CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
Holly Pund Jamia Seifert Nakia Sharp Olga Skiridova

“CRM is the process of predicting customer behavior and selecting actions to influence that behavior to benefit the company usually leveraging on information technology and database-related tools.” Koh Hian Chye & Chan Kin Leong Gerry, “Data mining and customer relationship marketing in the banking industry.” Singapore Management Review, Vol. 24, Issue 2, 2002, pp

Benefits of CRM Provide better customer service
Make call centers more efficient Cross sell products more effectively Help sales staff close deals faster Simplify marketing and sales processes Discover new customers Increase customer revenues It costs 10 times more to get a new customer than it does to keep an existing one. Moreover, evidence suggests that companies focused on their customers are achieving higher growth rates than competitors who aren't. “What is CRM?” Ehttp:// “Keeping Customers is Smart and Profitable” Viewed April 12, Chettayar, Krishna “Using customer information effectively.” Financial Executive, Morristown, Vol. 18, May 2002, pp

5 Elements Required to Implement CRM
Strategy Channel Marketing Branding Advertising Pricing Segmentation Technology Process Organization Brown, Stanley A. “Customer Relationship Management: A Strategic Imperative in the World of e-Business”. Toronto, New York: John Wiley & Sons, 2000.

Defining Needs of CRM Define customer strategy Create a channel and product strategy Understand the importance of an integrated infrastructure strategy “The key is for the CRM effort to move beyond sales, marketing, customer services and assisting customers to include operations and the "Office of the CEO" or strategic planning. It's critical, for example, to integrate sales-force automation with demand planning efforts that then feed supply-chain systems.” - Larry Yu Brown, Stanley A. “Customer Relationship Management: A Strategic Imperative in the World of e-Business”. Toronto, New York: John Wiley & Sons, Yu, Larry. “Successful customer-relationship management.” MIT Sloan Management Review, Cambridge, Vol. 42, Issue 4, 2001, pp

Corporate Structure Before CRM
“What is CRM? A White Paper by TBC Reasearch.” IT Toollbox Viewed April 18, 2003

Corporate Structure After CRM
The process entails acquiring and deploying knowledge about one’s customers and using this information across the various touch points to balance revenue and profits with maximum customer satisfaction. “What is CRM? A White Paper by TBC Reasearch.” IT Toollbox Viewed April 18, 2003

Founded in 1993 2002 Revenue: Over $1.6B
Industry-specific best practices, CRM applications, and business processes Founded in 1998 2002 Revenue: Over $2.3B Customer care and billing software and services that add value to the relationships between clients and customers Siebel web page. Convergys web page. Viewed April 22, 2003

Internet-enabled enterprise software
Founded in 1977 2001 Revenue: Over $10.8B Internet-enabled enterprise software New software license sales were down 23% in 2002 “Oracle is the first software company to develop and deploy 100 percent Internet-enabled enterprise software across its entire product line: database, server, enterprise business applications, and application development and decision support tools.” - Oracle 2001 Annual Report Oracle Annual Report, Viewed April 22, Seewald, Nancy & D'Amico, Esther. “CRM and SCM vendors post mixed results.” Chemical Week, New York, New York, October 2002, Vol. 164, Issue 43, pp

So What is the Cost of CRM?
Despite dropping by 5.4% in 2002, the CRM market is expected to expand from a projected $42.8 billion in 2002 to $73.8 billion by 2007. -Forrester Research CRM is expected to grow more than $20 billion by 2004 -AMR Research Siebel web page, Veiwed April 22, 2003 “CRM Overview” Viewed March 20, 2003 “Customer Relationship Management” Viewed April 12, 2003Anonymous, “CRM bounces back.” Chicago, Illinois: Marketing Management, Vol. 11, Issue 5, Sept/Oct 2002, p. 4. Patron, Mark, “If database marketing was so good, why is CRM so bad?”Journal of Database Marketing, London, Vol. 10, Issue 2, December 2002, pp

So What is the Cost of CRM?
Spending on CRM applications and services, which totaled $23 billion in 2000, are projected to grow at a compound annual growth rate of 27% and exceed $75 billion in 2005. CRM services revenue will increase 15% in The market is forecast to nearly double and reach $47B by 2006. Worldwide, organizations spent nearly $25 billion on CRM software in 2002 Of that total, only $3.7 billion, or about 15%, was spent on packaged CRM applications. -Gartner Group Almquist, Eric & Carla, Heaton. “Making CRM make money.” Marketing Management, Vol. 11, Issue 3, May/Jun 2002, Chicago Illinois, pp Anonymous, “CRM bounces back.” Chicago, Illinois: Marketing Management, Vol. 11, Issue 5, Sept/Oct 2002, p. 4.

