1. x 5.95 / $ 5.95 T H E S A P M A G A Z I N E · I S S U E 12 0 · S E P T E M B E R 2 0 0 4
Mat. No. 50 065 910
The Importance of Customer Centricity:
CRM STRATEGIES
ISSN 1619-6775
Daiichi: SAP Support: IT 2004:
Compliant Raising the Untangling the
Manufacturing Standards Terminology Wires
Page 50 Page 54 Page 66

2. I S S U E 12 0 · S E P T E M B E R 2 0 0 4
Contents CRM Strategies
Mass customization Page 12 Companies can only predict what their
customers will do in the future if they
Ideal campaign management Page 16
keep a record of past behavior and
Putting e-mail to good effect Page 20 know how to translate this information
The future of CRM Page 24 into knowledge about customers. Suc-
cessful customer relationships draw on
Case management in the public sector Page 28
this knowledge. And that is where the
CRM World 2004 Page 32 potential added value of customer rela-
tionship management lies.
adidas opts for mySAP CRM Page 34
Optimizing sales processes at Daishinsha Page 38
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3. s SAP INFO 120 · Forum
Mass customization for lasting customer satisfaction and loyalty To survive in today’s marketplace, a company cannot afford to choose between
low costs on the one hand, and high quality, innovative technology, quick delivery,
or high variety on the other. A hybrid strategic approach is needed, teaming high
The Personal Touch quality or the latest technology with a strong cost position.
Mass customization is the perfect way to bridge the finished product stock can dramatically lower storage
gap between cost pressures and customer-specific re- costs. Moreover, less surplus stock means less deprecia-
quirements. This strategy combines customer-specific prod- tion when models become outdated. For example, in the
ucts and services with the efficiency of mass production. The fashion industry, a considerable E 300 million (approxi-
customer who previously bought a standard product can now mately U.S.$ 370 million) is wasted each year on unsold
walk away with a tailored solution. Similarly, companies that products and inaccurate planning. This figure underscores
traditionally produced custom-made solutions can still man- the huge cost-saving potential of mass customization.
ufacture to order, but on a large scale, thanks to powerful s Long-lasting customer retention: A further benefit of cus-
new processes and product structures. Naturally, this cuts tomer-specific services is improved customer satisfaction
costs. Furthermore, mass customization provides the basis and retention. Personal interaction between the manu-
for successful customer relationship management (CRM) facturer and individual customers is vital if the company
through direct interaction with each customer. is to gather customer-specific information and translate it
Used effectively, mass customization holds considerable into tailor-made products. This interaction forms the ba-
potential: sis for a long-term customer relationship.
s Differentiation through individuality: Products that are
created specifically for a customer do not face price wars. Mass customization as the basis for lasting CRM
The emphasis is shifting from price to value, and research It is the manufacturer’s job to use the information received
shows that a customer who previously bought a standard during the customer interaction effectively and profitably.
product is often prepared to pay up to 100 percent more for Customers supply mass customizers with a great deal of in-
a personalized product. Despite higher production costs, formation about themselves, either by stipulating their own
therefore, the margins for mass-customized goods are of- needs or by enabling the provider to infer their requirements
ten greater than those for comparable standardized goods. from the configuration process. Not only do providers as-
s New ways to cut costs: Direct interaction between a com- certain their customers’ preferences, they use this knowledge
pany and each of its customers makes production more to create additional benefits for the customers. U.S. consul-
efficient and drives down costs. The “on demand” princi- tants Don Peppers and Martha Rogers talk of “learning rela-
ple prevents inaccurate forecasting of final products and tionships” that grow and become more intensive and intelli-
reduces high inventory costs. On the manufacturing side, gent with time.
inventory is restricted to raw materials and components, Adidas-Salomon demonstrates this perfectly with its mass
some of which are also procured to order. Elimination of customization program “mi adidas” (see graphic): A customer
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4. s SAP INFO 120 · Forum
Improvement and
fine-tuning of order
specification
wants to buy personalized running shoes for around U.S.$150. knowledge that is similar to panel data but without the usu- Repeat order Customer feedback,
The more the customer tells the vendor about his/her likes al effects of panel surveys. As a result, new products can be response data
and dislikes during the integration process, the better chance planned more efficiently and market research is more effec- Continuous
there is of a product being created that meets his/her exact tive because of unfiltered access to data on market trends optimization
needs on the first try. and customers’ needs. This is of special benefit to compa-
After delivery of the customized product, feedback from nies that unite large-scale make-to-stock production with
the shoe-wearer consolidates adidas-Salomon’s knowledge tailored services. Company and customer Order carried out
develop order specification
of the customer. The manufacturer can draw on detailed in-
formation about the customer for the next sale, ensuring that Two requirements for sustained CRM
the service provided becomes quicker, simpler, and more fo- There are two prerequisites for a successful CRM program.
