CRM: Is it Technology or Culture

V ChandrasekharChief Technology Officer

Bank of Baroda

CRM Failures Customer Relationship Management is often

confused with technology implementations. Accounting and MIS can be automated using

machines but not relationships. Business from early days to this date has been

based on emotions and relationships. Business can never be pure play with

technologies alone. Early CRM implementations met with failures

precisely for these reasons.

CRM - What is it? The goal of CRM has remained the same throughout

the centuries: ATTRACT AND RETAIN CUSTOMERS!

80/20 Rule:20% OF THE CUSTOMERS

CONTRIBUTE 80% OF THE REVENUES The CRM Value Formula:

RETENTION REPUTATIONATTRACTION

Why CRM It costs six times more to sell to new customer than to sell to

an existing one. A typical dissatisfied customer will tell 8-10 people By increasing the customer retention rate by 5%, profits

could increase by 85% Odds of selling to new customers = 15%, as compared

to those for existing customers (50%) 70% of the complaining customers will remain loyal if

problem is solved 90% of companies do not have the sales and service

integration to support e-commerce

Importance of service Consumers return to their sales channel for service $1 spent of service yields 12 times more revenue than

advertising 5% increase in loyalty yields up to 85% increase in profit 35% of online shoppers would buy more if they could

interact in real-time with a sales person 13.7% of Internet users who have not purchased said they

would buy online if they could speak with a customer service representative

Source: Gartner Group

Forrester Research

Drivers of CRM

Globalisation – Deregulated, proliferation of competition - Hyper competition

Product Proliferation Erosion of Monopoly – Low Profits Technology - Channel Proliferation Shifting Customer Loyalties –

Sophistication of Customer Information Clutter Getting customer attention

Drivers of CRM Volumes Anywhere Anytime

Transactions take place without knowledge of humans or at non banking hours

Channel Evolution

1960s - Letters 1970s - Phones 1980s - Fax 1990s - ATM, e-Mail, Call Centers 2000s - Internet Banking, Contact

Centers

Channel CostsDelivery Mechanism Transaction Costs $

In- Branch teller 1.20ATM 0.40Telephone 0.30PC Banking 0.20Internet Banking 0.01

Driving Down Transaction Costs Using Technology was at the Cost of Loss Direct Customer Contact

CRM Objectives Cross-selling and up-selling to existing

customers Reducing the cost of acquiring new

customers Closing more sales Targeting more lucrative markets Creating conditions to make those goals

more obtainable

CRM is all about changing to new processes with new technologies rather than just automating existing processes

CRM Objectives Maximize the value of the business to each

customer Maximize the value of the customer to the

business

The Objective Is To Focus On Customer Relevance To

Business

Another View of CRM Evolution

Automating Existing processes – Silo Approach

Cross Functional Integration Process Driven – Removing redundant

processes that doesnot add value to ( or impede) customer service

Customer Driven Model

One more View Interaction Management = Attract,

Transact, Support, Enhance Business Management = Strategy, Plan,

Action, Revisit

It is all about value

"… the customer never buys what the supplier sells. What is value to the

customer is always something quite different from what is value or quality to

the supplier."

— Peter Drucker"Management Challenges for the 21st Century"

Value Business Value = Growth, Revenue,

Efficiency, Innovation Customer Value = Service, Price, Quality

Human Value Chain = Manufacturer , Distributor, Customer

CRM & MarketingMetrics Traditional

MarketingCRM

Purpose Increase Sales Maximize Loyalty

Focus Customer Acquisition

Customer Life Cycle Management

Evaluation Market Share Mind ShareCustomer Information

Surveys, Interviews

Behavioral Information Data Base

Communication One Way. Promotion Oriented

Two Way. Interaction Oriented

CRM in Banking CRM is for Mass Mkt Relationship Banking is for HNI – Rs.1 to 2

Lacs/month income individuals Old generation was satisfied with conservative returns Generation after generation banked with same bank New generation knows its options Double Income Families Increase in HNI in Asia KYC, AML, Treasury Siloed Bank must be customer centric not CRM centric

