Customer relationship management at Maruti Suzuki
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  • 1. Customer Relationship Management at Maruti Suzuki Submitted on 20-Feb-2012 Group#08 (Section B) Basu Agarwal (FT12416) Bikram Satapathy (FT12417) Saloni Goel (FT12455) Shruti Mishra (FT12462) Srinivas Dhenuvukonda (FT12467)Great Lakes Institute of Management, Chennai 1
  • 2. Index Page1.0 Introduction 32.0 Various Technologies at Maruti Suzuki 4 Level of CRM3.0 Analytical CRM 5 3.1 Data base 5 3.2. Direct marketing-Data analysis 6 3.3 Cross-selling of various value added services 6 3.4 Customer Retention for Service at dealers, satisfaction, thereby, sales retention for the future 74.0 Operational CRM 8 4.1 Campaign management for promoting the special offers 10 4.2 SX4 Pre-launch Campaign management on MSD CRM 4.0 10 4.3 Insights for Dealer Development Division (DDD) & used car division (TRUE VALUE) 10 4.4 Loyalty card implementation (Auto card) 115.0 Strategic CRM 116.0 Philosophical CRM 127.0 Challenges addressed by MS Dynamics CRM 4.0 148.0 Future challenges of Maruti’s CRM 14Great Lakes Institute of Management, Chennai 2
  • 3. 1.0 IntroductionMaruti Suzuki is the Indian passenger car market leader for several decades. It has crossed the 10million cumulative domestic sales mark here today. It is the only automobile company in Indiato cross this milestone.The Company, which had rolled out its first car in December 1983, attained 5 million domesticsales in February 2006.The next 5 million domestic sales have been achieved in six years.The 10 millionth vehicles, a Red Swift Vxi, was dispatched to Coimbatore on February 9th, 2012from the Companys Manesar plant.While Maruti 800 and Omni powered sales for almost two decades, the Alto has been Indiasbest-selling car for the last over 7 years. In recent years, the success of WagonR and Swift,among others, has accelerated the Companys progress towards the 10 million mark.Dedicating this milestone to customers, Shinzo Nakanishi, Managing Director and CEO, MarutiSuzuki India Limited, said, "Maruti Suzukis success story is closely linked with the successstory of India in the last two decades. Even as India has grown and transformed, Maruti Suzukihas evolved to meet changing demands. He said, we will continue to drive the growth andevolution of Indias car market. I thank employees, dealers and suppliers for their support andcommitment".Top five Maruti Suzuki models in cumulative sales Models Cumulative Units sold M800 26.36 lakh units Alto + K10 19.08 lakh units Omni 14.37 lakh units Wagon R 11.14 lakh units Swift 6.85 lakh unitsDespite holding strong position in the market, Maruti Suzuki losing market share drasticallydue hyper competition prevailed with the entry of foreign players such as Ford, Chevrolet,Toyota, Honda & Renault etc. With that competition in place, the marketers now had to focuson customer oriented activities to stay in touch and retain them.Also, Maruti used communicates with the dealers and dealers, in turn, the dealers communicatewith the end customers and vice versa. With this, there is lot of widened gap of understandingthe customer needs and wants. With that dissatisfied customers are growing immensely. thereis no proper channelizing system to deploy the customer complaints and then solve them ontime. Diagnosing these dynamic changes in the customer market, Maruti wanted toGreat Lakes Institute of Management, Chennai 3
  • 4. communicate with the existing customers directly and understands the requirements and servethem better. Hence, Maruti had to initiate various customer focused marketing activities suchintroducing Customer Relationship Management (CRM) to retain the customers, acquire newcustomers & increase the customer satisfaction& loyalization. Maruti Suzuki Maruti Suzuki Dealer Dealer Customer CustomerFig 1(a). Traditional Communication Fig 1(b). Direct Communication through CRM2.0. Various technologies at Maruti SuzukiHCL technologies implemented the CRM at Maruti Suzuki. They have implemented MicrosoftDynamics CRM 4.0 in a span of approximately 6 months. Application Technology Suppliers Dealers Management Oracle 9i system Wipro, Oracle ERP Oracle-business suite Wipro, Oracle CRM Microsoft dynamics CRM HCL, Microsoft, SASGreat Lakes Institute of Management, Chennai 4
