity
Relationship: Buyer & seller to Strategic
Pricing: Product-based to Knowledge-based
Delivery: On-time & JIT to Anytime & all the time
Management: Sales to Interdisciplinary projects
Rewards: Output-based to Outcome-based

11. Developing a Customer Service Strategy
Ensure consistency with e-business/SC objectives and strategies
Analyze gaps among customer requirements and expectations, your practices, and best practices
Analyze optimal cost-service trade-offs
Inventory deployment and IS/IT requirements
Develop key performance measures
Set customer service priorities
Critical Value Analysis: Service Priority = Service profitability rank x Critical value to customers
ABC Analysis
A Protect Develop
B Develop Maintain
C Review
A B C
Customers
Products

12. Designing the Solution System Over the Customer Activity Cycle
SAS’s Unbroken Chain of Product-Services
book get check board go to
ticket ticket in destination
look for confirm go to wait collect return
info airport luggage office/home
Key
activity
points
Customer Activity Cycle
personal services special various
ticket at hotel lounge activities
book facility
terminal limousine express speed limousine
link desk delivery door to door
Product
service
components
Solution System
Common Principles in Successful Solution System Strategies
Develop a profound understanding of who the end users are, their usage behavior and their objectives
Understand the customer activity cycle as a process over time
Design a system aimed at maximizing performance of product-service components over the customer activity cycle
Deliver the solution system over the activity cycle either their own or in collaboration with suppliers or other firms
(Vandermerwe 1991)

13. CRM Project Phases Strategize Evaluate Execute Manage
Form a project steering committee
Define the project scope
Evaluate
Develop a full benefit case
Translate strategies into actions
Recruit resources
Define project structure
Evaluate vendors
Execute
Execute the work plan
Implement the pilot and actual solution
Fine-tune benefit and metrics
Manage
Manage the solution life cycle
(Kalakota & Robinson 2001)

14. CRM Scorecard
(Kalakota & Robinson 2001)

15. Finding the Right CRM Tool
No CRM package currently offers all the major functions
Typical features in CRM packages/suites
Marketing automation and management
Sales force automation
Customer service automation
Data collection and analysis
Typical Product Categories and Vendors
Enterprise Space (> 500 employees): Siebel, Vantive, Clarify, Oracle and PeopleSoft
Mid-market Space ( employees): ServiceSoft, Onyx, Pivotal, Remedy and Applix
Small-business Space (<100 employees): Goldmine, Multiactive, SalesLogix
Selection Approach
“Best of the breed“ approach
Pick the best application in each functional area
Integration & vendor maintenance issues
“Single vendor package”
Easier integration / support
Potential trade-off’s in terms of functionality
Finding the Right CRM Packages
Define the need
Build a business case
Set priorities, identify business requirements and technology constraints
Weigh the alternatives
Identify specific vendors
Screen vendors by phone
Conduct on-site visits
Check references
Test the software hands on
Request pricing proposals
Try to tie payment to performance
Source: Naras Eechambadi, crmguru.com

16. Customer Service and Support Vendors
CSS Apps Magic Quadrant
EGain
Key
SME focus
Utilities only
As of 7/2000
Completeness of Vision
Ability to
Execute
Niche Players
Visionaries
Leaders
Challengers
To Be a Leader
Provide suite with four core areas
Integrate with front-office components
Integrate with ERP/back-office systems/dB
Horizontal solution with vertical suites
Support multiple channels
50 referenceable production accounts
Business rule workflow
Multiple dB support
Globalized apps
Robust customization, development & administration tools
Adequate implementation resources
Multiple sales channels
Domestic & international sales
Onyx
Pivotal
Telephony vendors
Remedy
Managed Solution
ViryaNet
POINT
Conranta
Hatton Blue
SAIC/BSIS
Service Plus
SAP
Royal Blue
Symix
Oracle
E.Phiphany
Epicor
Chordiant
Applix
Siebel
Clarify
Quintus
PegaSystems
Kana
Vantive
E-Service Players
SCT Utilities
(Source: Fluss, Gartner Research, 2/2000)

17. Success Factors for CRM and Potential Pitfalls
CSFs
Concrete measurement goals
Solid consumer and channel partner relationships, channel partner support
Strong brand images, Corporate and product brand alignment
Complex product and service bundles
Executive marketing councils, Targeted marketing to C-level executives
Consumer insights, Integrated customer databases
Cultural change (customer awareness, intimacy, collaboration)
Project ownership & accountability
Pitfalls (Failure Rate as High as 80%)
Not adhering to project plan
Altering or adding requirements AFTER initial phase
Customizations
Software vendor will no longer support
Not upgradable
Architectural Tuning
Transaction level output
Retirement of legacy systems
Do a detailed analysis of legacy systems functionality
Solid Customer Relationships - Many companies observe the critical importance of creating strong relationships to drive general market success.
Strong Brand Images - To build customer and channel partner relationships, companies create strong brand images to help simplify consumer choice and enhance channel partner performance.
Corporate and Product Brand Alignment - Research partners see that corporate and product brand images must be consistent at a given time and refined as customer needs and market changes occur. Thus, companies adopt integrated approach to manage product and corporate brands across marketing groups.
Executive Marketing Councils - To align corporate and product brand images, companies create EMCs to ensure brands work in harmony by emphasizing consistency and alignment.
Consumer Insights - Findings suggest that top organizations acknowledge that consumer needs are always changing. These companies gather consumer insights and integrate consumer knowledge into marketing plans to drive branding and positioning of offerings.
Channel Partner Support - Companies support partners with ongoing consumer research to drive product advertising and promotions. Relevant sales collateral helps partners increase their profitability. With this, partners report better targeting to end users and return on advertising investment.
Complex Product and Service Bundles - The essence of a solutions-based business strategy rests on a company’s ability to offer customers complex product and service solutions for their business needs. Complex product and service bundles are enhanced over time and have huge dollar values, thus creating multi-year relationships.
Integrated Customer Databases - Companies create views of customers by integrating customer databases. Customer data shows interactions and highlights critical decision-makers in customer organizations. Companies also integrate key customer databases with data obtained from marketers in key customer segments. In turn, marketers share customer insights with R&D and new product developers to improve offerings.
Targeted Marketing to C-level Executives - Top solutions companies act on customer insights to target corporate branding to key customer decision makers.
Strategic Partnerships - Finally, marketing relies on customer databases and its understanding of customers’ business issues to research potential strategic partnerships that will provide comprehensive solutions for customer organizations.
(Source: Best Practices, LLC, Kalakota & Robinson 2001, Gartner Symposium ITxpo 2000,
destinationcrm.com, manufacturing.net)