CRM in Banking Optimise Customer Interaction Plan Multi Channel Delivery

Uniform Experience across channels Alerts across channels Have Single View of Customer Campaign Mgt DWH

Financial Logical Data Model CIF – Customer Information File

Clean and Comprehensive Customer Data

CRM Types Operational CRM – Things that touch the

customer, traditional, tactical, sales and service, real-time system, what one sees – also known as front office CRM

Analytic CRM – Things that deal with internal data generated by operational CRM/ external data, marketing and customer intelligence, segmentation, matrices, predominantly batch system, not seen, runs in background, also known as back office CRM

Data Customer Reference Data - Descriptive

data Relationship data – Transaction and other

interaction Data Contextual data – Unstructured data,

Difficult to implement like regulatory, political, economic impacts

Profitability Data

Data Management Planning and data acquisition

Disparate data sources Multiple platforms Disparate architectures

Maintenance of data – update to prevent from information decay

Deletion or disposal of stale data Applying data

Issues of Customer Centric Technologies

Information Clutter Information Overload Channel Conflicts Privacy Confidentiality

CRM Complexity Dynamic complexity

Business, Customer Fragmentation

Business, Customer Uncertainty

Market, Loyalties , Technologies, Business

CRM Unification: One face to customer Synchronization: Consistent customer

response Coordination: Coordinated service

delivery

CRM Assets IT: Technology and Information assets

constitute at most – 25% CRM competence

People & Process: Other assets include brands, messages, staff knowledge, policies, processes and rules

Organisational behavior : How you engage with people at all levels is crucial for CRM success

Organizational Issues Most company are organized around products or

service rather than customers Most companies distribute through intermediaries,

rather than direct to end users Most companies are organized for functional

competence For selling products, not cultivating customers

Going in the “customer direction” requires an integrated approach

Functional integration, and Divisional integration

CRM Implementations The rate of successful CRM implementations is

around 30%. That's an astonishing 70% failure rate

In most of the cases the failure is not because the requirements were not captured in the RIGHT manner, but because RIGHT Requirements were not captured.

The real reasons for the difficulty can be grouped into three categories - dynamic complexity, fragmentation, and uncertainty

Key Factors Tighter definitions and measurement

of business objectives Examination of CRM processes Effective measurement of ROI

Build or Buy There is a consensus that a blended approach is

emerging, i.e., buy and integrate the systems that will meet 50-70% of the business requirements, and build the rest.

Some of the factors to help you decide whether to build or buy include:

Technical skill Application domain knowledge How much time is needed to go to market? Organizational maturity - what is your culture, risk tolerance,

tolerance for new technology, degree of structure, standardization

Flexibility - platform and operating system volatility, business unit flexibility/adaptability, application integration, volatility requirements

CRM in Banking CRM is Relationship Management

Internal External

Economic upturn favors self service channels

Its downturn the branch channels

CRM in Banking Historically Most organisations were internally

focussed As communication and mobility and loyalties

decreased focus shifted to customer relationship – retaining and enhancing relationship

Increase efficiency of a relationship – multiple relationships per customer

Cost of relationship – channel migration issues Listening company – quiet performer

Value LTV – Long term value of customer MVC – Most valued customer

Value = Revenue from Customers – Cost of Relationship

CUSTOMER PROFITABILITY MEASURE Value

Revenue Per Customer

Retention Probability

Retention Costs

Acquisition Costs

Scheduled Call-Backs for

Customers

Service-based

Initiatives

Channel Consolida

tion

Incentive Referral

Programs

FINANCIAL METRICS

CUSTOMER METRICS

OPERATIONALINITIATIVES

Cross-Selling

Customer Satisfaction

Service Efficiency

Customer Referrals

Why CRM Fails Lack of management vision and commitment. Lack of complete business process analysis. Selecting the software before the analysis is completed. Implementing a system without changing the way