CRM Success & Failure Rates
45% of the CRM projects are successes that are producing definite paybacks 35% are likely to fail 20% are generating some ROI but not in a timely fashion Panker, Jon, “Research finds CRM failure rate lower than widely reported” News Editor12 Dec 2002, SearchCRM.com Viewed April 22, 2003

http://www.sabre.com/, viewed March 23 2003
Overview Travelocity.com was launched in 1996 as part of Sabre Holdings On April 11, 2002, Travelocity became a wholly owned company of Sabre Holdings. For 2002: Travelocity’s revenue was $308 million, an increase of 2.2 percent compared to $302 million for 2001 Travelocity’s gross bookings reached $3.5 billion, an increase of 11.8 percent compared to $3.1 billion for 2001 Since Travelocity is no longer a publicly traded company, information concerning IT’s budget was not available Saber Travel Network - The world's largest electronic network for travel buyers and sellers Get There - The leading Web-based system for corporations to book and manage travel Sabre Airline Solutions - The most comprehensive solutions and services to optimize airline operations and reduce costs viewed March

Overview World’s leading travel internet site providing consumers with reservation and information access: 700 airlines 55,000 hotels 50 car rental companies 6,500 cruise and vacation packages Over 35 million members 1,000 customer service representatives Web site in 7 languages across 4 continents TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Travelocity’s Business Objective
“Develop long-term profitable relationships by providing exceptional service and highly relevant Travel offerings:” Increase customer conversion Increase customer retention Increase revenue per member TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

CRM Focus at Travelocity
Develop a “single view of the customer” The most important focus of the CRM project Travelocity chose Teradata, a division of NCR, to assist with the CRM initiative “To achieve this vision requires having a single view of the customer - from when they begin looking to when they take their trip, and afterward. This requires segmenting customers by type (business, leisure, college, bereavement, etc.)” - Mamie Millard, Senior VP of Technology at Travelocity viewed March

Travelocity’s CRM Conversion
Six months conversion – The maximum recommended time Three people dedicated Mapped a middle or metadata layer into their data warehouse for the CRM equation Common problem of underestimated the amount of time required to cleanse the data during transfer Duplicate records The big OOPS! old database allowed duplicate records in some tables, whereas Teradata did not. Williams C.C. “Just the Ticket: Travelocity.com books Teradata for virtually instant answers.” July 5th, Viewed March 23, Woodcock, Neil & Starkey, Michael. “’I wouldn't start from here': Finding a way in CRM projects.” Journal of Database Marketing, London, Vol. 9, Issue 1, 2001, pp

Seven Steps to Implementation
Important: Selection of a specific business process that can be measured The use of a system that did not require a re-build along the way Step 1: Created a team Consisted of members from Travelocity and Teradata Travelocity (from Marketing & IT) Data warehouse developers Marketing Director Marketing Analysis Marketing Managers Teradata Data Modeler CRM Developer Project Manager Decided on the team members based on each persons strengths “The private sector’s CRM-ROI formula can work in agencies too.” Friday March 28, Viewed March 23, 2003

Step 2: Prepared the data warehouse Created new logical and physical data model (customer centric) Focused on data quality Added demographic data Step 3: Identified unique members Customers with multiple accounts are now identified as one unique customer Used Acxiom’s Abilitec product with customer accounts. TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Step 4: Developed Customer Segments Travelocity Member Groups: New Members Active Lookers Short-time Inactive Members 1st Time Booker 2 + Booker Best Customers Long Term Inactive Members This step is for marketing purposes and based on demographics, interests and life stages cluster, shopping & buying behavior TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Step 5: Activated Channels Aggregated data from all customer touch-points: Web interactions Inbound Call center interactions Offline bookings Activated customer touch-points to drive service levels and generate sales: Targeted offers on the web site Outbound targeted Cross sell/upsell opportunities at customer service TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Step 6: Implemented CRM Tool Utilized Teradata’s CRM solution for campaign management: New member conversion Post booking cross sell Pre-trip “Bon Voyage” message Frequent looker Toll-free reservation line message Step 7: Analyze Campaigns Analysis and reporting processes are in place to measure campaign performance TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Delivering Incremental Value
CRM campaigns will be added incrementally, then measured for effectiveness Key drivers are: Customer segment needs Merchandising plan Revenue management requirements Presently creating a position in Marketing: Manage CRM initiatives Link the IT and Marketing groups TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Travelocity’s Business & IT Partnership
Let each area focus on their expertise Data Warehouse group and Marketing partnered on major projects: Selection of Teradata Selection of Cognos tools for DB management CRM initialization The project budget and timeline was not available TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