  • 5. 3.0 Analytical CRM3.1. The data baseThe database is the pre requisite for any kind of data analysis that is done in the analytical CRMmodule. Since Maruti has established network of data centers through dealer transactions andtoll free number-call center data capturing etc. Maruti through various channels.Those are the following. 1) Any Time Maruti- toll free call center (operated by HCL Technologies at Noida). All kinds of queries are logged at (ATM) and the kind of information received into the following areas. a) New sales queries due to campaigning or advertising by Maruti b) Existing customer sales queries/complaints c) Service complaints These databases are automated to get migrated with respective operational CRM software modules from the call Centre. 2) Dealer Management System (DMS), dealer transaction module which is connected through extranet to the central server of Maruti. a) All the queries (sales/service/true value) are logged onto the DMS portal by the channel partners. b) The same data is migrated to the Microsoft dynamics Software at Maruti.The database from these sources is used for need analysis after the data is cleaned using variousdata warehouse/data mining techniques. CTPI MSD DMS server RDBMS SAS platform DW ATM HCL call Centre DA server Fig 2. Customer Database flow for analytical CRMGreat Lakes Institute of Management, Chennai 5
  • 6. 3.2. Direct marketing-Data analysisThe problem with direct marketing is with the fact that success rates of direct marketing arevery low. For example, some survey suggests that national average of catalog sales success ratiois about 2% ! With such success ratio, selling low profit margin products through directmarketing may not be feasible. Analytic methods that can select customers who are more likelyto buy products are needed. The following techniques can be used in selecting customers; • Customer profiling • Customer segmentation • Customer scoring • Predictive modelingThese techniques can reduce marketing cost by eliminating customer groups who are unlikely toplace orders. The techniques that are extensively used in Direct Mail Marketing are RFManalysis, clustering loyalty scoring etc.3.3. Cross-selling of various value added servicesCross-selling is to sell other products to existing customers. To increase the success rate, otherproducts tend to be co-products or related products. For example, a customer who bought aSWIFT car will likely to purchase extra accessories, extended warranty and Auto card.The following chart shows customer purchasing behaviors;Cells in red color indicate that there is positive relationship between two products. That is,when customers buy one product, they tend to buy the other product as well. Cells in blue colorGreat Lakes Institute of Management, Chennai 6
  • 7. indicate the opposite. When customers buy one product, they tend to not buy the otherproduct. Brightness of cells indicates the relative strength of relationships. The chart shows thatthe following product pairs have strong positive relationship; • Product P ~ Product O • Product P ~ Product F • Product O ~ Product FAlso notice that most product pairs show negative relationship (in blue). Knowing negativerelationship can prevent from wasteful marketing efforts! The strongest pairs as follows; • Product E ~ Product H • Product G ~ Product J • Product G ~ Product H3.4. Customer Retention for Service at dealers, satisfaction, thereby, salesretention for the futureIn the current scenario of Indian passenger car industry, customer churn is a big problem as thecompetitors are pouring sops on customer’s .Also; it is the duty of OEM to ensure that everycustomer is retained by the dealer for service needs. As in these days, the margins on sales of newcars for dealers is almost vanished or narrowed down, it is the service business that makes thedealers viable. Also, acquiring a new customer is costly when compared to retain the existingcustomer. Hence, retention of customers for both future purchase of the cars and current serviceneeds is necessary for Maruti Suzuki.For obvious reasons, the most important strategy in customer retention is to identify groupsthat are likely to leave (potentially to rival providers) through performing retention(alternatively defection) rate analysis. Once they are identified, preventive measures can bedeveloped and actions can be followed to prevent defections. The following techniques can beused to identify customer groups of defection risk;The main objectives of MS Dynamics CRM at the analytical level are to provide the predictivemodeling for probable dissatisfied customer in the service and provide the insights to the relateddepartment. The satisfaction scores and churn scores can be calculated at this levelGreat Lakes Institute of Management, Chennai 7
  • 8. • Defector profiling Develop profiles of risky groups based on demographic, geographic and psychographic attributes. • Defection scoring Build neural network predictive models that can predict likelihood of defection. 4.0. Operational CRM Operational CRM generally refers to services that allow an organization to take care of their customers.it provides support for various business process, which can include sales, marketing and service. The operational CRM addresses the various issues such as high customer turnover, ROI on marketing and promoting, customer satisfaction scores etc. CTPI MS MSD Microsoft OfficeDMS server RDBMS SAS Dynamics platform DW CRM 4.0ATM HCL call Interface Centre DA server Fig 3. Operational CRM Architecture A campaign is a record for storing the details about a marketing effort that uses multiple tasks to reach customers. The following diagram illustrates how to use a campaign in Microsoft Dynamics CRM to track the marketing efforts. Great Lakes Institute of Management, Chennai 8
