What is CRM?CRM stands for Customer Relationship Management. It is a strategy used to learn moreabout customers needs and ...
Are there any indications of the need for a CRM project?Not really. But one way to assess the need for a CRM project is to...
What causes CRM projects to fail?Many things. From the beginning, lack of a communication between everyone in thecustomer ...
They began by eliminating all the loops and unnecessary steps, such as the need forbrokers to keep calling the company for...
•   Work as a team. Have customer support, IT and other departments involved every    step of the way.•   Offer training t...
installed. It creates a flood of information. To use this information, organizationsmust learn how to use the information ...
If a company is just starting with a CRM project, what should they do?If youre just starting out, you want to build youre ...
Esteban Kolsky, senior research analyst at Gartner Group, says the trends in theindustry are moving toward automated chat ...
CRMGuru.comhttp://www.crmguru.com/gurus/index.htmlThis site offers access to CRM analysts for questions and discussion for...
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customer relationship management

  1. 1. What is CRM?CRM stands for Customer Relationship Management. It is a strategy used to learn moreabout customers needs and behaviors in order to develop stronger relationships withthem. After all, good customer relationships are at the heart of business success. Thereare many technological components to CRM, but thinking about CRM in primarilytechnological terms is a mistake. The more useful way to think about CRM is as aprocess that will help bring together lots of pieces of information about customers, sales,marketing effectiveness, responsiveness and market trends.What is the goal of CRM?The idea of CRM is that it helps businesses use technology and human resources to gaininsight into the behavior of customers and the value of those customers. If it works ashoped, a business can: • 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 revenuesThat sounds rosy. How does it happen?It doesnt happen by simply buying software and installing it. For CRM to be trulyeffective, an organization must first decide what kind of customer information it islooking for and it must decide what it intends to do with that information. For example,many financial institutions keep track of customers life stages in order to marketappropriate banking products like mortgages or IRAs to them at the right time to fit theirneeds.Next, the organization must look into all of the different ways information aboutcustomers comes into a business, where and how this data is stored and how it iscurrently used. One company, for instance, may interact with customers in a myriad ofdifferent ways including mail campaigns, Web sites, brick-and-mortar stores, callcenters, mobile sales force staff and marketing and advertising efforts. Solid CRMsystems link up each of these points. This collected data flows between operationalsystems (like sales and inventory systems) and analytical systems that can help sortthrough these records for patterns. Company analysts can then comb through the datato obtain a holistic view of each customer and pinpoint areas where better services areneeded. For example, if someone has a mortgage, a business loan, an IRA and a largecommercial checking account with one bank, it behooves the bank to treat this personwell each time it has any contact with him or her.Executive Guides www.netessence.com.cy
  2. 2. Are there any indications of the need for a CRM project?Not really. But one way to assess the need for a CRM project is to count the channels acustomer can use to access the company. The more channels you have, the greater needthere is for the type of single centralized customer view a CRM system can provide.How long will it take to get CRM in place?A bit longer than many software salespeople will lead you to think. Some vendors evenclaim their CRM "solutions" can be installed and working in less than a week. Packageslike those are not very helpful in the long run because they dont provide the cross-divisional and holistic customer view needed. The time it takes to put together a well-conceived CRM project depends on the complexity of the project and its components.How much does CRM cost?A recent (2001) survey of more than 1,600 business and IT professionals, conducted byThe Data Warehousing Institute found that close to 50% had CRM project budgets ofless than $500,000. That would appear to indicate that CRM doesnt have to be abudget-buster. However, the same survey showed a handful of respondents with CRMproject budgets of over $10 million.What are some examples of the types of data CRM projects should becollecting? • Responses to campaigns • Shipping and fulfillment dates • Sales and purchase data • Account information • Web registration data • Service and support records • Demographic data • Web sales dataWhat are the keys to successful CRM implentation? • Break your CRM project down into manageable pieces by setting up pilot programs and short-term milestones. Starting with a pilot project that incorporates all the necessary departments and groups that gets projects rolling quickly but is small enough and flexible enough to allow tinkering along the way. • Make sure your CRM plans include a scalable architecture framework. • Dont underestimate how much data you might collect (there will be LOTS) and make sure that if you need to expand systems youll be able to. • Be thoughtful about what data is collected and stored. The impulse will be to grab and then store EVERY piece of data you can, but there is often no reason to store data. Storing useless data wastes time and money. • Recognize the individuality of customers and respond appropriately. A CRM system should, for example, have built-in pricing flexibility.Which division should run the CRM project?The biggest returns come from aligning business, CRM and IT strategies across alldepartments and not just leaving it for one group to run.Executive Guides www.netessence.com.cy