cused. The state of information is increased and finely tuned The first is an offering based entirely on the wishes and needs Customer data and order
with each additional sale. This data is also used to propose of the customer – not simply on standard processes “cosmet- specification are stored
subsequent purchases automatically once the life of the train- ically personalized” through irritating promotional letters.
ing shoes is over (for many mi adidas customers who train A sensible customer-company liaison begins with personal Dr. Frank Piller has researched mass
intensively, this can be every couple of months). contact, continues with the creation of sales activities accord- customization and customer integra-
Developing learning relationships
ing to customer-specific specifications, and finishes with a tion for many years. He has produced
The potential of learning relationships learning relationship, whereby the provider is the student, five books and numerous papers on
When adidas-Salomon enters a learning relationship with not the teacher. the subject. He teaches in the De-
its customers, it increases the revenues from each customer Second, high-quality processes must underpin these cus- partment of General and Industrial
because, in addition to the actual product benefits, it simpli- tomer-specific services. Using new information and commu- Made to Order Management in the MBA program at
fies the purchasing decision, so the customer keeps coming nication techniques effectively is just as important as having the Technical University of Munich
back. Why would a customer switch to a competitor – even well-trained, motivated staff to interact with customers. The When the subject of mass customization is raised, the successful model of (TUM), Germany, and lectures at in-
one that can deliver a comparable customized product – if aim is to create an atmosphere conducive to customer inte- computer supplier Dell is often named as one of the most impressive examples. ternational universities. As a manag-
adidas-Salomon already has all the information necessary to gration and ensure that every communication between cus- But many other companies have also sustained lasting relationships with their ing partner of Think Consult, a man-
supply the product? A new supplier would need to repeat tomer and company is a positive experience – leaving the customers through mass customization. More examples are described at agement consultancy, he helps com-
the initial process of gathering data from the customer. customer convinced that to remain loyal is more convenient www.mass-customization.de, but here are a few: panies achieve long-term customer
Moreover, the customer has now learned how his/her in- than to turn to a competitor. Dolzer, a leading German manufacturer of women’s and men’s clothing, is a retention using customer-individual
tegration into the process successfully results in the creation fine example of how a company interacts well with its customers both in the products and services. His research
of a product. Such learning relationships boost loyalty. In Dr. Frank Piller, Technical University of traditional store and online. Dolzer enables its customers to create their own areas are technology and innovation
many CRM initiatives, only the communication with the cus- Munich (TUM), Germany s garments by choosing from a variety of fabrics and cuts. Trained consultants management and strategic marketing.
tomer is personalized – and often just through advertising provide advice in the company’s six stores, the online shop offers made-to-
materials. Such initiatives do not reach far enough and are measure shirts and blouses at a fixed price of € 50 (approximately U.S.$ 62). e-mail: piller@mass-customization.de
usually unsuccessful. Customers do not want personalized Further information: The customer is led through the process, selecting the fabric and cuff style
communication with a company – they want products that The Customer Centric Enterprise: and finally entering detailed measurements (www.dolzershop.de).
cater to their individual needs. Advances in Mass Customization and Personalization, A personal cosmetics series for every woman is the vision of U.S. Internet sup-
Learning relationships are also the basis for expanding edited by Mitchell M. Tseng and Frank T. Piller, Springer plier reflect.com – a subsidiary of Procter & Gamble. Customers configure their
knowledge about customers. Companies that gather and com- New York / Berlin, 2003 own makeup to match the precise requirements of their skin type and complex-
pare information about individual customers are in a better For more information and examples, check out the free ion. The appealing innovative nature, coupled with a high degree of integration
position to address their sales market in a targeted and effi- newsletter at www.mass-customization.de and a strong customer engagement mechanism, has made the company the
cient way. Third World Conference on Mass Customization and Per- most successful supplier of cosmetic products over the Internet in the United
By collecting and aggregating information from a segment sonalization (MCPC 2005), Hong Kong, September 18 -21, States. Now reflect.com has its sights set on store retailing with a multi-chan-
of customers, adidas-Salomon gains valuable market research 2005 (for more information, visit www.mcpc2005.com) nel strategy (www.reflect.com).
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