you do business. Managing expectations Becoming locked into a system that does not support

the CRM initiative (Agile Adaptability) Business acumen, interpersonal relationships and top

technology Efficient Back Office Functions and its integration

with front office and customer service delivery is critical

Reasons for CRM Failures Thinking that technology is CRM Management has little understanding of or

involvement with the customer Rewards and incentives are tied to old, non-

customer objectives Staff culture doesn't relentlessly focus on the

customer satisfaction

42% Don’t Respond To Email Within 24 Hours

19% Don’t Respond At All

Reasons for CRM Failures Forgetting that the architecture and integration issues

are bigger and more expensive Lack of mutually reinforcing processes Little coordination of multiple departmental

initiatives and projects Poor-quality customer data Creating the CRM team happens last The team lacks business staff No measures or monitoring of benefits Lack of testing and Feedback mechanism Customer not in the loop - customer feedback is

not part of change

CRM Technology Enterprise Architecture Comprehensive Touchpoint Automation Rich Platform Capabilities Unified Delivery Architecture Enterprise Application Integration

CRM Technology Front-office Automation Unified Customer Repository Seamless Business Processes Synchronize Business Functions Synchronize User Constituencies Synchronize Business Channels Deliver Multi-dimensional Experiences Enterprise Application Integration Synchronized Demand & Supply Chain

CRM Implementations Data Collection and Management:

It is the critical component to delivering CRM. However it is given least importance

Customer Experience It is the customer experience that ultimately differentiates a

brand. Customer facing activities are served better by humans. It may turn out to be cheaper to have a human in long run in the

CRM value chain Change Management

CRM is a culture and not technology Process Alignment and Integration

Every Activity of the organisation must be aligned to customer focus and seamlessly integrated to corporate CRM goals

CRM Implementation Choose one CRM Goal and Go for it

Extend breadth and depth of customer relationships Use CRM to lower costs Leverage and enhance brand equity Focus on customer value and satisfaction

The CRM Team To ensure success, have the right people on the team

including vendor teams with a third party integrator / consultant.

IT Business Benefit Always deliver a business benefit every six months.

Integration Channel Integration Department / Business / Organisation

Integration Service Integration – Marketing, Sales,

Service

Success Scarcest resource is customer attention Brand is organisational behavior Best form of Mktg is by maintaining

persistent presence Discover and focus on your strengths not

weaknesses Resonate with your employees Success of Strategy lies in its timely

implementation

CRM Project Management Define your business objectives and goals against which results can

be measured.  Give each CRM project three dimensions: people, processes

and technology.  Establish a systematic approach to project management including

team development, IT, marketing, services, sales and management, as well as software. 

Clearly identify corporate and customer needs. Research requirements, behavior and how to engage and deliver effectively.

Manage organisational change effectively. The human factor is imperative to a project’s success. 

Invest in training – more essential than any piece of software. Focus on proactive selling, management and relationship building to

effectively upsell and cross-sell.

Success Factors Close a sale before competition: Plan and

manage field sales, Automate the call center, Create and manage quotes, Configure complex products, Drive web sales, Optimize mobile sales

Integrate Your Service Center: expand your customers base, build customer loyalty and improve service efficiency

Interaction Center integrates with Service , Sales, Contracts , and Marketing applications to reduce the cost of customer contact center operations.

Relationships & Organisational Success

Great organisations are built on great relationships

No company with poor internal relationship can create and deliver quality and innovation for long time

It can provide bursty performance but cannot sustain its competitive advantage

Success hinges successful management of both internal and external relationships

TRM – Total Relationship Mgt Govt Relationship Regulator Relationship Employee Relationship Customer Relationship Supplier Relationship

Getting to the Heart of CRM We have only two sources of competitive

advantage: The ability to learn more about our

customers faster than the competition and The ability to turn that learning into action

faster than the competition-Jack Welch

Thank You