  3. 3. What causes CRM projects to fail?Many things. From the beginning, lack of a communication between everyone in thecustomer relationship chain can lead to an incomplete picture of the customer. Poorcommunication can lead to technology being implemented without proper support orbuy-in from users. For example, if the sales force isnt completely sold on the systemsbenefits, they may not input the kind of demographic data that is essential to theprograms success. One Fortune 500 company is on its fourth try at a CRMimplementation, primarily because its sale force resisted all the previous efforts to sharecustomer data.As the largest health insurance provider in New York, Empire manages more than 29,000corporate employer accounts, of which about 26,700 are small to midsize companiesemploying 50 people or fewer. Empire services these "community rated" employers viasome 1,800 registered independent sales brokers. Because each customers needs aredifferent, brokers must produce customized coverage estimates for each one. Forexample, some companies want preferred provider plans, and some want healthmaintenance plans. Each plan has different "riders," or options, attached, such as visioncare or prescription coverage.In the past, a broker would call Empires broker relations department, pass along thecustomers specs and then wait for Empire to calculate a price quote. The broker thenrelayed the quote back to the customer, who would either accept it or ask formodifications—in which case the broker had to contact Empire again and request arevised quote. When a quote was finally accepted, the broker filled out and filed one setof paperwork while the customer filled out a group application and sent it directly toEmpire. Whenever Empire revised its plan structure, brokers found themselves withoutdated enrollment forms.The company then made 60 copies of the enrollment paperwork, filing it within 11departments at Empire. Even then, fully 67 percent of the forms had to be returned ordouble-checked by phone with the brokers because of errors or omissions.Since they couldnt generate quotes themselves or process the paperwork, the brokerswere completely dependent on Empires broker relations staff, who were around onlyduring normal business hours. As a result, it took about 27 days to shepherd a newcustomer through the sales and enrollment process. Then employees had to wait anotherweek to 10 days to get their ID cards.The Quest to StreamlineIn late 1998, Stephen Bell, vice president of e-business operations, and Kenneth O.Klepper, senior vice president of systems, technology and infrastructure, begandeveloping a "print on demand" system to reduce the vast mountains of quickly outdatedbenefits brochures and contracts that sat in storage rooms.First, Snow and his team took a hard look at the existing paper-based process. Theytook over a conference room and created a color-coded map of the sales process; no onehad ever before tracked it from start to finish. "It was like a grapevine," Bell says of theprocess map. "It just got bigger and bigger. For the first time, we realized that therewere 33 redundancy audit checks—where we go over information to make sure itscorrect—built into the process. We had created this nightmare."Executive Guides www.netessence.com.cy
  4. 4. They began by eliminating all the loops and unnecessary steps, such as the need forbrokers to keep calling the company for revised quotes. "Wherever there were repeats,we tried to eliminate them," Bell says. The team managed to cut the essential steps from80 to 40. That was the easy part, he says; then came the daunting task of finding anapplication to make the streamlined map a reality.Because Empires sales channel was so complex, Bell decided that Empire couldnt gowith an off-the-shelf application. And he quickly saw the value of moving the process tothe Web. Bell and Klepper hired Firepond of Waltham, Mass., to customize its proposalconfigurator and develop a quote engine and group enrollment process for Empire.Because Empire lacked in-house experience and resources for handling anenterprisewide application, they kept the IT department close to the project so thatstaffers could learn from the experience. The department also had to integrate theapplication with Empires legacy mainframes, a process that was tedious but critical,according to Bell.Empowered BrokersEmpires Broker Services Application, which includes the quote engine and proposalconfigurator and enables online group enrollment, went live in October 2000. Thebrowser-based quote engine frees brokers from having to call Empire to crunch numbersevery time they need a quote. Instead, they can now enter the relevant customer datathemselves online, and an automated formula generates a quote in a matter of seconds.If the client isnt satisfied with a particular quote, the broker can go back online andchange the specifications. Upon making a sale, a broker no longer has to wade throughpiles and piles of paper, but can go online to enroll a new account. The password-protected system also lets agents maintain customer information online, where itsaccessible around the clock.By Oct. 31, 2001, all of Empires 1,800 independent brokers had registered on the site,Bell says. When the site went live, Empire aimed for getting 15 percent of the brokers touse its self-service functionality. As of October, more than 45 percent were regularlygenerating their own quotes online.Empire agents using the site now handle an average of 45 percent more quotes; brokerswho used to process 20 quotes a day, now handle 50. Most important, the enrollmentprocess that once dragged out over 27 days now takes just two to three days tocomplete online.10 Tips for implementing customer self-service• Learn everything about your customers.