  • 9. When everything is ready to plan a new marketing campaign, the first steps are often gathering information and determining your audience. From there, one can create your team and your budget for the campaign and get ready for launch. All this information, as well as data about the campaign tasks, can be stored in a campaign record, allowing you easy access to the details of a particular campaign. You can also run reports on the campaigns and see what marketing works best for your organization.Great Lakes Institute of Management, Chennai 9
  • 10. 4.1. Campaign management for promoting the special offersCRM division of Maruti Suzuki runs campaign management using MSD CRM 4.0 to targetvarious segments of customers using the data available from analytical CRM.these kind ofcampaigns are run to promote the products with some offers such as cash discounts, bundlingoffers, exchange offers etc. CRM will contact each and every customer with customizedmarketing program. Interested customers will respond back, the responses from the customersare again captured by CRM database. This can be further analysed for insights using analyticalCRM frame work. Hence, CRM is an iterative process.4.2. SX4 Pre-launch Campaign management on MSD CRM 4.0The launch of SX4 is an example of Maruti’s CRM campaign management for positioning a newproduct using MSD CRM successfully. The objectives were to position the car in the sedansegment in competion with Honda City, to conquer new customers and loyalize the previousmodel Baleno. An integrated communication campaign was launched that coordinated TV andprint campaigns, direct marketing, preview events, electronic media, as well as dealer marketing.The goal of entire marketing was to select relevant prospects for the actual launch in theupcoming period. The activity started by one-to-one bulk email marketing followed by print andTV advertising. Based on the responses of this activity, the prospects are called for previewlaunch, thereby; the contact details of these hot prospects are passed to dealers for the follow uponce the product entered into the actual market. The effectiveness of the campaign wasmeasured in terms of response rate, cost per contact, ROI on campaign & quality of prospects.Overall the campaign was extremely successful, not only premium positioning but also in termsof leading sales in the targeted segment (Honda Siel /Ford fiesta/Hyundai Verna).4.3. Insights for Dealer Development Division (DDD) & used car division(TRUE VALUE)There are two major responsibilities of the DDD division. 1. Improving the customer satisfaction of the existing customers through dealer activities. 2. Enhancing dealer network by analyzing the demographic variables. Analytical CRM will provide the satisfaction scores (defection scores) upon which there will be action taken by the relevant division for improving the customer satisfaction measures. This would help the dealers to increase profitability by retaining them. Also, analytical CRM will provide the cluster analysis, upon which the DDD will take action to appoint a new dealer in the city or close down the existing one.Great Lakes Institute of Management, Chennai10
  • 11. The TRUE VALUE division undertakes trade-in activities of any car in the market. Operational CRM will provide recommendations based on the data from DMS or Maruti e- commerce portal of exchange of cars or other sources.4.4. Loyalty card implementation (Auto card)Maruti Suzuki loyalty card is a unique loyalty reward program designed exclusively for theowners of Maruti cars. The program is loaded with powerful features and offers the customersbest services along with exciting rewards and privileges. With this program the customers willnot only get reward points on spending but also on the contribution to the ever increasing salesof Maruti cars. Like, whenever the customers recommend his friends or colleagues, he/she wouldearn reward points which can redeemed while buying any product or service from Maruti.Maruti ties up SBI Bank to penetrate into rural market.MSD CRM 4.0 will help the Loyalty program department in tracking the customers and theirpurchase benefits so that it can provide insights and recommendations for one-to-one marketingthrough SMSs and emails. This would help Maruti retain these customers and offer customsolutions to each customer.5.0 Strategic CRM Customers Owners partners Strategic CRM Employees Suppliers competito rs Fig 4: Strategic CRM framework for Maruti SuzukiGreat Lakes Institute of Management, Chennai 11