The Effects of CRM at Travelocity
500,000 automated communications sent monthly New member welcome/conversion series Post booking cross sell Bon voyage pre-trip 20,000,000 targeted promotional s sent monthly 8,000,000 personalized newsletters sent weekly Travelocity’s ROI for the CRM project The CRM efforts contribute a minimum of $2 million per month to Travelocity’s revenues TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

CRM Lessons Learned Build the foundation first, then add the bells and whistles Set scope of project and stick to it Dedicate resources to the project Set internal expectations and provide frequent updates CRM projects take more time than initially anticipated – this was difficult because they had scope creep TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

CRM Lessons Learned CRM is never “finished”
Focus on data quality first Determine agreement on service levels between different groups Talk to other companies utilizing CRM find companies your size that have data warehouses and (ask about) their experiences. Learn by other people’s successes and mistakes. Williams C.C. “Just the Ticket: Travelocity.com books Teradata for virtually instant answers.” July 5th, Viewed March 23, 2003

Six Key Success Factors
Corporate Buy-in Travelocity’s “CRM had significant senior management support, a factor agency IT and business managers also know to be critical to any e-commerce effort.” - Caroline Smith, Director of Business Intelligence - Travelocity A robust data warehouse Obtain the “single view of the customer” TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Six Key Success Factors
Flexible and scalable CRM tools Define event and wait for it to occur Event triggers a reaction Record event in data warehouse Employ good communication channels Ongoing analysis and improvement Establish control groups Continuously monitor campaign performance Maintain contact history Develop and apply data modeling to improve customer targeting TDWI conference keynote speakers Caroline Smith, Director of Data Warehousing at Travelocity.com & Chris Warwick, Director of Relationship Marketing at Travelocity.com – February 20th, 2003, & interviewed in person by Jamia Seifert

Greatest CRM Challenge
Constantly implementing new features and functionality into the Web site New sources of data Web site traffic keeps increasing Creates greater volumes of data To provide more value to our customers. This impacts the data warehouse because new features on the site equal new sources of data for the data warehouse. Daily, have to make decisions about evaluating and prioritizing these new sources of data. This can get quite hectic Williams C.C. “Just the Ticket: Travelocity.com books Teradata for virtually instant answers.” July 5th, Viewed March 23, 2003

Best Practices & Leadership Award - 2002
TDWI determent Travelocity’s CRM initiatives as innovative and unique because: Travelocity is able to perform analyses and execute automated, personalized marketing campaigns. “Before their CRM initiative, customer information was available to only a few end users and that information was scattered. Now, all information for all travel categories—air, car, hotel, and cruise—is in one location and is available to anyone with a need to view the information.” - TDWI recognition statement “Best Practices and Leadership in Data Warehousing Award Winners 2002.” January 2003 Viewed March 23, 2003

Oracle Company Background
Founded 26 years ago by Larry Ellison, Bob Miner, and Ed Oates First software company to develop and deploy 100% internet able enterprise software The World leader in supplier software for information management The World second largest independent software company Producer of the World’s greatest database-Oracle 9i Viewed February 2, 2003

Oracle Company Profile
Headquarters Location: Redford Shores, California Employees: 40,000+ Revenues for 2001: $10.8 billion Viewed February 2, 2003

Oracle Company Areas of CRM
Marketing Sales Service Contracts Viewed February 5, 2003

Oracle Marketing Solutions
Problem: Company makes marketing decisions by instinct rather than by solid facts from data. Solution: Oracle offers Oracle Marketing. A system that automates the entire marketing function and process. Products: Oracle Marketing Oracle Trade Management Viewed February 8, 2003

Oracle Sales Solutions
Problem: Ill preparation of a company’s sales staff leading to its inability to hit sales targets, reduce costs, and reduce sales cycles. Solution: Oracle provides the company with an automated business process for all sales and customer interactions. Products: Telesales Sales Online Sales Offline Incentive Compensation iStore Quoting Configuration iPayment Viewed February 23, 2003