• Conduct focus groups to ensure that they want self-service.• Define clear business goals.• Evaluate the technology for its technical and financial merits.• Does it match your customer base? Will it boost profitability?Executive Guides www.netessence.com.cy
  5. 5. • Work as a team. Have customer support, IT and other departments involved every step of the way.• Offer training to employees.• Expect this to be an iterative process that requires making changes as you learn more about your customers.• Develop an effective way to measure results.• Underpromise and Overdeliver.Intelligent agentA program that automatically performs a service, such as gathering specificinformation, or that personalizes information on a Web site based on a user’sregistration information and usage analysis.Enterprise relationship managementThe practice of analyzing customer data from sales, marketing, service, finance andmanufacturing databases in order to relate efficiently to customers.Data warehouseA database that stores large amounts of historical business data.Data miningThe practice of extracting data from a data warehouse in order to analyze patterns,trends and relationships.Michael D. Johnson, a D. Maynard Phelps Collegiate Professor of BusinessAdministration and a Professor of Marketing at the University of Michigan BusinessSchool answers a few questions regarding Customer Relationship Management.Question:Given that CRM software integration is key, what role do you think that businessmanagers and IT should play? In other words, do you think that business managersshould lead the efforts strongly relying on IT? I think in some companies, IT isleading these efforts. It seems to me that this is a strategic error.Reply:Clearly IT is a critical player and an important voice in CRM software integration.But I strongly believe in the value of having a general manager lead such efforts.Organizations need the cross-functional perspective of the general manager to getthe most of their CRM efforts. Consider what happens once CRM software isExecutive Guides www.netessence.com.cy
  6. 6. installed. It creates a flood of information. To use this information, organizationsmust learn how to use the information to develop and prioritize tailored customerofferings. They also have to learn to execute these tailored customer offeringsthrough front-line service people. Ultimately, it is in these latter phases wherecompanies get bogged down and where the biggest CRM bottlenecks occur. Thus Ifind it critical that the users of the software have a large voice when integratingCRM. The general manager’s job is to get systems and people to work together.This underscores the need for general management leadership in the CRMintegration process.Question:What is the future of CRM using the Web?Reply:I wish I had a crystal ball, but I don’t. Certainly the technological aspects of usingCRM via the Web will continue to change and evolve. I know the big players in thisfield are working hard to develop technological improvements. What has beenrelatively limited and remote access to CRM systems via the Web will become muchmore dynamic and indistinguishable from dedicated CRM access going forward. Themore interesting question is, I believe, “what is the future of the Web using CRM?”That is, how will the Web fit into an organization’s overall customer orientation andrelationship management? Here the future is a bit clearer. The past two years havereinforced the need to integrate one’s web activities within an existing product-service offering and distribution system. Customers will continue to use multipletouch-points. Consider that 95% of Charles Schwab customers use all threepossible channels (branch offices, the telephone and the Internet) to interact withthe company. The integration of Web activities into an existing multi-channeloperation leverages an existing brand name, purchasing power, and distributionefficiencies. CRM systems play a critical role in this multi-channel strategy byproviding employees, primarily front-line service employees, with a seamless flowof information from multiple channels.Companies must tweak their operations to realize future CRM benefitsCRM software is on its way to reaching a saturation point—those who are likely toinvest in CRM already have. According to recent research by Cambridge, Mass.-based Forrester Research, as the CRM market returns to modest growth over thenext few years, companies will change the way they collect and manage customerdata in order to realize the full potential of CRM.Forrester estimates that CRM revenues will grow from $42.8 billion in 2002 to$73.8 billion in 2007, a compound annual growth rate of 11.5 percent(characterized by Forrester as “modest”). Marketing automation software will makethe most gains, growing at a 14.5 percent clip from 2002-04 and then rising to 17percent thereafter.August 7, 2002 - CXO MediaExecutive Guides www.netessence.com.cy