  • 12. Owners: A successful CRM strategy should create value for not only customers but for alsoinvestors or owners. Its top-down approach. Hence, management commitment is crucial toimplement successfully.Customers: customers are the major focus of the CRM strategyPartners: partners such as dealers commitment in supporting the data is crucial for success ofthe CRM.Suppliers: Suppliers (HCL, SAS , Microsoft etc)the success of the CRM strategy largelydepends on the quality of the product chosen and quality of service provided by them andcommitment.Management: Employees: Key stake holders are employees in this process. There will beresistance for change of existing systems to new CRM strategy. Top management seriousnesswill ensure adaptation of CRM among the employees.Competitors: competitors practices influence the selection of CRM as it is a competitiveadvantage that it can create over the competitors.6.0 Philosophical CRMThe following are the Maruti Suzuki’s philosophies for implementing CRMTo identify customer success factorsTo create customer based cultureTo adopt customer based measuresTo develop end to end process to serve customers with the existing productsTo maintain competitive edge in serving the customerGreat Lakes Institute of Management, Chennai12
  • 13. The overall activities of CRM division mapping of those of other divisions in Maruti Suzuki is given in the following Table. CRM Division of Maruti Suzuki Divisions of Maruti Analytical Operational CRM Strategic CRM Philosophical CRM CRM To implement CRM on Microsoft Cluster analysis, Campaign Dynamics CRMMarketing RFM analysis, management 4.0.plotform. In- Clustering house developed and customized. To identify customer success factors Lead management, To create customer complaint based cultureSales Need analysis, management, sales To adopt customer satisfaction based measures To develop end to end Network process to serveDealer Clustering enhancement, New customers with theDevelopment dealer establishment existing products To maintain competitive edge in Customer Complaint serving the customerService churning, management, defection scoring Customer satisfactionSales supportDivision(Used Trade-in promotion, Clustering, RFC,cars, Auto card, Loyalty programother activities) Great Lakes Institute of Management, Chennai 13
  • 14. 7.0. Challenges addressed by MS Dynamics CRM 4.0 at Maruti Suzuki Create and maintain the platform for reporting & dash-board creation as a Business Intelligence initiative to leverage data of over 6 million customers. Data migration from DMS (Oracle 9i platform to) Microsoft Dynamics CRM 4.0 platform, the two different technologies migrated successfully for the strategic purpose of Maruti Suzuki. Customer level data-mining for enhanced decision making of stake-holders such as Brand managers, Network development team and used car divisions etc. Advanced Analytics: Predictive Models for Up-Sell, Cross-Sell and other business problems. Monitoring of data of the company in terms of sourcing, sufficiency & quality . It has catered the needs of brand managers for effective campaigning and targeting the right set of customers cost effectively.8.0. The future challenges for Maruti Suzuki’s CRM There is lot of service campaign budget over spending on huge set of customers. To optimize the utilization of service budget using CRM analytics, so that only right set of customers is targeted for campaigning. Hence, fully integrated CRM is the next big challenge. Holistic integration of CRM with SCM: A holistic integration of CRM systems with SCM systems in preliminary value-add activities represents further evolution in an OEM’s CRM activities.. Car design controlled by demand profiles provides better capacity planning and thereby can help reduce fixed costs. As a result, OEMs considerably improve their variability. To operationalize these strategies, an OEM first needs to have an overview of all internal CRM strategies. OEMs that have already centralized their CRM need to develop an extensive strategy that incorporates customer-specific national and regional CRM solutions. It is anticipated that only concepts that combine realistic goals with positive economic results will succeed. Helping the dealer better Sales forecasting: currently Maruti dealers are forecasting based on tactical measures. The CRM can be extended to integrate with DMS, there by better accuracy of forecasting of vehicles and thus less inventory costing, in turn, helps increase dealers profitability. Maruti launched e-commerce portal for used cars trade in recently & integrating the CRM with the e- commerce portal for better insights for the used car business.Great Lakes Institute of Management, Chennai14
  • 15. References:http://www.marutisuzuki.com/http://www.marutisuzuki.com/showroom.aspxhttp://en.wikipedia.org/wiki/Maruti_Suzukiwww.hcltech.comwww.microsoft.comCustomer relationship management, a database approach, V Kumar, Werner J. Reinartz -----------------------------END-------------------------------------Great Lakes Institute of Management, Chennai15