Oracle Service Solutions
Problem: A company’s inefficiency due to gaps in communication between service, field service and maintenance. Solution: Oracle’s automated and centralized process of tracking requests and dispatching. Products: iSupport Mobile Field Service Advanced Scheduler Field Service Wireless Option for Service Depot Repair Viewed February 23, 2003

Oracle Contract Solutions
Problem: A company’s use of manual contracts leads to omissions of important information which later results in a loss of revenue. Solution: Oracle’s complete automation of multiple style contracts Products: Service Contracts Project Contracts Lease Management Viewed March 13, 2003

The Oracle Strategy of Implementing CRM
Oracle’s focus of implementing CRM to their existing customers database Single database instance Suite of integrated applications Software configuration, not customization Viewed March 13, 2003

Oracle Case Studies Case Study #1 McData Corporation

http://www.mcdata.com/about/profile/index.html. Viewed March 5, 203
McData Corporation McDATA Corporation was founded in McDATA (Nasdaq: MCDT/MCDTA) is a global leader in open storage networking solutions and provides high performance enterprise directors and Storage Area Networks (SANs). The company manufactures and markets high-performance switching solutions — Fibre Channel for open systems environments and ESCON for IBM data centers. Viewed March 5, 203

Company Profile Industry: High technology
Headquarters Location: Broomfield, CO Industry: High technology Annual income: $101 million to $500 million Employees: 501 to 1999 CRM Outsourcing Company: Oracle Viewed March 5, 2003

Oracle Products & Services
Discrete Manufacturing Center Incentive Compensation Mobile Field Service iLearning TeleService Sales Online Depot Repair Oracle Support iSupplier Portal Viewed March 5, 2003

Project Goals for CRM Implement a scaleable solution to support growth
Create a 360 degree view of the customer Streamline processes Lower total cost of ownership Viewed March 5, 2003Crafton, Thomas W. “Do you really know your customers?” Strategic Finance, Vol. 84, Issue 4, October 2002, pp

Outcome from CRM Implementation
Avoided $5 million in cost in one year and saved $1 million Reduced days of sales outstanding from 80 days to 50 days Reduced quarterly close days from 21 days to 4 days Inventory was reduced from $68 million to $43 million Product quality was improved by 22% On-time shipments were increased from 79% to 97% Time necessary to create reports reduced by 95% Viewed March 5, 2003

Oracle Case Study Case Study #2 Gevity HR

www.gevityhr.com. Viewed March 10, 2003
As the nation's leading provider of outsourced HR solutions, Gevity HR helps businesses: Find the right people Manage the paperwork Develop and manage your people Protect your business Retain your best employees Gevity HR services are provided through specific offerings, such as recruiting assistance, training, benefits administration, payroll processing and related paperwork management, and legal compliance. Viewed March 10, 2003

Customer Profile Headquarters Location: Bradenton, FL
Industry: Professional Services Annual Income: More than $1.001 Billion Employees: 501 to 1999 Viewed March 10, 2003

Oracle Products & Services
Scripting Oracle9iAS Portal HR Intelligence Self Service HR Human Resources Financials Training Administration Oracle Consulting Services Viewed March 10, 2003

Project Goals for CRM Create core service transactions related to HR and payroll administration Implement Oracle TeleService and CTI applications Viewed March 10, 2003

Outcome from CRM Implementation
Reduced total work time for transactions by 27% Doubled payroll staff productivity in 18 months, which resulted in $3 million savings in personnel cost No new clients terminated for service related reasons in first half of 2001 Integrated 24 hour access to customer data in 41 field offices Viewed March 10, 2003

Best Practices for CRM

A New CRM System Alone Will Not Bring Improvements
New Technology + Old Organization = Expensive Old Organization “One thing that doesn’t work is going out and buying a single package to solve all your CRM problems. Without a business case, without business buy-in, without executive sponsorship the package will not solve the problem. The problem is not the technology – it’s the culture change.There is no silver bullet.” Liz Shahnam Roche, Meta Group Vice President, interviewed by CRMDaily.com, December 22, 2002 Andersen, Henrik, and Per Jacobsen. “Implementing CRM: 20 Steps to Success”. In Stanley Brown, ed. Customer Relationship Management: A Strategic Imperative in the World of E-Business, 269. Toronto, New York: John Wiley & Sons, 2000.Raymond, Ed. “Sorting Out CRM Best Practices.” viewed April 15, 2003.