  7. 7. If a company is just starting with a CRM project, what should they do?If youre just starting out, you want to build youre requirements first. Define theproblem, understand whats going to solve that problem and understand thefunctionality of that solution.In other words, in order to increase your number of marketing campaigns thisyear, you are going to need individual customer profiles. Thats just one example,but once you understand that its a requirement, you can find the technologies thatsupport that particular functionality. Thats the right way to do it: the requirement,the functionality, then the tool.Babies need about a year to gain the coordination and strength to take their firststeps. A less heartwarming but similarly anticipated moment for businessexecutives comes when their CRM initiatives begin to pay off.According to a May 2001 study by the Cutter Consortium, an Arlington, Mass.-based business advisory group, 66 percent of CRM programs are less than 12months old. Only 11 percent of companies surveyed have had CRM initiatives inplace for more than two years.“That’s not really enough time to get a good feel for these applications,” says CurtHall, a senior consultant at the Cutter Consortium. “Count on a year to see anyROI.”CRM is sometimes broken down into two classes—operational and analytical.Operational CRM includes visible customer interactions, such as adding productFAQs or chat capability to a website. Analytical CRM involves compiling customerdata, collected through operational CRM, breaking it down to identify trends andpumping that customer information back into the operational arm. Hall sayscompanies moved first on operational CRM by investing in sales force automationand customer service programs that integrated Web channels with offline channels.“They think that’s where they’re going to see the immediate payoff,” Hall says.“Those are the units that make initial contact with the customer. Companies aretrying to get a bigger picture and deeper understanding of what’s going on. Andthat means blending the operational side with the analytical side.”The Cutter Consortium survey also found that 40 percent of respondents were“satisfied” with their CRM efforts. On the other extreme, just 6 percent said theywere disappointed.“They’re not all exactly dissatisfied, but they’re not all jumping up and downeither,” Hall says.Stamford, Conn.-based Gartner Group says that multichannel service and customerself-service technologies will not only improve customer loyalty, but also lowerservice costs.Executive Guides www.netessence.com.cy
  8. 8. Esteban Kolsky, senior research analyst at Gartner Group, says the trends in theindustry are moving toward automated chat and e-mail applications. Enhancingthose features with natural language software, he says, will speed up customerservice calls and reduce the costs of handling e-mail and chat inquiries.On average, the cost of handling a customer over the phone is $6 per call. Anefficient chat application reduces that cost to about $3. Good e-mail applicationstrim the cost even further to $1. According to Kolsky, however, those cases are fewand far between. The analyst says inefficient e-mail or chat can raise costs per callto levels higher than phone assistance—up to $40 per e-mail and $8 per chatsession in some cases. The bottom line, says Gartner, is that well-executed CRMshould lower services costs by 6 percent over the next four years.Gartner predicts that the worldwide CRM software revenues will drop 8 percentfrom 2000 levels, to $3.6 billion in 2001 (2000 revenues were $3.9 billion, 89percent above 1999 revenues.). Growth will remain flat for 2002, before rising to10 percent for 2003 at $4.03 billion.Over the next five years, all CRM software and new license revenue will show acompound annual growth rate (CAGR) of 5.6 percent worldwide. While NorthAmerica will show a CAGR of only 0.9 percent, Japan’s CAGR over the same periodwill be 30 percent. Other regions break down this way: Latin America, 18 percent;Asia-Pacific, 15 percent; Europe, 8.5 percent.An Executives Guide to CRMhttp://www.psgroup.com/freereport/imedia/report.aspThis lengthy and detailed guide offers a short history of CRM, an overview ofconcepts and objectives, and an illustration of the applications of CRM. (freeregistration required)CRM Research Centerhttp://www.cio.com/research/crm/index.htmlThis CRM based Research Center, provides a slew of resources including recentarticles on strategy, implementation information and case studies.CRM Forumhttp://www.crm-forum.com/index.htmlThis is an online customer relationship management resource center based inEdinburgh, U.K. Links include press releases, case studies and links to vendors. TheCRM-Forum provides services to visitors to the site; associate members of the CRM-Forum (free); and corporate members of the CRM-Forum.Executive Guides www.netessence.com.cy
  9. 9. CRMGuru.comhttp://www.crmguru.com/gurus/index.htmlThis site offers access to CRM analysts for questions and discussion forums as wellas a CRM newsletter, called CRM.Insight.retailindustry.about.comhttp://retailindustry.about.com/cs/loyaltycrm/Articles are organized by topic (customer data mining, customer equity, customerrelationships, privacy and etiquette, to name a few). Youll also find acomprehensive vendor directory with one-liners that decode the marketing gibberishinto plain English that explains what each vendor does.searchCRM.comhttp://searchcrm.techtarget.com/techtarget.coms Customer Relationship Management-specific site. Includes links totips and tutorials, interactive forums, downloads and chats with leading experts.* Taken from Darwin PyblicationsExecutive Guides www.netessence.com.cy

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