Development of Customer Centric Business Strategy
Object: to find win-win opportunities with customers Plan around customer wants, not company goals Focus on listening to customers, rather than forcing them to listen to you Avoid promotional marketing communication; stick to informed and informational dialog with customers : important focus of the CRM project - to develop a single view of the customer Lee, Dick. “Four Steps to Success with CRM”. viewed April 15, 2003.

4 Ps of CRM Success Planning People Process Platform
Gerson, Richard. “Secrets of CRM Success”. viewed April 15, 2003.

Planning #1 - - Develop a comprehensive plan for your CRM efforts – lay out what you want your program to accomplish (how you want to capture and use the data) Gerson, Richard. “Secrets of CRM Success”. viewed April 15, 2003.

Planning Example Planned CRM Activity: to capture consequently three types of customer data from a corporate website Type of Data customer’s address and name customer’s physical address and phone numbers customer’s purchase preferences Usage of the Data To capture 80% of the visitors to the site To turn 90% of those first-time visitors into customers To capture purchase preferences to personalize their future visits; to send hard copy direct mail to influence future repeat purchases Look towards a software solution that will allow you to perform this activity choice of Teradata Gerson, Richard. “Secrets of CRM Success”. viewed April 15, 2003.

Planning #2 - - Carefully select the initial (pilot) implementation areas within the organization that will bring the greatest benefits and quick wins Andersen, Henrik, and Per Jacobsen. “Implementing CRM: 20 Steps to Success”. In Stanley Brown, ed. Customer Relationship Management: A Strategic Imperative in the World of E-Business Toronto, New York: John Wiley & Sons, 2000.

People Get employees and partners involved and on-board with your CRM effort – generate a new company culture! Restructure employee compensation to reinforce CRM priorities e.g. tie employee incentives to customer-oriented indicators (customer retention and satisfaction) Gerson, Richard. “Secrets of CRM Success”. viewed April 15, 2003.Sims, David. “Principles Make the Best Practices”. < viewed April 15, 2003.

People Establish two training protocols
#1 - Communication the culture-change and associated soft skills #2 - Technical training Gerson, Richard. “Secrets of CRM Success”. < viewed April 15, 2003.

Best CRM Practices Proportion for Training and Infrastructure Budgets
People Best CRM Practices Proportion for Training and Infrastructure Budgets - acquisition of software and hardware - training and change management $1 $3-15 Ramesan, Kevin. “CRM Application Users are Key to Project Success”. < viewed January 27, 2003

Process Re-engineering of work processes involves:
#1 - change of departmental roles and responsibilities #2 - adoption of new work processes; creation of a service map, including: How a customer contacts the company How you will capture the information How you will process the information Methodology of repeated contact with a customer Consolidation of info from all customer touch-points Gerson, Richard. “Secrets of CRM Success”. < viewed April 15, 2003.

You have:. Set your CRM program goals. Involved your people
You have: Set your CRM program goals Involved your people Charted the process Now you are ready for technology!

Platform CRM software comes in all shapes, sizes and functions – it should support, but not drive new work processes Span of Focal Points Identify your focal point and compare it to the focal point of every software you are considering Marketing Automation Sales Automation Call Center Sales Call Center Service Field Service Lee, Dick. “Four Steps to Success with CRM”. viewed April 15, 2003.

Implementation Perspective of CRM Success
3 inter-related activities of successful implementation Leadership (10%) Program Management (10%) Change Management (10%) In brackets percentage relative to each section’s contribution to overall success of the project Petersen, Glen. CRM Best Practices: The Framework For An Industry Renaissance. GSP & Associates, Inc, 2002.

Leadership Find a sponsor in top management – they have influence to find necessary sources and accelerate decision-making process Hansotia, Behram, “Gearing up for CRM: Antecedents to successful implementation.” Journal of Database Marketing, London, December 2002, Vol. 10, Issue 2.

Program Management The effort must be well-coordinated and follow a defined schedule with checkpoints

Change Management A change in culture and practice must shadow your CRM initiative – communication and training play an integral role in the implementation process Mullin, Rick, “CRM: Show us the payback.” Chemical Week, New York, New York, October, 2001, Vol. 163, Issue 40, pp

Summary of Best Practices
Develop a customer-centric strategy in you company Set precise goals Get employees and partners involved with your CRM effort Re-engineer work processes Select the CRM platform adequate to your goals

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CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

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